Amidst the global economic downturn the COVID-19 pandemic brought in its wake, Africa’s technology sector is defying the odds as investors continue to maintain their interest in African companies.
This isn’t a surprise when you consider how the continent’s top talents and those in the diaspora keep churning out innovative solutions that address peculiar needs of the people. Perhaps an obvious way to measure the growth of the technology sector is through the amount of funding raised by African startups.
Dubbed the Covid year, 2020 saw 397 startups secure a whopping amount of US$701.5 million in total funding. Accordingly, the 2020 Partech Africa Report asserts that in 2020, more startups closed deals than in previous years.
One of Africa’s greatest success stories of last year is the acquisition of Paystack by Stripe for over $200 million.
Also, for the first time in Africa, the Bezos Expedition- a personal venture launched by Amazon’s CEO, Jeff Bezos- participated in a $30 million Series B investment into African-focused fintech startup, Chipper Cash.
What about in 2021? Early this March, Africa recorded Flutterwave, a Nigerian-based payment company, as its fourth African startup to attain unicorn status upon raising $170m in a Series C round, with a valuation of over $1bn.
What the foregoing illustrates is this: if the African tech ecosystem continues on this positive trajectory, the continent will soon become a force to be reckoned with globally.
Once upon a time, many risk-shy foreign investors viewed investments into African businesses with trepidation- an exercise in futility.
Today, though small in relation to the global tech sector, Africa’s tech industry is attracting no significant attention of Silicon Valley executives and Fortune 500 CEOs.
With this trend, how are African leaders supporting the efforts of the technology ecosystem in deepening the continent’s digital economy?
Well, in an attempt to do this, smaller African governments have tried to bolster their own tech ecosystems through supportive legislation. A good example of this is the Startup Act Policy already enacted in countries like Tunisia, Senegal, and Kenya among others. What is a Startup Act, you may wonder?
It is a legal bill that outlines government policies and regulations on startups, as well as proposes a number of reforms to tax, immigration, and regulatory policies that govern their operations in the country. It consists of a set of policies designed to increase the potential of young people to start businesses and for investors to invest in promising companies.
Nigeria and the proposed National Innovation Establishment Bill, 2020
While many African countries are beginning to implement policies that support startup innovation in their communities, Nigeria is heading on another path with a proposed bill to set up a National Innovation Establishment.
As per an explanatory memorandum, the bill seeks to provide the establishment and management of a National innovation ecosystem for the encouragement and stimulation of research, innovation, and scientific discoveries in Nigeria and for the establishment of an Agency for the exploitation and commercialization of the products of research and innovation to diversify and improve the economy for Nigerians.
For its part, this proposed bill indicates that the Nigerian government is aware of the limitless potentials of the country’s young talents, case in point- Flutterwave and many others.
It also acknowledges that these talents need to be supported so they can strengthen the nation’s digital economy through their innovations.
That said, it is important to point out, that Nigeria already has an innovation ecosystem made up of entrepreneurs, startups, enterprises, support organisations, funders, academia, and other stakeholders, all collaborating to grow the sector.
Even as the activities of an innovation ecosystem are typically established, produced, or controlled by the private sector, the public sector must provide the required enabling environment conducive to the growth of innovation, the attraction of investment, and the retention of highly skilled talent.
This involves providing infrastructure, assistance, connections, and compromises to entrepreneurs and funders to generate employment and accelerate economic development.
Speaking candidly, we live in a country that already has an over-bloated civil service, where efficiency and effectiveness are not properly driven by technology, yet the government is busy building more civil service structures especially with this new proposed establishment.
The existence of the Federal Ministry of Communications and Digital Economy and Federal Ministry of Science and Technology and all their numerous agencies are enough to work with stakeholders and deepen innovation in the country. There is absolutely no need to establish a brand new National Innovation Agency.
To put it in another way, Nigeria is in no shape to effect what the government is proposing, especially at a period when the nation is literally awash with blood due to the rising insecurity, low on productivity, and mass unemployment is on the rise among many other socio-economic ills.
One major argument against the bill is that the proposed agency has no new function to deliver. It is at best replication of several existing agencies and at worst, a ploy to misappropriate funds.
As it stands, the various MDAs that we have are not doing enough to impact the ecosystem. The growth and progress of Nigerian startups that we’re celebrating today are made possible through the blood and sweat of individuals, groups, and organizations that make up the ecosystem.
Hence, rather than create more agencies, I submit that the government should maximize the efficiency of the current innovation ecosystem. This can be done in a number of ways.
First, Nigerian policy makers can be more deliberate in mapping out unambiguous roles and functions of current ministries, departments, and agencies tasked with technology and innovation.
Second, there should be a direct path of communication between the private and the public sector; this could be through sessions and conference meetings between the MDAs and the innovation ecosystem.
Third, relevant MDAs can set up provisional teams to provide high potential MSMEs and startups with technical support and funding needed to scale.
Also, it won’t be improper to suggest that the Nigerian government should take a cue from neighbouring African leaders executing policies that promote innovation and empower their tech communities. Why is this of utmost importance?
Let’s take a look at the numbers: As of 2020, Nigeria recorded N70 trillion in GDP with the ICT sector contributing about N10.535 trillion (15.05%). Conversely, the oil sector raked in N6.223 trillion (8.89%).
From the stats above, there’s no doubt that the ICT sector is growing Nigeria’s digital economy.
As a nation, we will continue in that direction if the government formulates thoughtful, yet practical innovation-friendly policies that will benefit Nigeria, the innovation ecosystem and the people as a whole.
ICT Clinic by CFA is published weekly in the Sunday Punch