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Digital technologies offer new avenues for economic growth in Africa

Boutheina Guermazi, Brigit Pickel and Lacina Koné

Digital technologies offer new avenues for economic growth in Africa by accelerating job creation, supporting access to public services and increasing productivity and innovation. However, major challenges remain. The lack of connectivity in remote and rural regions and the low use of digital technologies in connected areas is further disadvantaging the poor, women, and small businesses. Increased cyber risks and lack of data protection have brought new risks and vulnerabilities to businesses, governments, and people.

Government policies and regulations are key to enable greater use of digital services while mitigating risks. But how to intervene in a timely manner in a changing technological environment? Agile enabling regulations are needed to quickly respond to market developments, facilitating entry of new competitors for the benefit of consumers. In Kenya, collaboration between the competition authority, the central bank and the telecom regulator allowed digital financial service providers to access telecom services to offer mobile money services along mobile network operators. Consumers benefitted with greater availability of options for mobile payments. Later, the collaboration also facilitated interoperability between mobile money providers and banks, allowing consumers to seamlessly transfer funds between providers, top up saving accounts or use digital credit.

Such new approach is required to support the development of agile and collaborative regulations. A shift from planning and controlling to piloting and implementing policies in a multi-stakeholder setting for rapid feedback and iteration is necessary. Feedback loops allow policies to be evaluated against the backdrop of the broader ecosystem to determine if they are still meeting citizens’ values and needs and considering the impact on the industry and private participation. To implement this approach, a change of mindset is first needed. This approach is particularly appropriate for dealing with digital transformation, which by its nature is changing and evolving, and would otherwise be hampered by rigid policies and regulations.

Some African countries are already implementing agile regulation principles to address various issues. Ghana and South Africa responded swiftly to COVID pandemic demand for higher bandwidth by quickly adjusting current regulations and made it easy for companies to offer higher bandwidth to citizens. Kenya and Zimbabwe were quick to remove roadblocks and supported the roll-out of applications that allowed citizens to quickly access mobile money transfers and other financial apps. The African Union has consulted perspectives from businesses, civil society and academia to develop policy frameworks on data and on digital identities. This inclusive multi-stakeholder approach resulted in workable frameworks that encourage innovation through data sharing and cross-border data flows for African eCommerce while protecting rights of individuals. These African Union frameworks on data and on digital identities are important cornerstones to build an African Digital Single Market – the vision of the Smart Africa Alliance that is endorsed by all members of the African Union.

The African Union’s Agenda 2063 envisions a people-driven development for Africa, relying on the potential of African people, especially its women and youth. That’s why digital skills are prioritized in the African Union Digital Transformation Strategy 2020-2030, where the goal is to “build inclusive digital skills and human capacity across the digital sciences […] and technology policy & regulation”. African leaders recognize the pivotal role of policies and regulations in shaping societal and business practices and – if done correctly – how policies can support and encourage digital transformation.

German Development Cooperation and the Digital Development Partnership of the World Bank, in partnership with Smart Africa, have started piloting this agile approach under the Agile Regulation for Digital Transformation program (AReg4DT), a program linked to the Smart Africa Digital Academy, the digital skills vehicle for Smart Africa, and atingi – an online learning platform developed by GIZ, the implementing organization of the German Federal Ministry for Economic Development and Cooperation. The pilot is equipping policymakers and regulators in Africa with the knowledge and tools to regulate digital markets in Africa to support digital transformation. The results so far have been promising with a combination of online and face-to-face training events to allow for learning and knowledge exchange within and for Africa. This partnership is testing the development of capacity building activities in an agile and iterative way and tailoring the content to the local context, as well as gaining a practical understanding about implementation challenges and the training ecosystem in Africa. Prof. Dr. Yeboah-Boateng from Ghana’s National Communications Authority also appreciated the chance for peer-to-peer exchange during the event in Abidjan. In particular, he noted the “value of better harmonization of policies and regulations across Africa that would benefit the continent as a whole.”

Regulators across the world are developing and testing new policies and regulatory tools, while also adapting existing ones for new purposes, particularly in face of the COVID pandemic. In many cases, the same technologies that challenge traditional regulation also offer many opportunities to reinvent rule making, oversight, inspections, and enforcement.

The AReg4DT program supports the implementation of the Digital Economy for Africa (DE4A) initiative and aims at facilitating regional integration through a common understanding of challenges, opportunities and solutions that can be implemented at the national and regional level, thereby ushering Africa, into the dawn of the single digital market.

This article is part of:Shaping the Future of Digital Economy and New Value Creation

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