After COVID-19 outbreak, the African Union in collaboration with UNDP and AfriLabs worked together to implement the first African business simulation that seeks to help Micro/Small/Medium Enterprises MSMEs to overcome the current COVID-19 challenges and the lockdown. More than 400 participants and 10 different partners have been involved in building and participating in the simulation in 2020 from 5 different countries: Cameroon, Egypt, Sudan Senegal, and Zimbabwe.
Policy Pathways
A roadmap for the promotion of innovation in driving a thriving entrepreneurship ecosystem in Africa.
Contributors:
Serge Ntamack - Policy Advisor Brian Dzansi Dzidefo - Policy Associate
August 2022
About AfriLabs
Founded in 2011, with a mission to support innovation hubs and their communities to raise high potential entrepreneurs that will stimulate economic growth and social development in Africa, AfriLabs has become the largest and most diverse community of technology hubs, innovators, and entrepreneurs in Africa. It has an ever-increasing coverage and membership of over 350 technology and innovation hubs across 52 African countries and the diaspora, and with its broader community of over 1 million entrepreneurs, developers, innovators and startups, it works in an integrated manner to build a thriving innovation economy in Africa. AfriLabs has successfully impacted and served multiple stakeholders and clients by providing a wide range of services such as capacity building, research, networking, programme execution and funding, among others.
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AfriLabs network
Members across Africa
Morocco 07
Algeria 03
Niger 03
Tunisia 06
Gambia 05
Libya 01
Cape Verde 02
Senegal 05
Egypt 07
Guinea Bissau 01
Guinea 03
Chad 04
Mauritania 01
Sudan 03
Mali
08
South Sudan 03
Sierra Leone 03
Bukina Faso 06
Djibouti 01
Ethiopia 05
Liberia 02
Burundi 02
Cote d’iviore 06
Rwanda 05
Somaliland 03
Ghana 38
Togo 02
Nigeria 89
Somali 04
Benin 04
Kenya 32
Central African Republic 01
Uganda 15
Sao Tome e Principe 01
Tanzania 13
Cameroon 24
Gabon 03
DR Congo 09
Malawi 03
Angola 01
Mauritius 04
Equatorial Guinea 01
Comoros 01
Congo-Brazzaville 02
Namibia 01
Madagascar 03
Zambia 05
Zimbabwe 08
Mozambique 03
Botswana 03
South Africa 15
Lesotho 01
Keys:
Diaspora
1-5 hubs 6-13 hubs 14-20 hubs Over 20 hubs
France 02
USA 01
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TABLE OF CONTENTS
FOREWORD
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EXECUTIVE SUMMARY
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INTRODUCTION
09
TEN POLICY PATHWAYS
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ADVOCACY STRATEGY
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CONCLUSION
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1 Foreword
Technology, innovation and entrepreneurship for Africa’s economic transformation
Africa is leapfrogging traditional development pathways using technology. Digital financial technologies driven by mobile money innovations, for example, have accelerated financial inclusion beyond what traditional banks could offer a few decades ago. Indeed, the 2016 study by Tavneet Suri and William Jack showed that increased access to mobile money has reduced poverty in Kenya, particularly among female-headed households. The rapid expansion of mobile money, the report says, has lifted an estimated 2% of Kenyan households (some 194,000 individuals) out of extreme poverty. It has also enabled 185,000 women to transition from subsistence farming into business. It is a similar situation across Africa, where innovation is creating new job opportunities among the youth as they develop solutions in the health, financial, and education sectors. Yet even with these benefits, innovators in the continent still face several structural and operational challenges in building and scaling their ventures, including cumbersome regulations, insufficient digital talent, limited funding, and fragmented markets.
