Bad Policies Can Cripple Great Innovation
The African tech ecosystem has been on the rise in recent years. In 2022 alone, African tech startups raised a combined total of $3.3 billion in startup funding. This is 55.1% more than the $2.15 billion that was raised in 2021. Even with the global economic recession, African tech startups were still able to attract funding to the continent.
This growth in investment shows that foreign investors believe in the innovation and development being made enough to part with some money to acquire a piece of it. We also have companies that have attained unicorn status, 7 of them in Africa as of 2022, which is another indicator of the growth of the tech ecosystem in Africa. For context, 6 years ago, the entire continent didn’t have a single unicorn.
But with all this innovation, you need good policies to nurture and encourage even more innovation. However, sometimes we have had some government policies that have crippled innovation so there’s a need for some understanding between the innovators and the government.
Innovation is not the Problem
What I mean by this is that tech startups in Africa are building some amazing solutions to everyday problems. PiggyVest and Cowrywise have built applications that are cultivating the savings and investment habits of Nigerians. They have reduced the barrier of entry in investments, especially as it relates to mutual funds, real estate and agro investments. The common man can now download an app, save and make investments, and earn interest without needing to understand the nitty-gritty details or hire someone to help them do this.
Jumia is creating an e-commerce platform that is helping to foster trade across the African continent. Flutterwave is building payment solutions to make it seamless to send and receive money to Africa which is enabling global trade.
There are a lot more companies doing amazing work than I can mention but the point is, innovation is not a problem. We need to understand the role of policies as it relates to innovation.
The Role of Policies in Innovation
One of the conversations I often hear around tech innovation tries to take the biggest stakeholder of innovation out of the picture. You’ll hear statements like “Let’s forget about the government, what can we do?” “what can we do without the government?” I understand the place for resourcefulness and resilience but I don’t think excusing the biggest stakeholder is the right approach in this case.
We’ve seen startups and individuals across Africa build solutions and create opportunities but we’ve also seen how detrimental certain policies can be. An example that comes to mind in recent times is the case of the okada (motorcycle) ban in Lagos.
For some context, Lagos is a city in Nigeria that is known for having bad traffic. Startups like Max.ng and Gokada created solutions for this problem which involved linking motorcycle drivers to riders, essentially Bolt for motorcycles. However, due to some security challenges, the Lagos government put a ban on motorcycles which affected these startups. At the end of the day, they had to pivot to logistics companies and other companies had to pack up.
Another common trend that’s happened in recent times across Africa has been the ban/partial ban of internet services/social media platforms. This has disrupted trade that would regularly take place through these platforms so there’s definitely a loss of revenue during these periods. These are some of the ways that unfavourable policies affect tech and development.
Bridging the Gap between Policy and Innovation
I think one way we can do that as a community is to get more involved in politics. This way, we can contribute and explain what we have to offer to policymakers and help them understand the benefits of tech.
I think the recent appointment of Bosun Tijani as the Minister of Communications, Innovation and Digital Economy in Nigeria is a good step in the right direction. For better or worse, we need to be more involved in politics so we help to make better policies, at least as it relates to tech.
The recent collaboration between Flutterwave and the Central Bank of Nigeria to solve the FX issues in the country is another great development. A collaboration between the apex bank in the country and a payment platform would lead to some more collaboration in the future. Whether this solution actually solves the problem is left to be seen but it’s a net positive for me.
We need to continue to try to work with the government, we need to get more involved in government to create an enabling environment for the growth of tech. At the end of the day, the problems of Africa will be solved by Africans. This is what I believe.
