By Serge NTAMACK and Anna EKELEDO
African Heads of State recently joined President Joe Biden in Washington to participate in the second United States-Africa Leaders’ Summit. President Biden said in a statement in July that he hoped to reinforce the US-Africa commitment to democracy, mitigate the impact of COVID, respond to the climate crisis and amplify diaspora ties. The summit came at a moment of global fragility, gravely impacting Africa, including COVID-19’s health and economic shocks, the war in Ukraine, and climate insecurity.
More than 60% of Africa’s population is under the age of 25, and by 2030, young Africans are expected to make up 42% of global youth, according to the World Economic Forum. This can be an advantage or a disadvantage, depending on how African governments handle the situation. The continent is undergoing a digital transformation that will shape economies and societies for decades. With more than half the world’s mobile-money users, Africa is a pioneering space for commercial innovation. In 2021, the African start-up ecosystem grew faster than any other region, with investments more than tripling in one year, reaching $5.2 billion. Yet over 800 million Africans remain offline, including millions of youth who will drive the future of the region’s digital economy. A report published recently by AfriLabs outlines ten innovation policy areas for African Governments to contemplate. Beyond the provision of opportunities and infrastructures, creation of adequate policies is one of the major responsibilities of all levels of leadership. There is a need for well thought-out policies to be instituted in every industry including but not limited to the African innovation ecosystem. The right policies will empower Africans to take the lead in the search for solutions to their own problems.
The time is ripe for bold initiatives to accelerate African innovation. However, for that to happen, the Biden administration should prioritise partnerships and direct engagements to enable scalable investments, build local capacity and, more importantly, create a favourable policy environment for innovators to thrive.
Encourage collaboration and direct partnerships with African innovators
First, the US should push beyond its traditional emphasis on “civil society” partners such as activists and journalists to include other influential nongovernmental actors. A win-win approach will seek to empower a digital civil society with a more expanded definition to have organisations such as tech associations, academics in universities and research organisations that play a role in policy debates. Several of these organisations are active in Africa and contribute to building a sustainable ecosystem. For example, AfriLabs, a pan-African network of innovation hubs with 400-member hubs across 52 countries, has been active in incubating and scaling start-ups
through knowledge-sharing, investments, and business readiness programs. It also recently published its flagship policy pathways report cited above, that outlines a roadmap for innovation policy and advocacy in Africa from the ecosystem perspective, which could enrich the conversations on a US digital initiative.
Secondly, the US government should encourage and leverage existing collaboration channels. US tech companies and Silicon Valley investors are already among the most significant stakeholders in the African innovation scene, given the pervasive use of their digital platforms and the influx of venture capital investments fuelling exponential start-up growth in crucial sectors such as finance or agriculture. For example, several African start-ups have benefited from admission to the Silicon Valley Y Combinator program, leading to substantial business growth and fundraising performances.
Promote scalable impact investments and bridge the innovation skills gap
Despite the growth in funding in the tech start-up ecosystem, access to capital remains the highest challenge for early-stage start-ups on the continent. Limited investment flows also originate within Africa, and the investment landscape is mainly undeveloped. Innovative investment vehicles at the early stage, pre-seed, and seed are thus required to address gaps in funding. The US government could prioritise supporting government innovation funds such as Rwanda’s, which could play a critical role in mobilising commitment from the private sector into the start-up ecosystem. It must also seek to amplify connections between U.S.-based entrepreneurs and investors and their African counterparts, and locally among innovators and investors, and build programs that directly target entrepreneurship networks, start-ups, and local financiers. Such programs will enable and grow local angel investing, which comes at the early stages of start-ups, leveraging best practices such as AfriLabs and ABAN Catalytic Africa Program that co-invest with angel investors with matching funds through grants.
Additionally, Fintech is a success story in the African innovation ecosystem, which attracts the most significant investments and exhibits innovative approaches and faster potential to scale. However, it depends on inadequate scalable data platforms since it is challenging for individuals, researchers, innovators, and investors to access public data, combined with the lack of skills required to develop a data industry. The skills gap is arguably a critical impediment to consuming and accelerating African innovation. Therefore, the Biden Administration, building on the US tech companies’ expertise in data, could support an initiative to urgently promote opportunities for diaspora skills repatriation, apprenticeship programs, workplace training and entrepreneurial skills development. An excellent place to start is to expand existing locally- relevant content and platforms for digital skills training targeting policymakers or innovators,such as the AfriLabs Capacity Building Programme that connects entrepreneurs and hubs with skill development content and peer expertise.
Launch a Digital Initiative for the continent and provide the leadership required for its implementation.Recent developments such as the Africa Continental Free Trade Area (AfCFTA) are a positive step for the innovation ecosystem. The AfCFTA carries hope that cross-border harmonisation could become an unstoppable force to develop intra-African African trade, foster innovation and modernise public institutions. Ongoing negotiations on the Digital Trade Protocol cover issues such as access to financing, capacity building and awareness, and free movement of persons, goods, services, and skills. Implementing the agreement is a stated priority for the US
government. However, harmonisation of policies goes beyond AfCFTA and, in collaboration with African governments, should be placed at the core of the digital initiative. Again, the Afrilabs Policy Pathways roadmap could provide a helpful guide to bring out critical issues and identify adequate implementation mechanisms.
More significantly, the United States can build on the wave of ‘innovation goodwill’ prevalent among African policymakers. Among several initiatives, governments are announcing either start-up bills to incentivise innovation ventures or ‘silicon’ programs to attract and relocate tech companies and workers across Africa. Also, we are seeing increased ministerial collaboration in the start-up sector, such as at the Algiers conference, where numerous countries discussed opportunities to cooperate in developing the industry and harmonising policies towards a single innovation space in Africa.
Prioritising innovation isn’t just sound business policy – it’s also a strategic imperative during increased geopolitical competition for Africa. To ensure that US policy on Africa gives innovation proper attention, the US government should launch a flagship digital initiative for the continent and appoint a special envoy to promote the U.S.-Africa partnerships on innovation. That initiative will build on the existing collaboration streams between the US and Africa start-up ecosystems, encourage private investments in targeted sectors, and prioritise a consultative approach with private and public sector stakeholders to determine helpful support and partnerships. Furthermore, the Biden Administration should stop referring to the artificial and outdated ‘Sub-Saharan Africa’ marker.Instead, it should embrace the reality of the whole of Africa, which is today a vibrant interdependent tech ecosystem that stimulates the emergence of genuinely pan-African champions.
By taking the steps above, the Biden administration would send a strong signal — through its strategy and actions — that innovation, digital transformation and the youth are indeed at the centre of its foreign policy on Africa.
Serge NTAMACK is a Policy Advisor at AfriLabs, Impact Investor, and former Microsoft Africa Policy Lead.
Anna EKELEDO is the Executive Director of AfriLabs.