Mobile connectivity and digital transformation present a unique opportunity for Sub-Saharan Africa to leapfrog its development. But this requires progressive policies with supportive fiscal demands to stimulate investment, innovation, entrepreneurship and adoption. This was the key takeaway from the inaugural Africa Policy Leaders Forum (PLF) in Kigali, Rwanda. The forum, part of MWC Africa, brought together stakeholders from ministries, regulatory bodies and the broader mobile ecosystem to exchange views on the policy developments required to catapult Africa to the digital economy.
Progressive policy to accelerate the digital agenda
Governments across Africa are developing progressive policies to address barriers such as availability, affordability, quality and adoption of broadband services. At the opening session of the PLF, Hon. Paula Ingabire, Minister of ICT & Innovation of the host country, Rwanda, launched its National Broadband Policy and Strategy. The policy sets out strategies and programs to close the usage gap tackling access, affordability and reliability to move Rwanda into a high-income country and promote a digital future. Digital skills and literacy were quoted as critical enablers for adoption, along with the importance of developing relevant content and services in local languages.
Hon. Leon Juste Ibombo, Minister of Posts, Telecommunications and Digital Economy of Congo, a country advancing in its digital transformation journey, highlighted the value of an all-inclusive policymaking process in developing a robust digital economy. It is not just governments who are in charge of policies; full industry participation is required. The next panel reached a consensus that the potential of digital transformation for Africa is endless, but it requires progressive policies with supportive fiscal demands and affordable spectrum prices to stimulate investment and innovation in the telecoms sector.
Fiscal policy reforms on the horizon
The mobile industry continues to invest billions in building network infrastructure to guarantee high-quality and affordable consumer services. In the opening keynote of the PLF day two, GSMA’s Head of Digital Infrastructure Policy, Dr Mani Manimohan, noted that the mobile market represents 8% of Sub-Saharan Africa’s GDP. According to the ITU, an extra 10% mobile broadband penetration will result in a further 2.5% GDP growth. Yet, high taxes on mobile services directly impact affordability at levels as high as 35% in some African countries. In addition, factors including asymmetric regulation and restrictions, sector-specific taxes and spectrum costs are squeezing the business models of infrastructure providers. A renewed tax policy reform is required to modernise tax systems and reduce the high fiscal burden on mobile operators and, by extension – the price to mobile consumers.
Governments should take a long-term view on promoting mobile services, as it takes at least three years to see a multiplier effect from digital innovation. Sector-specific taxes should be eliminated to help invest in digital infrastructure. Finally, policymakers can broaden the tax base by considering online services that benefit the most from mobile networks. Policymakers must reconsider the interdependence of online services and other growth sectors on the underlying infrastructure investment to stimulate a fair, innovative and sustainable digital economy for all.
Startup Acts driving the next wave digital transformation in Africa
The final session of the PLF focused on the impact of Startup Acts on the African continent and how policymakers can create and implement an enabling regulatory environment. National legislation that makes clear frameworks and operational support for startups is one of the best ways to help Africa’s digital companies thrive and improve their economic environment over the long term. Countries such as Tunisia, Nigeria, Rwanda, Senegal and Ghana are setting regulations that centre innovation at the heart of their economic transformation and promote their startup ecosystem.
Salma Baghdadi, Director of Startup Ecosystem, Smart Capital, shared the success story of Tunisia’s Startup Act, which turned into law in April 2019. As part of the Act, Tunisian startups receive government incentives, such as safety nets for the founders and tax exemptions. As a result, the ecosystem in the country is booming, with over 800 startups, from AI to biotech, accessing African and European markets and patenting innovative products and services. Notably, 36% of these startups are founded by female entrepreneurs.
The key learning from Tunisia’s journey is that policy is crucial to innovation and growth, but it has to be supported by other programs. Policymakers must work closely with startups to build capacity for all stakeholders and create an ecosystem where all parties can share expertise. Moreover, countries need to be able to change policies when they become obsolete and adapt to meet new needs. Innovation develops fast, and so should policy too.
The PLF ended on a positive note. The diverse African continent has intelligent young people who can build next-generation solutions and the market size to implement and scale them successfully. The remarks from Oswald Osaretin Guobadia, the lead on the Nigeria Startup Bill, sum this up: “The very next startup to impact the world will be from Africa.”