Artificial Intelligence For Economic Policymaking – The Next Frontier

As African governments explore new frontiers in fiscal and monetary policymaking, artificial intelligence (AI) is poised to play an increasingly important role. AI has already become a ubiquitous presence in daily lives, with applications in commerce, education, health, public service delivery, communications, governance, agriculture, and manufacturing.

In the developing world, AI is making significant contributions towards achieving the Sustainable Development Goals (SDGs) and is deployed to target humanitarian relief and address the impacts of climate change. However, numerous challenges and hurdles remain. In many African countries, comprehensive policy frameworks to incentivize responsible AI, regulate AI-driven business models, and promote the creation and capture of high-quality data are lacking. Few countries have holistic strategies for innovation and digital transformation that include a focus on AI.

With support from the Artificial Intelligence for Development in Africa (AI4D Africa) program, ACET recently published a report exploring the potential for African governments to use AI solutions to inform fiscal and monetary policy. The report found that while opportunities exist, there is an urgent need to build knowledge, capacity, understanding, and trust. This is unsurprising, as AI for economic policymaking is still a frontier agenda, even in the global North.

The ACET report reinforced the idea that technical experts are the most interested in AI solutions, as they understand the benefits from a theoretical or methodological perspective. However, it is also important for politicians to understand AI’s potential positive and negative impacts in this context. Currently, there is a lack of digital leadership in AI for policymaking.

Technical issues such as data usability and access are primary challenges in utilizing big data sources. The report found that the usability of existing data is often hindered by being outdated, poorly collated, and kept in formats prohibiting rapid and low-cost use. Addressing these challenges may require political will or massive institutional change across many parts of government.

Data access is another challenge. Most stakeholders believe that government data will only be a small part of AI solutions for economic policymaking. The private sector will likely create new data, such as telephony, geo-located data, wearables, customer data, financial data, social media data, synthetic data, and more. Synthetic data generated from mathematical or machine learning models has significant potential as it relies less on data directly linked to individual citizens.

Existing large datasets owned by the private sector will also be necessary to use AI in financial and monetary policy effectively. Accessing this data will require trust between the government and the private sector, as well as policies that provide legal access to data with appropriate legal guardrails.

Stakeholders surveyed for the report emphasized the need for well-informed policies in all African countries. Such action is not only crucial for creating AI solutions in economic policymaking but also for fostering a thriving digital economy with successful start-ups and new technologies to tackle development challenges.

Ultimately, Africans must own Africa’s data. This requires legislation, particularly relating to global technology firms. The report recommends developing an ecosystem to support AI solutions and fostering dialogue between governments, the private sector, academia, and think tanks on data and economic policy.

The future of fiscal and monetary policy will be informed by artificial intelligence. African policymakers must start preparing now to seize this opportunity.

Original Source: ACET