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But we are now at a change-point, where policymakers and other technology industry stakeholders must consider the opportunity cost of an uncertain and incoherent environment. To bridge the gap, over the last decade, AfriLabs has worked as a convenor of dialogue amongst all the relevant stakeholders in the African Innovation and technology ecosystem (startups, corporates, government agencies, academia, donor agencies, and investor groups). This has been implemented through interventions that empower innovation hubs and support entrepreneurs, in addition to collaboration with pan-African institutions and national governments in the development of appropriate innovation policies, startup bills, digital rights, and capacity-building programmes. To sustain our policy advocacy work, we have, in this report, identified 10 policy priorities that we believe will offer an opportunity for multiple stakeholders to create the desired business environment for innovators and startups. The report builds on our AfriLabs next Ten-Year Strategy, previous projects and advocacy initiatives targeting hubs, startups, Small, Medium, and Micro Enterprises (SMMEs), which are the engine of growth for most African countries. The report also elaborates the core principles that will henceforth guide our co-creation approach to policy and regulatory framework design. In each pathway, we rely upon our community and partners to provide context, identify salient issues, and policy alternatives. We believe that the Africa we want, as outlined in the African Union (AU)'s Agenda 2063, is within reach if we co-create a supportive ecosystem for innovators, entrepreneurs, and innovation hubs to thrive.
Anna Ekeledo, Executive Director
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2 Executive Summary Driving innovation through a supportive policy environment
Africa is witnessing an explosion in its technology enterprises. Home to more than half the world's mobile-money users, the continent is pioneering opportunities for commercial innovation. Indeed, in 2021, African tech grew faster than any other region, with investments more than tripling in one year, reaching $5.2 billion. As we now enter a period of rapid take-off, increased activity in the policy and funding aspects must be stepped up for a sustained impact of innovation in the economic performance of the continent. Policymakers in some countries already appear to have taken cue and are now stepping up legislation to improve the business environment for innovators. More of these actions are required following the establishment of the African Continental Free Trade Area (AfCFTA), which makes the continent home to the world's largest free-trade area, with the power to boost its income by $450 billion by 2035 (a 7 per cent gain). A good portion of this additional income will come from innovations supporting sectors like manufacturing and agriculture and trade. Meanwhile, several African countries are deploying "Start-up Acts", an incentive framework to spur private sector investments, reduce regulatory burden, and promote entrepreneurship. But more needs to be done to address the numerous challenges that innovators and entrepreneurs on the continent face. An ambitious and comprehensive effort across multiple policy areas is especially required to ensure that innovation in Africa yields tangible results. Our 10 policy pathways thus summarise the priorities for entrepreneurs, startups, innovators, and hubs across Africa, which require urgent attention by policymakers, donors, investors and innovation partners.
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The policy pathways fall into four broad priority categories:
• Promotion of digital skills for inclusion and employment: A massive push in broad digital skills education increases the user-base and market for digital solutions in Africa. Building advanced digital skills increases the employability of young people on the continent in the global digital jobs market. • Incentivisation for startups and SMMEs: Constructing conditional frameworks to spur innovation and entrepreneurship. These include: improving the ease of creating startups, support grants, procurement preferences, incentive funds for private investors, tax-free operations for the early years, and incentives for Research & Development (R&D). • Preservation of digital rights and access to digital infrastructure: Advocacy for policies aimed at bridging the digital divide, limiting the disruption to online services, and promoting the right to information to address issues such as internet shutdowns, bans on some digital platforms, and arrests of online activists. This pathway also includes the development of infrastructure for digital identity and broader access to online and mobile services. • Development of harmonised common frameworks: Promoting easy access to regional markets through legislation and policy harmonisation. This includes negotiation of the AfCFTA, concerted actions on data governance, and consolidation of sector-specific regulations - including adopting regulatory sandboxes - to support international market access.
3 Introduction
A cause for innovation and entrepreneurship
Africa has the youngest population in the world, with about 60% of its population being under the age of 25. The youthful population presents both an opportunity and a threat to the continent, because at the current incremental pace of economic and social advancement, several young people will miss out on the opportunity to live up to their potential. The high illiteracy rate among young people, under and unemployment rates, and lack of patient capital for youth-led entrepreneurial ventures are notable barriers that continue to limit the realisation of the full potential of young people across Africa. The failure to shatter these barriers means that youth joblessness will persist into 2050 when the continent’s population will have doubled, leading to worsened poverty, hunger and insecurity. Technology, innovation and entrepreneurship present an opportunity to disrupt this trajectory by unlocking new pathways through digital innovations for rapid economic growth, education, job creation and access to services that would have been unimaginable only a decade ago. A recent joint report by Google and the International Finance Corporation (IFC) estimates the potential of Africa's internet economy to contribute up to $180 billion to the continent's GDP by 2025 and $712 billion by 2050 .
