The growth of digital technology and its transformative impact on individuals and businesses is changing the way that Africa is operating. As a result, a new generation of entrepreneurs is disrupting the traditional industries. These young companies are using digital technologies to build solutions to the continent’s biggest challenges.
For example, agritech startups are focusing on the biggest pain points of smallholder farmers. They are using scalable digital platforms to provide farmers with information and market opportunities. This includes soil analysis platforms and solar powered water-pump systems.
Mobile payments have also become a key part of the East African market. With a huge number of people without access to bank accounts, fintech startups are attempting to address the financial gap between the unbanked and the advanced financial services. Examples of such companies are TradeDepot, which offers logistics services to informal retailers, and Paystack, which was acquired by Stripe for USD 200 million.
Big tech firms from the United States are also investing in technology hubs in Africa. Their investments are particularly valuable for startups that have positive socio-economic impacts. One example is the Equiano subsea cable, which will run from Portugal to South Africa and is being built by Google.
While the emergence of new technology is boosting the economic growth of several African countries, the potential of this new wave of innovations to boost inclusive growth is still untapped. This is why it is essential for African governments to encourage entrepreneurship and promote the development of digital skills. In addition to this, African governments must ensure that less digitalised parts of their society do not fall further behind.
In addition to fostering entrepreneurship, African governments must create policies that allow for the harnessing of the advantages of these new technologies. It is essential for them to develop a balance between promoting competition and ensuring that consumers are protected. To achieve this, policymakers should focus on preventing harm to consumers and providing support to local entrepreneurs.
Startup legislation is aimed at making it easier for startups to scale. The legislation will give startups credit guarantees and government loans, and make it easier for them to engage with regulators. However, in addition to these policies, African governments must also encourage and support local entrepreneurship. Homegrown entrepreneurs, especially African-educated entrepreneurs, are severely underrepresented in the tech industry.
Many countries in Africa are facing digital divides, which reflect large differences in internet usage, and the adoption of mobile phones. Nevertheless, the Internet has helped to accelerate economic development in several African economies. Most of the digital advances have occurred in urban centres of major African markets.
In addition, the growing presence of big tech companies in Africa presents tremendous opportunity for the economy. Their involvement can provide financial resources and know-how, as well as acting as anchor customers for emerging African tech startups. Additionally, these firms can act as investors and talent providers in local startups.
Currently, African governments are promoting entrepreneurship through startup legislation. However, they must also encourage private investment in digital infrastructure.