The impact of the 4th Industrial Revolution on Development Finance
Human history is in many ways simply a chronological catalogue of our available technology. After all, the story of our species, since we emerged onto the African plains over 200,000 years ago, is most popularly understood in terms of technological milestones: from the prehistoric Stone Age and the Agricultural Revolution, through the Bronze and Iron Ages, right up to the Silicon Age – the age of information. Whenever revolutionary technology is discovered or invented, we humans start writing the next chapter of our tale.
It’s interesting to note that these chapters have been getting shorter and shorter as technology develops at an accelerating pace. While it took us nearly ten millennia to progress from developing agricultural technology (circa 10,000 BC) to smelting bronze (circa 3,000 BC), less than a century passed between the first working steam locomotive (1804) and the Wright Brothers achieving mechanised flight (1903). This acceleration is even more pronounced in the age of computing, where Moore’s Law has accurately predicted the exponential shrinking of silicon chips since 1965.
Welcome to the 4th Industrial Revolution: Industry 4.0
Today, this accelerated rollercoaster of technological development has brought us into new and exciting territory, in what is commonly referred to as the 4th Industrial Revolution or Industry 4.0. Building on the computer technology of the digital revolution (also known as the 3rd Industrial Revolution), the 4th Industrial Revolution involves cyber physical systems, including technologies like the Internet of Things (IoT), Artificial Intelligence (AI) and robotics, as well as some more fringe technologies like genetic editing and various transhumanism initiatives. While this may sound like the stuff of science fiction, these technologies are already having a very real impact on how people around the world do business, consume media and go about their daily lives.
The implications of Industry 4.0 for development finance
For figures in the development finance space, Industry 4.0 presents numerous opportunities and challenges. Perhaps the most significant opportunity lies in the increased accessibility of the digital knowledge, tools and resources needed to function effectively within this new hyperconnected paradigm. The environment is also ripe for budding entrepreneurs, as cheap technology and cloud-based Software as a Service (SaaS) solutions lower barriers to entry and make it far easier to get the ball rolling with startups and small businesses. This all directly increases the positive impact of development finance initiatives in many emerging economies, facilitating long-term growth by allowing them to effectively leapfrog into Industry 4.0.
As such, these developments show especially great potential for developing countries in Africa. The digital disruption of practically every industry means that any African population with high levels of digital literacy will be sufficiently equipped to reap the rewards of the international business environment. But this also highlights one of the main challenges: facilitating digital literacy and skills development across the chasmic economic divide. Unless this is addressed sufficiently, any economic benefit ushered in by Industry 4.0 will only be available to the computer-literate elite and entrench societal inequality further.
Another risk of this new technological epoch for developing economies involves cybersecurity. As cyber infrastructure is developed and more of the population build a digital livelihood, the greater the impact of potential cyberattacks. For an idea of the sheer scale of cybercrime on the internet today, consider that there are approximately three billion Google searches in a single day; in the same time period, Cisco blocks an average of 19.7 billion cybersecurity threats. If cybersecurity training and infrastructure are not invested in sufficiently, anyone below the poverty line who seizes a digital opportunity will be uniquely vulnerable to attack.
Facilitate positive change in Africa and beyond
If you’re interested in helping develop economies in Africa leverage the 4th Industrial Revolution to write their next chapter and achieve economic prosperity, consider enrolling in an African-centric development finance higher learning programme. The MPhil in Development Finance (MDevF) from the University of Stellenbosch Business School is a critical-skills degree for Africa. This is because it focuses on enterprise-level development finance and sustainable growth, reinforced with a solid understanding of the theories underpinning development finance practices. Enrol in the MDevF programme today.