An enabling environment is, therefore, now imperative to promote and grow entrepreneurship, technology, and innovations across Africa.
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A time for expanded policy advocacy
A few countries – such as Tunisia and Senegal - have taken the lead in enacting innovation and startup acts to provide broad incentives for digital innovators, and remove the regulatory barriers in their path. The co-creation approach with local ecosystem players in designing these policies, is commendable. However, some African governments still view the rapid growth in the digital ecosystem as a threat. Internet shutdowns, over-regulation of content on social media platforms, and taxation are common attacks on internet freedom across Africa, which, if left to persist, will negate the benefits brought about by technological innovation. To ensure a balanced and inclusive digital ecosystem for entrepreneurs and innovators to thrive, AfriLabs seeks to play a leadership role in influencing policies and strategies at the national and pan-African levels. We believe now is the best time for multi-stakeholder engagements on digital sovereignty, preparing the youth for the fourth industrial revolution, and promoting the adoption of innovation.
Ten Policy Pathways 4
Promote digital Skills for inclusion & employment. 01
Commit to AfCFTA and open intra-Africa digital trade. 06
Encourage entrepreneurship and startups through legislation. 02
Preserve Digital Rights and Access to Digital infrastructure. 07
Create an enabling environment to attract investments. 03
Promote innovative uses of data. 08
10 POLICY PATHWAYS
Adopt pro-innovation tax policies. 04
Build R&D capacity and protect IP. 09
Enable an inclusive digital payments ecosystem. 05
Simplify Public procurement for innovation 10
The Policy pathway will guide the collaboration between AfriLabs, Africa's leaders, policymakers, and other stakeholders in transforming the continent through entrepreneurship, innovation and digital technologies.
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1
Promote Digital skills for inclusion and employment
The COVID-19 pandemic caused medical, economic, and social devastation across Africa. Yet it also accelerated the growth of local innovation, and the rise of digital solutions for many of the continent’s problems. Digital technologies, for example, enabled the continuation of work and education during lockdowns and other periods of restricted movement. On the other hand, the pandemic exposed the digital divide across countries, where millions of citizens lack access to the online opportunities that are driving digital economic growth elsewhere. Internet penetration is still low and unaffordable in most African countries, with the limited access to digital devices, and a pervasive digital skills gap largely contributing to exacerbating digital inequality. The digital skills gap is especially prominent as it encompasses a lack of the proficiencies needed for effective participation in the digital economy. This is worrisome because modern jobs require increasing interaction with technology, and as many traditional businesses shift online, digital skill will become mandatory for sustainable economic participation. According to the International Finance Corporation (IFC) study published in 2019, at least 230 million jobs across Africa will require some digital skills by 2030, representing about 650 million training opportunities and an estimated $130 billion market.
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Such data reveals the urgency for governments to address the growing skill divide by promoting digital literacy training at all education and workforce levels. This training should focus on the acquisition of technical skills (e.g. data and web management, but also target other skills such as creativity, critical thinking, flexibility, and communication, all of which are in high demand. It goes without saying that widening the pool of digitally-literate people would increase the market size and adoption of digital solutions by African entrepreneurs. And as governments work on skill-building, it is imperative that they also address critical policy issues related to gender disparity, the high cost of internet, low access to digital devices, labour market access, and opportunities for diaspora skills repatriation. In this regard, it would be helpful to leverage public-private partnerships in planning apprenticeship programs, workplace training and entrepreneurial skill development. For a rapid take-off, AfriLabs can create the content needed to guide policy development, and the establishment of multi-stakeholder partnerships for knowledge sharing on digital skill transfer. AfriLabs presently develops locally-relevant content and platforms for digital skill training through its Capacity-Building Program (ACBP). Now in its third year, the program identifies the needs of hubs and entrepreneurs, and links them to the requisite skill development content, as well as peer expertise and training.
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Encourage entrepreneurship and startup growth through supportive legislation
African entrepreneurs endure unfavourable policy and regulatory environments, which make it difficult to set up, grow and expand innovative ventures.
