Transforming Africa’s Tech Ecosystem: Five Lessons for Leaders from Leaders

Transforming Africa’s Tech Ecosystem: Five Lessons for Leaders from Leaders

Commentary
Posted on: 10th December 2021
Chizi Gakuo
Policy Analyst

On 24 November 2021, the Tony Blair Institute for Global Change convened a roundtable on transforming Africa’s tech ecosystem in collaboration with The German Agency for International Cooperation (GIZ). The discussion brought together senior policymakers from the Democratic Republic of Congo Ethiopia, Ghana, Nigeria, Tunisia, and Senegal who are building or enacting legislation to support tech start-ups and shape the continent’s future as a tech superpower to share insights with each other. The discussion was held under the Chatham House rule. We have identified five key lessons from participants, which – with their permission – we share to inform other leaders embarking on this journey.

 

Thriving tech start-up ecosystems drive job creation and economic growth. Creating and not just consuming the tech that is changing the ways we live and work gives countries a seat at the table to shape our shared digital future. These mutual motivations, fuelled by the desire to harness the potential of Africa’s large and fast-growing youth population, were unanimously highlighted by leaders as the reasons for prioritising the tech start-up ecosystem in their countries. 

The digital economy is expected to contribute up to 300 billion dollars to Africa’s GDP by 2025 (10% growth per year). The working age population across the continent is expected to grow by 450 million people, or close to 70 per cent, by 2035.  While 10-12 million young people enter the Africa job market each year, only 3.1 million jobs are created. Creating quality tech jobs is an important part of the puzzle - Kenya’s ICT sector is set to create 250,000 jobs in 2021. A different but equally pressing problem highlighted by many participants is the brain drain – with the best educated youth choosing to leave their countries for better job prospects abroad (70,000 skilled professionals leave the continent each year).  For countries looking to close this gap and retain top talent, investment in the tech ecosystem is crucial.

Technology is a key enabler of all industries. For example, as one participant highlighted, it will be crucial to transforming agriculture, a key sector on the continent that contributes around 18% of GDP and employing more than 52% of the population. The potential market size of digital agriculture is estimated to be between $ 2.3 and $5.3 billion and thus far only a fraction, $127 million, has been captured.

Participants were optimistic about Africa’s future as a tech superpower, stressing that this is the moment for African tech. They recognised the pressing need to invest in the tech sector for their countries’ future and shared insights from their experience: the key challenges they’ve encountered in addressing this challenge and the lessons they’ve learned.

Five Key Lessons

1.   Engage the entire ecosystem at every stage of the process: listen, communicate, and engage

A resounding message echoed during the discussion was the critical importance of collaboration in developing legislation to facilitate the growth of the tech startup ecosystem. The starting point must be listening to what startups need and ensuring they help to shape priorities and process. One participant emphasised that it is imperative to have a laser-cut vision that everyone understands and agrees on.

Drafting legislation aimed at facilitating the growth of startups, such as startup acts or bills, requires a continual conversation between the private and public sectors, civil society and the general public to ensure the priorities of different stakeholders are considered.  Another participant succinctly described this as a ‘Big tent approach’ bringing together the private sector, founders, and government actors on a shared platform, enabling the co-creation of an inclusive, comprehensive law. A key challenge participants discussed in getting actors across the private and public sector to work together to develop legislation was aligning different ways of working to create shared processes and timelines. Once the legislation has been drafted participants highlighted an important next step - campaigning for widespread buy-in. Sharing the spirit and essence of the legislation early on can also garner support from the public. Using a transparent, bottom-up approach to develop legislation facilitates the start of a collaborative conversation, laying the foundations for relationships between stakeholders which are essential to building thriving tech ecosystems in the long run.

2.    Get buy-in from across government at an early stage

Another critical determinant of legislative success discussed was securing senior champions within and across government. Governments are always juggling hundreds of competing priorities, and policymakers across government – even those who are less tech savvy - need to understand and feel the importance of investing time and resources in growing a thriving tech startup ecosystem. One participant explained that the President's office became a crucial ally in pushing legislation through, enabling them to pass the law much faster than many countries before them.  

The startup technology ecosystem is nascent in many African countries, and many government entities don’t fully understand or embrace the digital revolution. In a world of competing priorities, investing time and resource in supporting tech startups can seem to some like a luxury rather than a necessity. Participants stressed that making a clear case for the benefits of growing the tech ecosystem, and engaging with actors across government, are a critical part of the picture.

 3.     Startup acts aren’t a silver bullet – they’re a platform for dialogue and a focal point for action

Participants highlighted "law is a good start but isn’t enough on its own to make progress". Legislation is foundational for creating the right business environment and creating a platform for dialogue, but startup acts are not a panacea. They are the beginning of a continual conversation between the ecosystem and government. It must be an iterative process with modifications made over time drawing on learnings and developments. Participants stressed the importance of coherence across legislation:  a startup act alone is no good if it is undermined by aggressive tax or regulation in other areas of government.

4. Draw on global best practice, but always contextualize

Many countries are already taking bold steps to grow their tech ecosystems. Several participants said they had been inspired by early adopting countries across the continent and beyond in building out legislative models to facilitate startup growth. They highlighted models from Silicon Valley in the United States and Tunisia, the first African country to implement a startup act and explained the value of learning from their successes and challenges. One participant noted that while drawing lessons from other countries is crucial, it is also essential to adapt legalisation to the local context.

5.   Think of Africa as a single market and work to support regional integration

A key challenge for African countries building tech ecosystems is an inability to access regional markets - just 2% of African trade is within the continent. But that shouldn’t be the case: the Africa continental free trade area (AfCTA) creates the world’s largest free trade area, which is to connect 1.3 billion people across 55 countries which have combined gross domestic product (GDP) valued at $3.4 trillion. This agreement is aiming to eliminate 90% of tariffs, break down exuberant non-tariff barriers and unify the continent through a single market which will enable the free movement of goods and services.

Participants all had an optimistic attitude towards the agreement but said nations need to do more to make the agreement a reality. One noted "Africa has the market— we need to create these solutions for ourselves”, another said “AfCTA is a chance to change Africa’s narrative”.  The implementation of this agreement can have far-reaching positive effects for the tech startup ecosystem in Africa, allowing for the development of competitive markets and opportunities that can provide incentives for African talent to build the continent. 

Looking forward

As the roundtable drew to a close there was an undeniable air of optimism for future of the African technology ecosystem, transforming the landscape to ensure - as one participant emphasised - "Africa is the next destination" to develop solutions for global challenges. Participants appreciated the opportunity to learn from different country experiences and identify common challenges and suggested that a Pan-African task force should continue this dialogue, allowing what one participant described as a space to "Educate. Negotiate. Appreciate".

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