IMF says AI could add 4% to Sub-Saharan Africa’s economy if power and internet improve

AI could lift Sub-Saharan Africa’s economy by about 4 percent over the next decade, according to an IMF paper published on Tuesday, but only if governments fix electricity, internet access, and digital skills first.

The IMF believes that without these reforms, any gains from an AI boom will shrink to almost nothing.

A 4% upside or basically nothing

Countries that upgrade infrastructure and train workers in AI-related skills stand to gain about 4 percent in economic output increase over ten years. Countries that do not could see gains of just 0.2 percent across the same period.

“Frankly, that’s a rounding error,” said Andrew Tiffin, a co-author of the report. Lead author Martin Schindler, a Deputy Division Chief and Mission Chief in the IMF’s African Department, placed the choice on policymakers. “Policy changes will be key to whether further growth can be unlocked from AI,” he said.

The IMF explains that the risk is different in this geographical region than in richer economies. The worry for Sub-Saharan Africa is not that AI displaces workers, the paper argues, but that the region cannot adopt and scale the technology fast enough to keep pace. Its AI adoption rate is among the lowest globally, ahead of only South Asia.

IMF says power comes first

Reliable electricity remains the biggest constraint. About half the region’s population lacks any sort of dependable supply, and the report ties any AI progress directly to fixing the power issues.

“It’s hard to have anything without electricity,” Tiffin said.

In the paper, the IMF posits that targeted grid and mini-grid developments built around schools, clinics, and other public facilities, could double as local digital hubs. Tiffin also said that data centers themselves can become projects that bring new capacity onto the grid, turning the need for AI into an argument for power development.

The second most important bottleneck is connectivity to the internet. According to the published paper, only 38 percent of Africans were online in 2024, compared to a global rate of 68 percent. The IMF points to investment in fiber infrastructure and open-access networks as a way to cut costs and widen internet access.

Private companies making moves on the continent

Microsoft and G42 have already announced a $1 billion, 100-megawatt data center campus in Kenya powered by geothermal energy, the Arab Weekly reported. Cassava Technologies and NVIDIA have signed a $700 million deal to install 12,000 GPUs across South Africa, Nigeria, Kenya, Egypt, and Morocco.

This proposed capital is concentrated, and the IMF sees this as a risk. Africa is host to around 160 data centers, equal to about 5.5 percent of the global total, with almost half sitting in just three countries: South Africa, Nigeria, and Kenya.

The report warns that AI investment remaining clustered in only a few countries could widen the gaps between African economies rather than pull them closer.