However, countries such as Tunisia and Senegal are beginning to see the importance of promoting local enterprise, and are establishing the necessary policy frameworks for boosting innovation. The two countries pioneered startup acts in Africa. Côte d'Ivoire, Kenya, Nigeria, Rwanda, South Africa, and Uganda have followed suit and are now preparing the legislation needed to advance startup growth, while borrowing from Tunisia’s and Senegal’s success. Overall, the advancement of supportive legislations contributes to the development of an enabling policy environment for startups, even as it provides an opportunity for dialogue and engagement between the private and public sector players. Concertation between these two groups of stakeholders has been found to be instrumental in achieving broad buy-in.
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Startups acts typically cover far-reaching policies aimed at creating a conducive environment for technology-enabled businesses through support for startup creation, provision of incentives for investors, and promoting an easy operating environment for businesses. This is achieved through such incentives as tax breaks, intellectual property support, streamlined registration processes, business support (training, legal, accounting), financial aid, R&D incentives. It is recommended that governments consider tapping into the dynamic African diaspora by including innovative provisions in their startup acts to support diaspora repatriation through technical assistance programs that encourage immigrants to bring their ventures to the continent. Meanwhile, AfriLabs supports the startup act effort, and will leverage data and best practices to advise governments and other players in the innovation ecosystem, including national hub associations, on issues related to the development of ideal legislations.
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Create an enabling environment to attract investment
In the last one decade, there has been a significant investment inflow into the tech startup ecosystem across Africa in the last decade. According to the Partech annual African Tech Venture Capital Report, investment into the African tech startup ecosystem in 2021 surpassed US$5 billion, more than three times the amount invested in 2020. In addition, 681 equity rounds were raised by 640 start-ups, a 92% YoY growth compared to the 359 rounds raised by 347 start-ups in 2020. Nigeria, Egypt, South Africa and Kenya remain recipients of the largest share of the total funding. Despite the growth in funding, access to capital remains the biggest challenge for early-stage startups, according to surveys conducted across the continent. Other blockades include limited investments from within Africa, and narrow exit opportunities - very few African startups have exited. Jumia is the primary example of an exit through an initial public offering (IPO). For a turnaround, it is critical to develop investor-friendly policies that incentivize and attract different types of financing to close the existing funding gaps. Innovative investment vehicles at the early, pre-seed and seed stages, including state-administered innovation funds are also important in mobilising commitment from the private sector and donor communities. The Rwanda Innovation Fund is a prominent example of successful initiatives by governments to support local innovation.
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On the private sector front, angel investors that channel financing from various high net worth Africans into tech startups (generally at pre-seed, seed and early growth stages) are needed to drive change. To draw in these private investors, governments should formulate regulations that guide, enable and grow angel investing. For evidence-building, AfriLabs will draw from its experience with the Catalytic Africa program and investor networks across Africa to garner first-hand insight into sector-specific patterns of investments and the participation of Africans (locals and the diaspora) in asset control. This will shape our short-to-medium term advocacy on the necessary policy levers to attract increased funding from domestic investors and more reinvestment returning to the ecosystem.
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Adopt pro-innovation tax policies
The digital boom in Africa has made digital services an attractive and easy source of tax revenue for governments. Many African countries are considering new ways of taxing the fast-growing digital economy to compensate for the revenue dip. South Africa, Kenya, Uganda, Nigeria, Cameroon, Algeria, and Zimbabwe have, for example, introduced digital or mobile services tax. But such aggressive tax regimes may end up discouraging innovation. Uganda implemented an "over-the-top" (OTT) services tax that required consumers to pay a daily tax of UGX200 ($0.055) to use any of more than 50 OTT mobile communi- cation apps. By 2019, the imposition of the digital tax resulted in a decline in the number of internet users, unmet revenue targets and social unrest in Uganda. Kenya also enacted a 1.5% tax on all digital services, regardless of the company’s location, and there are plans to double it in coming months. This may in the long run lead to the winding down or exiting of both local and foreign startups contributing to an unintended fiscal revenue shortfall. Meanwhile, in Cameroon, the International Monetary Fund estimates that the 0.2% mobile money tax that became effective in January 2022 may be counterproductive and hamper financial inclusion.
