Artificial intelligence, AI, could increase Sub-Saharan Africa’s economic output by about 4% over the next decade if governments improve electricity supply, internet access and digital skills, according to a new International Monetary Fund paper.
The IMF warned that the region risks missing out on the global AI-driven economic boom if these structural challenges remain unresolved. Without targeted reforms and investment, many countries in Sub-Saharan Africa could record productivity and economic growth gains of just 0.2% over the next decade, a figure the Fund described as negligible.
As governments and businesses around the world race to harness AI’s economic potential, investment in data centres, energy infrastructure and digital networks has accelerated.
However, Sub-Saharan Africa, which ranks lowest on the IMF’s AI Preparedness Index, is expected to capture only a small share of AI’s benefits unless long-standing infrastructure bottlenecks are addressed.
“Policy changes will be key to whether further growth can be unlocked from AI,” said Martin Schindler, Deputy Division Chief and Mission Chief in the IMF’s African Department and lead author of the report.
“Without decisive action, many countries in the region would see productivity and growth gains of only about 0.2% over the next decade and frankly, that’s a rounding error,” Schindler said.
The report noted that Sub-Saharan Africa remains on the margins of the global AI revolution, recording one of the lowest AI adoption rates worldwide, ahead of only South Asia.
According to the IMF, the region’s poor performance on its AI Preparedness Index is driven by inadequate digital infrastructure, limited technical expertise and weak regulatory frameworks, all of which hinder AI adoption and reduce resilience to labour market disruptions.
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“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,” the report stated.
The IMF identified unreliable electricity as one of the biggest barriers to AI development, noting that around half of the region’s population still lacks dependable access to power.
It recommended targeted investments in national grids and mini-grid systems around schools, healthcare facilities and other public institutions to create local digital hubs capable of supporting AI innovation.
“It’s hard to have anything without electricity,” said Andrew Tiffin, a co-author of the report, adding that growing demand for AI infrastructure could also make data centres commercially viable projects capable of accelerating electrification across the continent.
Internet connectivity remains another major obstacle. Only 38% of Africans had internet access in 2024, compared with a global average of 68%, the report said. It recommended greater investment in fibre-optic backbone infrastructure and open-access networks to reduce costs and expand connectivity.
Despite these challenges, private-sector investment in Africa’s AI ecosystem is beginning to grow. Microsoft and G42 have announced plans to build a $1 billion, 100-megawatt geothermal-powered data centre campus in Kenya, while Cassava Technologies and NVIDIA have signed a $700 million agreement to deploy 12,000 graphics processing units across South Africa, Nigeria, Kenya, Egypt and Morocco.
The report also highlighted the uneven distribution of AI infrastructure across the continent. Africa currently hosts about 160 data centres, representing roughly 5.5% of the global total, with nearly half located in South Africa, Nigeria and Kenya.
The IMF warned that unless investment is spread more evenly, the rapid expansion of AI infrastructure could deepen existing regional inequalities rather than narrow the continent’s digital divide.
Reuters
