Improving Africa’s digital and innovation ecosystems: five ways forward

Innovation and digital technologies have great potential to create jobs, boost productivity growth, reduce poverty, foster inclusion, and reduce inequality. They are vital for increasing the production of farms, firms, manufacturers, and service providers, and for accumulating knowledge capital. But they require collaboration by many actors working in digital and innovation ecosystems to ensure that they deliver benefits for society. This is not happening in Africa­––yet.

On February 23, ACET brought together key stakeholders, including entrepreneurs, policymakers, and international actors for a “deep dive” discussion on how African governments can improve policymaking to accelerate innovation, technology, and digital transformation in support of the continent’s economic transformation.

Cecilia Conrad, ACET Board member and CEO of Lever for Change, moderated a panel discussion between Adia Sowho, Chief Marketing Officer for MTN Nigeria; Daniel Spoiala, Advisor and Lead Facilitator of the EU-AU Data Flagship at GIZ; Eva Sow Ebion, co-founder of The Innovation for Policy Foundation and Director of Community and Communications of the #i4Policy movement; Freda Obeng-Ampofo, Founder and Chief Mixer of Kaeme Cosmetics; and Noomane Fehri, former Minister of Communications Technology and Digital Economy in Tunisia and ACET board member.

Freda Yawson, ACET Innovation and Infrastructure Senior Manager, and Rob Floyd, ACET Senior Fellow and World Bank Director, also participated in the webinar to present details on ACET’s new Digital & Innovation Program. Research and analysis around the program will focus on ways to integrate innovation ecosystems at the national and regional levels, attract investment for digital infrastructure and skills development, and build human capital.

Five takeaways from the discussion:

In her opening remarks, Conrad explained that innovation and digital policies are either non-existent or only just being developed in many African countries. Panelists agreed policymakers have limited capacity and are urgently seeking inputs. Floyd emphasized the importance of peer learning and sharing of best practices to fill this gap.

Fehri shared his own experience in developing an enabling policy environment as the Minister of Communication Technologies and Digital Economy of Tunisia. Three of the four pillars of the digital economy strategy in the country failed, but the final pillar on setting up a Startup Act exceeded expectations. Fehri attributes this success to the active role provided for the youth, civil society, and the private sector. The elements of the Startup Act that contributed to its success include a legal framework that takes away the burden of paperwork for nascent businesses; financial instruments run by the private sector with contributions from the government; and a stronger ecosystem with incubators and accelerators that help startups gain the necessary skills and knowledge to scale. Other countries in Africa, including Senegal, have already started to develop similar startup legislation.

Sowho shared some of the roadblocks that businesses face in a pan-African context, including the complex challenges posed by a wide range of tariffs, laws, currencies, and regulations across the continent. For African SMEs and innovative startups, in particular, this inhibits growth and scaling. Her advice to innovators is to recognize the reality and avoid replicating approaches from innovators in other markets. African startups cannot build and expect customers to come later, she said. In the weak infrastructure and low trust environment common across the continent, they need quick wins.

Fehri stressed the importance of achieving strategic partnerships at the continental level. Several approaches are required to get all stakeholders to push forward on the single market. This collaboration has to happen across hierarchies and at all levels, through initiatives such as Smart Africa, networks like Digital Collective Africa, and forums organized by civil society organizations.

Obeng-Apofo shared her insights as an entrepreneur about the value of incubators and accelerators. In her experience, the right SME-focused incubator can be very effective at preparing startups for investment readiness. Mentoring is a crucial component, as a lot of SMEs lack the ability to experiment and bring in new ideas, making it difficult to innovate. An additional benefit is the confidence that participation in an incubator can provide potential investors about entrepreneurs’ skills and knowledge.

Spoiala noted that the German development corporation and the EU are very involved in developing the startup ecosystem by supporting incubators and accelerators. Digital innovation was a key topic at the recent EU-AU summit, and mentoring and coupling EU companies with African startups is a major component of intercontinental cooperation.

One of the key recommendations of Integrating to Transform is for countries to ensure transparent rules that foster regional integration of data markets. The panel discussion uncovered the complexities of developing a data policy framework.

While it is crucial for African governments to ensure that citizens’ data is protected, the example of the EU’s General Data Protection Regulation, which went into effect in 2018, shows that it can be especially difficult for smaller companies to adapt to some regulations. Finding the right data protection environment that works for citizens but does not harm startups can pose a real challenge for policymakers. According to Sowho, the low-trust environment in Africa means that data policy cannot be approached the same way.

A running theme throughout the discussion­––and a sentiment shared by all panelists­––is the need for Africa to “own its narrative” and for stakeholders to ensure that policies and practices are developed with a greater awareness of the local context. Obeng-Apage shared her own example of the uphill battle she faced to get African black soap certification for the EU market. Due to the lack of knowledge from EU regulators about her product, she faced certification requirements that did not line up with the needs of consumers and the nature of the soap. After much explanation and demonstration, she was able to establish a better-suited certification procedure for black soap­––concluding that, as an African entrepreneur, you have to know what you are about before you can convince others.

Watch the recorded event below