The Tanzanian private sector is embracing digital transformation. Many businesses invest in new technologies to improve their operations and reach new customers. Digital transformation is helping to make businesses in Tanzania more competitive and efficient. Does this transformation contribute to the issue of unemployment and the lack of skilled labour? What about its contribution to the national economy?
Digital transformation in the Tanzanian private sector involves adopting and integrating digital technologies into all business operations. This includes using technologies such as cloud computing, big data analytics, artificial intelligence (AI), and the Internet of Things (IoT) to improve efficiency, productivity, and customer engagement.
The Current State of Digital Transformation in Tanzania
The Tanzanian private sector is increasingly embracing digital transformation. A 2022 survey by the Tanzania Private Sector Foundation (TPSF) found that more than 52% of businesses invest in digital technologies. The most common technologies being used are cloud computing (43%), mobile payments (58%), and social media (52%).
The Tanzanian government also supports digital transformation through initiatives like the National Broadband Strategy and the Tanzania e-Government Strategy. These initiatives aim to create a more enabling environment for digital businesses to thrive.
Significance of the Topic
Digital transformation can impact unemployment, skilled labour, and the national economy in several ways. On the one hand, digital transformation can lead to job displacement as businesses automate tasks that humans previously performed. On the other hand, digital transformation can create new jobs as businesses demand new skills to operate and maintain digital technologies.
The impact of digital transformation on skilled labour is also mixed. On the one hand, digital transformation can create a demand for new skills such as data analysis, software development, and digital marketing. On the other hand, digital transformation can also make some existing skills obsolete as businesses automate tasks that humans previously performed.
The impact of digital transformation on the national economy is also complex. On the one hand, digital transformation can lead to increased productivity and economic growth. On the other hand, digital transformation can also lead to increased inequality, as those with the skills to benefit from digital transformation can earn higher wages.
The impact of digital transformation on the Tanzanian labour market will depend on many factors, such as the pace of technological change, the ability of workers to adapt to new technologies, and the government’s policies on education and training.
Successful Digital Transformation Initiatives
Vodacom Tanzania: Vodacom Tanzania has implemented many successful digital transformation initiatives, including launching its M-Pesa mobile money platform, one of Africa’s most successful mobile money platforms. Vodacom Tanzania has also invested in cloud computing and big data analytics to improve its customer service and network performance.
NMB Bank: NMB Bank has implemented some digital transformation initiatives, including launching its NMB Mobile Banking app, which allows customers to access their banking services from their mobile phones. NMB Bank has also invested in artificial intelligence (AI) to improve its fraud detection capabilities.
Technological Advancements Driving Transformations
Impact on Unemployment: The relationship between digital transformation and job opportunities is complex and multifaceted. On the one hand, digital transformation can lead to job displacement as businesses automate tasks that humans previously performed. On the other hand, digital transformation can also create new job roles as businesses demand new skills to operate and maintain digital technologies.
Automation and Job Displacement: The automation of tasks is a crucial driver of digital transformation. As businesses adopt new technologies, they can automate tasks that humans previously performed. This can lead to job displacement, as businesses no longer need as many employees to perform these tasks.
For example, the introduction of self-service checkouts in supermarkets has led to a reduction in the number of cashiers needed. Similarly, the development of chatbots has reduced the number of customer service representatives required.
Emergence of New Job Roles: While digital transformation can lead to job displacement, it can also create new job roles. As businesses adopt new technologies, they demand new skills to operate and maintain them. This has led to new job roles such as data analysts, software developers, and digital marketers.
In addition, digital transformation is creating new opportunities for entrepreneurs and freelancers. As businesses become more reliant on digital technologies, they increasingly outsource tasks to freelancers and small businesses. This has led to the growth of the gig economy, in which workers are paid for individual tasks or projects rather than being employed full-time.
Workforce Reskilling and Upskilling Programs: Several Tanzanian companies are investing in workforce reskilling and upskilling programs. These programs help employees develop the skills they need to succeed in the digital economy. For example, some companies in Tanzania have launched a reskilling program for their employees. The program provides training in various digital skills, such as data analysis, cloud computing, and digital marketing.
In addition, another has launched an upskilling program for its employees. The program provides training in a range of skills that are in high demand, such as project management, agile development, and design thinking.
Also, some Tanzanian companies are collaborating with educational institutions to develop training programs that meet the needs of the digital economy. For example, Airtel Tanzania has partnered with the University of Dar es Salaam to create a master’s degree program in telecommunications engineering. We witnessed the impact of these collaborations when the robot delivered the 5G to President Samia at the launch. These collaborations are helping to ensure that graduates have the skills they need to succeed in the digital economy.
National Economic Impact
Increased Productivity and Efficiency: Digital transformation can significantly increase productivity and efficiency. For example, different studies found that businesses that have adopted digital technologies have seen productivity gains of up to 25%. These gains are due to several factors, such as the automation of tasks, the improved flow of information, and the ability to make better decisions.
In Tanzania, digital transformation is already having a positive impact on productivity. For example, using mobile money has made it easier for businesses to collect payments and disbursements. This has led to a reduction in the time and cost of doing business. Additionally, cloud computing has made it easier for businesses to access and share data. This has led to improved collaboration and decision-making.
Contribution to GDP Growth: It can also significantly contribute to GDP growth. A study by the World Bank found that countries that have embraced digital technologies have seen higher rates of GDP growth than those that have not. This is because digital technologies can help to boost productivity, create new jobs, and increase exports.
In Tanzania, It is expected to contribute significantly to GDP growth in the coming years. The government has set a target of increasing the contribution of the ICT sector to GDP from 3% to 10% by 2025. This is expected to be achieved through many initiatives, such as the rollout of broadband infrastructure, the development of digital skills, and the promotion of e-commerce.
Role of the Private Sector in National Economic Development
Job Creation as a Driver of Economic Growth: The private sector is crucial to job creation in Tanzania. In 2020, the private sector accounted for more than 60% of all formal employment in the country. The transformation is creating new opportunities for job creation in the private sector. For example, the growth of the e-commerce sector is creating demand for new skills in areas such as web development, digital marketing, and logistics.
In addition to creating new jobs, it is also helping to improve the quality of existing jobs. For example, digital technologies can help make jobs safer, more efficient, and more rewarding.
Attracting Foreign Investment through Digital Innovation: Digital innovation can help to attract foreign investment to Tanzania. Foreign investors are increasingly looking for countries that are embracing digital technologies. Digital technologies can help businesses reduce costs, improve efficiency, and reach new markets.
Tanzania is well-positioned to attract foreign investment in the digital economy. The country has a growing young population, a stable macroeconomic environment, and a government committed to promoting.
The benefits are felt in several areas, including productivity, GDP growth, job creation, and foreign investment. The Tanzanian private sector is playing a leading role in driving digital transformation. The Tanzanian economy is expected to grow and prosper as the private sector embraces digital technologies.
Also read: Leveraging Digital Transformation for Economic Growth.
