The Growth Effect of Disruptive Technology in Ethiopia: With a Case Study of Digitalization in the Financial Sector
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Date
2022
Authors
Grzybowski, Lukasz
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
Focusing on digitalization as a major disruptive technology in Ethiopia, this study
found that digitalization is at a very low level of development in Ethiopia, by regional
standard. Yet, a 10% rate of digital penetration (digitalization) is found to increate GDP
growth by 0.5%―this being as high as 0.8% in the service sector. Digitalization in the
financial sector is growing very fast, but is still the lowest by regional standard. Major
challenges for this are found to be the stifling regulatory environment from the central
bank, the telecommunication infrastructure (though significantly improved lately) and
the low level of digital literacy both at national level and within the financial sector.
Low investment from the board of directors of banks so as to pay high dividend, failure
of executives to take risk to creatively use the IT capacity in the country, the difficult of
measuring the impact of digitalization for use in board and executive decision-making,
and coordination failure in collectively acquiring some digital technologies from
global vendors at national level are some of the challenges identified in the sector.
Based on these findings, the study derived various policy implications that include:
strengthening the regulator body and improving its working modality; acquisition of
some digital technology at national level; and improving the digital infrastructure,
cost and reliability; among others.