AI’s Growth Potential in Africa Hinges on Electricity, Connectivity and Skills, IMF Says

Artificial intelligence could increase Sub-Saharan Africa’s economic output by about four percent over the next decade, but only if governments make substantial investments in electricity, internet connectivity and digital skills, the International Monetary Fund said in a report released Tuesday.

Without those reforms, the region would capture only marginal gains from the AI revolution, with productivity increasing by as little as 0.2 percent, according to experts at the Fund.

As governments and companies around the world invest heavily in data centers, energy systems and digital infrastructure to capitalize on AI, Sub-Saharan Africa remains one of the least prepared regions for widespread adoption of the technology. According to the IMF, the region trails every part of the world except South Asia in AI readiness.

The IMF’s AI Preparedness Index attributes the gap to weak digital infrastructure, shortages of technical skills and limited regulatory capacity, factors that constrain both AI adoption and countries’ ability to manage labor market disruptions.

“For Sub-Saharan Africa, the central concern is not the risk of technological disruption, but whether countries will be able to adopt, adapt and scale AI quickly enough to capture its benefits and avoid falling further behind,” reads the report.

Reliable electricity remains one of the biggest obstacles. About half of the region’s population lacks dependable access to power, the IMF said, recommending targeted investments in national grids and mini-grids serving schools, health facilities and other public institutions to create local digital hubs.

Internet access is another major constraint. Only 38 percent of Africans were using the internet in 2024, compared with a global average of 68 percent. Expanding fiber-optic backbone networks and open-access broadband infrastructure would help lower costs and improve connectivity, the report said.

The region also faces a shortage of computing infrastructure. Africa hosts only about 160 data centers, roughly 5.5 percent of the global total, with nearly half concentrated in South Africa, Nigeria and Kenya. That concentration risks widening inequalities between countries as AI investment accelerates, according to the IMF.

Sub-Saharan Africa, including East Africa, ranks at the bottom of the IMF’s AI Preparedness Index, scoring particularly poorly in digital infrastructure, human capital and regulatory capacity. The report says those weaknesses could be overcome through sustained investment and policy reforms, allowing the region to realize significant economic gains from AI.

Within East Africa, Kenya and Rwanda lead the region in AI readiness. Kenya has benefited from a strong private technology sector, while Rwanda has advanced through coordinated government policies and digital reforms.

Ethiopia ranks among the lower-performing countries on the IMF’s index, placing within the low-income country group, which has an average score of 0.32. The country lags in AI adoption, specialized skills and computing capacity, although it has expanded its telecommunications network, with 3G coverage reaching 98.7 percent of the population and 4G available to about 74 percent, providing a foundation for broader deployment of AI-enabled services.

The IMF said that strengthening digital infrastructure, expanding access to reliable electricity and investing in technical education will be critical if countries across the region are to share in the economic benefits of artificial intelligence rather than fall further behind more advanced economies.