Sub-Saharan Africa faces 4% AI growth dividend if power and grid gaps close
A new IMF paper warns that Sub-Saharan Africa could add 4% to its economy over the next decade through artificial intelligence, but only if governments and private investors urgently overcome critical power and digital infrastructure deficits.
Sub-Saharan Africa stands to gain a 4% boost to its gross domestic product over the next decade from artificial intelligence, but capturing that dividend requires an urgent overhaul of the region's power and digital infrastructure, according to a paper released on Tuesday by the International Monetary Fund.
Without immediate policy intervention to address electricity access, internet connectivity, and workforce skills, the IMF forecasts that the region's AI-driven economic gains could be negligible. “Policy changes will be key to whether further growth can be unlocked from AI,” said Martin Schindler, a deputy division chief in the IMF’s African Department and the paper's lead author. Mr. Schindler warned that under a low-action scenario, productivity and growth gains over the next ten years could be as low as 0.2%. “Frankly, that’s a rounding error,” he said.
The IMF's analysis highlights a significant divergence in how emerging markets will experience the next technological cycle. Sub-Saharan Africa currently ranks at the bottom of the IMF’s AI Preparedness Index, trailing every region globally except South Asia. The paper notes the central economic risk for the continent is not labor displacement, but the speed of adoption. “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.
Infrastructure Bottlenecks
The physical constraints on AI adoption are steep. Around half of the region's population lacks reliable power, severely limiting the ability to run computation-heavy applications. Co-author Andrew Tiffin identified electricity as the foundational barrier to deployment. “It’s hard to have anything without electricity,” he noted. However, the report highlights that the AI boom itself could help finance a solution, noting that data centres can become bankable investment projects that accelerate broader electrification efforts.
Internet penetration remains another major hurdle, with only 38% of Africans using the internet in 2024 compared to a global average of 68%. The IMF recommended targeted investments in fiber backbones and open-access networks to expand this footprint. Furthermore, investment opportunities in physical hosting are heavily concentrated. Africa hosts roughly 160 data centres, accounting for just 5.5% of the global total. Nearly half of those facilities are clustered in South Africa, Nigeria, and Kenya, raising the risk that AI capital will bypass the rest of the continent and widen regional inequalities.
Pushing these structural reforms will test a region already facing mounting fiscal constraints. The IMF's latest regional outlook projects that the median fiscal deficit across Sub-Saharan Africa will widen to 3.2% of GDP in 2026. With government balance sheets under pressure, public-private partnerships and targeted foreign direct investment will likely be required to build the local grids and digital hubs necessary to integrate the continent into the global AI economy.