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And although most of the current digital service taxes are aimed at large mobile or Internet companies, startups are likely to see higher charges for the platform services they depend on, thereby hindering their expansion and general growth of the local ecosystem.
It is, therefore, imperative that governments rationalise taxation and resist the opportunity to view the innovation ecosystem as an easy source of revenue.
AfriLabs will continue to work with industry stakeholders and other partners to protect startups from excessive taxation, which may stall the progress made by African countries in digitalisation.
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Enable an inclusive fintech ecosystem
Digital financial technologies (FinTechs) accelerate financial inclusion for many Africans with limited access to traditional financial services such as loans, insurance, wealth management and investment. It is, therefore, unsurprising to see the recent exponential growth of FinTech startups, and fintech support programs by enterprise support organisations, acquisitions, and users. According to market insights firm Briter Bridges, FinTechs raised nearly $3 billion, amounting to two-thirds of the investment raised by startups across the continent in 2021. In addition, five out of the seven unicorns in Africa are FinTech. Yet despite the investment boom in FinTech, cross border financial payment and other financial services are still a challenge, mainly due to regulatory bottlenecks. Central banks across Africa face the challenge of designing balanced regulatory frameworks that promote the growth of FinTechs. Hardline regulations have the potential to stifle innovation, while on the other hand, loose policies expose consumers to many risks. Indeed, FinTech brings about many concerns around new risks related to money laundering and the financing of terrorism. This necessitates the implementation of licensing and market entry controls by governments, as well as requirements to institute preventive measures by startups — including customer due diligence, transaction monitoring, record keeping, and obligations to report suspicious transactions.
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Other fintech regulatory issues touch on broader telecommunications infrastructure for affordable internet access and interoperability to reach a critical mass of customers across multiple countries. With the speed of technology adoption often faster than the development of regulation – as was the the case of the rapid growth of mobile payments - governments should look into enabling the piloting of new technologies through regulatory sandboxes that promote the testing of products and services under supervision in controlled environments. Regulatory sandboxes foster the development of technologies that may raise public policy concerns and promote cooperation between regulators and innovators. Some countries like Kenya and Ghana have established frameworks that are great examples of sandbox programmes to be emulated by other African regulators. To address infrastructural challenges, policymakers in the region must mobilise the financing needed to invest in electricity generation, transmission and distribution; critical internet connections, and the hardware and software systems needed to provide internet services such as fibre optic links. AfriLabs will leverage insights from its network, partners and fintech startups across the continent to influence policymakers to implement the appropriate consumer- and data-protection rules to ensure consumer trust. This is especially important as the FinTech sector is continually innovating bringing about new solutions, such as digital micro-lending, many of which are partially or not yet regulated. Moreover, AfriLabs could work as a convener or part of a consortium to stimulate the adoption by FinTech providers of a voluntary set of principles that ensure customers’ trust and protection. In relation, AfriLabs supports the AFCFTA recently launched Pan-African Payment and Settlement System that offers interoperability of continent-wide payments systems as a first step to improving cross-border digital financial services
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Commit to the African Continental Free Trade Afrea (AfCFTA) and open digital trade
The AfCFTA, the world's largest free trade area, came into effect on January 1, 2021, as a significant milestone in fully implementing Africa’s free trade agreeement. The AfCFTA eliminates tariffs on 90% of goods produced in Africa, and has the potential to transform the continent with its potential market of 1.2 billion people and combined GDP of around $3 trillion across the member states of the AU. The AfCFTA is a positive step for the innovation ecosystem, as it gives startups and SMEs access to more than 50 countries, facilitating regional expansion, and attracting more investments. In addition to increased funding, the harmonised African market entrenched in the AfCFTA will enable consumers to access lower-cost online content and services. The United Nations Economic Commission for Africa (UNECA) estimates that the AfCFTA has the potential to double intra-African trade if there is a reduction in Non-Tariff Barriers. Despite the enthusiasm for the AfCFTA, traders, SMEs and startups on the continent continue to face numerous market access challenges. These include the differing regulatory bodies and intra-jurisdictional obstacles such as work permits, licences and taxes, excessive delays, ad hoc fees at borders, cumbersome document requirements, restrictive product standards, regulations and packaging requirements. These limita- tions impact the ability of the enterprises to leverage economies of scale AfCTA pro- vides to achieve meaningful growth and profitability.
