IMF Warns Africa Missing Out on Big AI Boom

Sub-Saharan Africa could expand its economic output by roughly 4 percent over the next decade if regional governments prioritize investments in electricity supply, internet access, and digital skills, according to a report published by the International Monetary Fund (IMF).

Without decisive intervention to fix persistent energy and connectivity bottlenecks, the technology's contribution to economic growth may reach just 0.2 percent over the same ten-year period. The institution noted that such a negligible figure would leave the continent on the margins of global technological development.

The region currently ranks lowest on the IMF AI Preparedness Index. Weak digital networks, inadequate power generation, limited technical training, and underdeveloped regulatory structures continue to constrain widespread adoption of automated systems across key industrial sectors.

Lead author and Deputy Division Chief in the IMF African Department, Martin Schindler, emphasized that policy choices will decide whether nations capture meaningful productivity improvements. He noted that without targeted infrastructure policy, potential gains remain statistically irrelevant.

While global investment accelerates into high-capacity data centres and localized power facilities, Africa hosts only about 5.5 percent of the world's data centers. Furthermore, internet penetration across the sub-Saharan region stood at just 38 percent in 2024, compared to a 68 percent global average.

The primary economic risk for African nations is not job displacement caused by advanced technology, but rather falling further behind global competitors due to missing foundational utilities. Rapid expansion of energy grids and reliable fiber networks remains essential for local markets to deploy computer algorithms effectively.

Co-author Andrew Tiffin highlighted that stabilizing power grids remains the most urgent prerequisite for digital modernization. Data facilities require heavy uninterrupted electrical supply, which current regional grids struggle to deliver consistently without substantial expansion and private sector participation.

Recent capital deployments show some motion toward addressing these infrastructure gaps, including high-capacity geothermal-powered facilities in East Africa and graphics processing unit deployments across several nations. However, broad institutional reforms remain necessary to scale these localized projects into regional industrial assets.

Governments must address high taxation on technology hardware, streamline permits for utility corridors, and establish clear guidelines for data management. Establishing these regulatory frameworks will help attract the international capital required to construct critical digital and energy assets.