Propelling economic growth post-COVID-19: Increase investments in AI - IMF MD advocates
The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has called for increased investments in artificial intelligence (AI) technology to propel economic growth, especially after the devastation left behind in the wake of COVID-19.
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She said the IMF was concerned that growth after the pandemic might continue to be below the annual average which could affect efforts to improve the living standards of people.
Before COVID-19, the global economy was growing at an average of 3.8 per cent of gross domestic product (GDP) annually but after the pandemic, the global economy has been growing at an average rate of three per cent.
She said the global environment, therefore, needed something that would inject some dynamism into the world economy and that was where AI came in handy.
Ms Georgieva, who is on a three-day visit to Ghana, was speaking at an AI Summit which was held on the theme: “AI as a catalyst to transform economies in Sub-Saharan Africa.
It was jointly organised by the IMF and the Ministry of Finance in Accra yesterday.
Aside from Ms Georgieva, other speakers were the Minister of Communications and Digitalisation, Ursula Owusu-Ekuful; the President of Ashesi University, Patrick Awuah, and the Head of Google Research, Jason Hickey.
The IMF Managing Director said: “When we think of what can lift up productivity, by far our best chance is in investment in the green transition and in the adoption of AI”.
“We can see about three to five per cent productivity gain if we go forward with AI effectively.
We desperately need something that could inject some dynamism in the world economy,” she added.
Context
Data suggests that AI could increase global GDP by up to 14 per cent by 2030, with Sub-Saharan Africa poised to benefit significantly.
A report by the IMF has also highlighted that AI offers a myriad of opportunities for Sub-Saharan Africa, including improving agricultural productivity through precision farming, enhancing healthcare delivery through AI-driven diagnostics, boosting financial inclusion via fintech solutions and transforming educational outcomes through personalised learning experiences.
Risks of AI
Ms Georgieva, however, noted that in spite of the urgent need to embrace AI, it came with its own risks that had to be addressed as well.
According to a recent IMF research on the impact of AI on the labour markets, about 60 per cent of jobs would be affected in advanced countries, 40 per cent in emerging markets and developing economies, and 26 per cent of jobs in low-income countries.
The IMF Managing Director said countries must, therefore, put in place measures that would enable them to take advantage of the benefits, while managing the risks.
“We have to think of how we can make the best out of it to prevent AI from being a source of inequalities instead of a source of good,” Ms Georgieva stated.
Critical areas
For countries to effectively take advantage of AI, she said the IMF had identified four critical areas which needed immediate attention.
The areas are investment in digital infrastructure, investment in human capital, innovation, and effective regulations and ethics.
“Without digital infrastructure, it will be difficult to adopt AI and when you look at countries that have strong dynamic agile labour markets, they are better prepared”.
“We also have to look at innovation and how it fits into entrepreneurship.
You can have research in development but not feed into the dynamism of the economy,” the Managing Director of IMF said.
Digital infrastructure
The Minister of Communications and Digitalisation said the government had been preparing for the adoption of AI in the last seven years.
Mrs Owusu-Ekuful said digital infrastructure had been on the government’s agenda and with the help of development partners, particularly the World Bank, a lot had been done in that regard for the smooth take-off of the digital economy.
“It was important that we put in place our national ID system, proper addressing system, digital financial services, among others.
“All these systems would have to work right on the infrastructure underpinning all of that which is connectivity, and we have worked with the private sector to extend the network of fibre infrastructure,” the minister stated.
Mrs Owusu-Ekuful said the current internet challenges also presented an opportunity for the government and the private sector to invest more in connectivity.
Fourth industrial revolution
In his welcome address, the Minister of Finance, Dr Mohammed Amin Adam, said as an offshoot of the fourth industrial revolution, AI was leading to fundamental changes in the way people lived, worked and related to one another.
He said the current internet challenges which had affected economic activities in 13 countries was a reflection of how technology was impacting lives.
Commenting on the contribution of technology to the economy, Dr Adam said the information and communications technology (ICT) sector's contribution to GDP had increased from GH¢4.4 billion in 2016 to GH¢21 billion in 2022, approximately four per cent of GDP.
He also stated that AI was projected to contribute up to $15.7 trillion to the global economy by 2030, of which $1.2 trillion could be generated in Africa, thereby making AI one of the biggest economic opportunities available to the continent.
“We are truly in an era where new innovations will continue to surprise.
This presents us with opportunities to not only address longstanding challenges but also unlock new avenues for progress, the likes of which our forefathers could never have imagined,” the Finance Minister stated.