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Implementing the AfCFTA agreement remains a priority for all African countries as it has the potential to accelerate the growth of tech startups across the continent by lowering their operating costs, and increasing market access. To accelerate it, players in the technology ecosystem across Africa must contribute to negotiations around the implementation of the digital trade protocols that will cover e-commerce, digital services and the functions that support them across borders. Issues of notable relevance include privacy, electronic-trade facilitation, and consumer protection. For its part, AfriLabs will actively engage multi-stakeholders on the strategies for using innovation and technology to remove trade barriers, promote fair competition and consumer protection at the national level, and address cross-border anti-competitive practices across Africa. In addition, AfriLabs will look to protect and support the entry of tech startups into already established markets against multinationals.
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Preserve digital rights and access to digital infrastructure
With over 500 million Africans accessing the internet, there is an opportunity to extend the protections enshrined in international conventions to online users. These rights include access to information, privacy, freedom of expression and association. This is especially important now, when according to Freedom House's Internet freedom report, internet freedom has declined globally. The situation is not different across many countries in Africa. There have been reports of internet shutdowns, bans on some digital platforms, and laws that compromise data privacy. Furthermore, the arrest and detention of prominent innovation leaders in the continent bring the issues of digital freedom to the fore, as such acts as digital censorship, surveillance, content moderation, and infodemic algorithm discrimination, among others. It is, therefore, critical that efforts are made to bring the remaining 700 million Africans online as the first step towards promoting all-encom- passing digital rights. This will involve infrastructure investments to reduce the cost of accessing the internet, which is still beyond the reach of many people in Africa. At present, Africa is the region that is furthest from meeting the UN’s ‘1 for 2’ target for internet affordability, according to the latest edition of the Alliance for Affordable Internet report.
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The issue of digital identity is another critical policy issue that must be urgently addressed. Indeed, at the core of the Sustainable Development Goals (SDGs) is the goal of inclusion, and SDG 16, target 9 (SDG 16.9), specifically calls for the delivery of a legal identity for all by 2030. Yet, according to the World Bank, a staggering 1 billion people in the world today lack official identity proof, including one in two women. Without a legal identity, it is almost impossible for citizens to claim fundamental rights and essential services such as healthcare, social protection, and education. A lack of a stable and predictable digital identity framework also restricts the ability of startups to scope their target markets, scale their businesses, and access crucial statistics and planning content. More work is needed to get Africa up to speed, because despite the significant growth in the continent’s digital space, the supporting infrastructure remains siloed and fragmented at the national and regional levels. This has led to increases in the cost of scalability for tech startups such as those in e-commerce, many of which struggle to access regional and international markets due to technical barriers. Conversely, a few countries have harmonised infrastructure that have fuelled growth in their Fintech sectors. For continent-wide growth, regional infrastructure-sharing, an agreement between market players to share various parts of their infrastructure to provide services, can be an effective and affordable way to improve digital infrastructure. Infrastructure-sharing has traditionally taken place between actors in the private sector but could be widened to cover services between countries, to facilitate the deployment of more advanced networks such as 4G and eventually 5G mobile connectivity, and the co-location of cloud data centers using previously-established infrastructure. For inclusivity, AfriLabs is working with civil society partners to campaign for a safe, non-discriminatory and secure digital economy that benefits all. We will also leverage our network and partners to build coalitions that advocate for policies, and regulations, that seek to lower industry costs and, ultimately, create more affordable broadband and online services for all across Africa.
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Promote advanced uses of data
Access to and sharing of data are critical components for spurring innovation and driving the SDGs. Data also enhances public service delivery and improves policymaking and investment decisions by the private sector. The pervasion of technologies like machine learning and artificial intelligence vastly depends on data availability, which, when availed, could drive innovations that transform the agriculture and health sectors. We have seen during the Covid-19 pandemic how the sharing of health data underscores the relevance of open data sharing for socio-economic wellbeing.
Despite the evidence of the economic and social benefits of open data, access and sharing of data remain below their potential across Africa. It is challenging for individuals, researchers, innovators, and investors to access public data.
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For a change, governments must address barriers to the use of cloud technologies and, specifically, the cross-border transfer of data across the continent to unlock innovation. The adoption of cloud technologies is uneven across countries, as concerns about data security and jurisdictions, plus the reliance on a few influential global providers are factors leading many African countries to continually rely on local data storage solutions. These limitations have increasingly conflicted with the regional expansion of African startups, such as those in FinTech, which depend on scalable data platforms for their business. AfriLabs will continue to contribute to developing coherent data governance policies and frameworks to unlock the potential benefits of data across and within countries. We will address areas such as the AU Convention on Cyber Security and Personal Data Protection, data standards, interoperability of national data infrastructure and digital security. For a head-start, AfriLabs is already participating in the Cloud and Data Centres for Africa initiative hosted as part of the Smart Africa Secretariat portfolio in collaboration with the AU to address some of the concerns and advocate for governments to embrace best practices for cloud policy and data regulation on the continent.
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Build R&D capacity and protect Intellectual Property
Africa needs to increase investments in research and development to become more efficient and competitive. Indeed, African governments spend less than 0.5% of GDP on research compared to an average of 2.3% by OECD countries. The talent pool of researchers on the continent is also tiny. According to the 2021 UNESCO Science report, there are only 198 African researchers per million inhabitants, compared to 4,500 per million in the UK and the US, and far below the global average of 1,150 per million. Moreover, the limited investment in R&D has yielded little economic transformation in the structural and new growth sectors. However, we acknowledge that our hope for a better Africa is in the ability of Africans to build for Africans. Therefore, African governments should prioritise R&D investments that focus on new and emerging technologies such as Artificial Intelligence, Machine Learning, blockchain, robotics, digital manufacturing, and data science to make the region a technology powerhouse in the coming years. The establishment of dedicated technology-research funds and directly supporting research labs in partnership with tech hubs and universities will continue to develop skills and create new job opportunities.
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At the same time, the diffusion of research output through both formal and informal networks (from lab to market) will help drive innovation and growth. Funds should be available to universities and innovation hubs to access and fund the spin-off projects with the best market potential. In addition, governments should support increased regional or pan-African technology transfers. To further promote their regional expansion, entrepreneurs should have facilitated access to harmonised Intellectual Property (IP) protection regimes such as the African Regional IP organisation (ARIPO) or the IP office for francophone central and West African countries (OAPI). Support for African innovators could take the form of subsidies or fast track processes on patents or trademarks. AfriLabs’s leading role in the African innovation ecosystem uniquely positions it to stimulate the policy conversation on the aforementioned themes. We will build on lessons from the COVID-19 crisis to actively engage multiple stakeholders in using innovation and technology to foster domestic production and partner with academia and pan African institutions as a way of prompting the legislation needed to address potential biases in the growing usage of technology.Afrilabs will lead the advocacy for a sustainable collaboration between higher education institutions, private sector and innovation hubs, Intellectual Property rights stakeholders and their link to research commercialisation.
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Simplify public procurement for innovation
The Covid pandemic exposed the vulnerabilities of traditional global supply chains and highlighted the need for governments to build resilience and local solutions into their supply chains. Local innovators, startups and SMEs rose to the occasion at the height of the pandemic, when they disrupted global logistics to provide personal protective equipment, digital solutions, medical supplies, and many others. In most African countries, government procurement represents a significant portion of public expenditure. As a result, government products and services, and whom they buy from, are critical demand-side instruments that could stimulate local innovation and entrepreneurship. However, even with this vast opportunity, many startups and SMEs in Africa find it difficult to work with the public sector, as most government processes are steeped in bureaucracy. The time and effort required to get through the application phases can be overwhelming and rarely result in the award of contracts, discouraging startups from applying for tenders. Larger organisations have considerably larger resources at their disposal, in many cases sizeable bid management teams, to locate, track and apply for tenders – startups do not, affecting their ability to compete.
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To drive change, governments can help promote demand for local tech solutions through procurement and acquisition of products and services by startups. Local entrepreneurs, if well supported, often have innovative solutions to address complex national challenges for governments. The kind of support that will truly boost startups comes in the form of financial support when bidding for and implementing government tenders. Governments and donors can come in to provide the capital or revenue reprieve, which may also involve waivers and concessions for tech procurement. AfriLabs is keen to engage critical stakeholders on public procurement policy options that could effectively boost economic growth and support the development of the tech ecosystem. An enabling environment also implies addressing issues around digital technology to remove the knowledge, awareness, processes, and liquidity barriers that startups and SMEs face in the procurement of public services.
5 Advocacy Strategy
Unconventional approaches to shaping policy We will take responsibility to lead through inclusive policy-making approaches, including partnering with existing workstreams that bring together all relevant stakeholders, fostering co-creation and We provide further details about our policy advocacy strategies in the section below: AfriLabs believes a deliberate process of informing and engaging decision-makers at the multilateral, pan-African level can influence smart policymaking, implementation, and mobilisation of resources to create an enabling environment. However, the successful implementation of this strategy primarily depends on the principles that the approach is hinged on, providing evidence from the grassroots, top-down and bottom-up engagements with all stakeholders, and knowledge-sharing to support advocates in every member country. co-decision-making processes, while encouraging diversity and inclusion. Where policies are designed to support entrepreneurs and innovators, we will prioritise work with our hubs, national governments, national hub networks and strategic partners to ensure that implementation is realised as envisioned and that there are opportunities for public evaluation of these policies. Following an assessment of their impact, we will work with stakeholders to undertake such studies. We will also develop curriculums on civic engagement and policy design for innovators and entrepreneurs. These will be critical for our hubs to better position themselves as policy influencers in their communities and contribute meaningfully to their national or local policies.
Policy engagement process
We have identified four channels to support our policy engagement work; inclusive dialogue, thought leadership, knowledge sharing and grassroot policymaking. The AfriLabs Policy Dialogue is a series of consistent and regular engagements seeking to bring together on one platform key stakeholders in Africa's entrepreneurship and innovation ecosystem to discuss and proffer recommendations on policy gaps identified by the community. The dialogue outcomes will feed into policy position papers to advise governments and other development partners working in the digital economy in Africa. The AfriLabs Policy Briefs publish opinions, insights and research from AfriLabs member hubs on the priority areas identified in AfriLab's Policy Pathways. In addition, the briefs will provide evidence of the impact of policy options implemented and discuss new pathways to solve the digital ecosystem challenges across Africa. The AfriLabs knowledge exchange platform harnesses lessons and promotes peer to peer knowledge exchange among member hubs, national associations, and policy experts to lead policy advocacy in their countries or communities. The AfriLabs Policy Fund exists to provide financial support to member hubs/individuals leading advocacy campaigns for a change in policy/program in their national/local ecosystem that will create a favourable environment for innovators and entrepreneurs to thrive.
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6 Conclusion
Innovation and entrepreneurship thrive within the right legal and regulatory environment. The AfriLabs policy pathways identified policy challenges and opportunities, and laid a roadmap to success. We believe the reasons could not be more compelling for governments to continue to be innovative in their policymaking and address the cross-jurisdictional issues affecting Innovation in Africa. We also realise that the relationship between government and the innovation ecosystem, which has been antagonistic and counterproductive, is shifting. Furthermore, each African country or region has unique circumstances, challenges and opportunities based on history or specific legal systems to consider when designing innovation policies. Public policy needs to amplify these benefits, rather than to slow innovation. For Africa to fulfil its potential, policymakers must implement transformative measures to improve the business environment and address the challenges that limit the growth of startups and SMEs: the innovation-skills gap, inconsistent and fragmented policy frameworks, deficient digital infrastructure, and an inability to scale and compete internationally. Such measures should reflect the interests of all stakeholders inclusively and diversely. On our part, AfriLabs remains committed to advancing a public-private partnerships around Innovation and entrepreneurship policy, and offers our platform and the voice of our members and partners to help promote this influential agenda.
Moetaz Helmy, Chairperson, AfriLabs
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