Governments have only just awoken to the digital economy but are stifling not supporting startups
Project Syndicate | Perseus Mlambo | Africa is the youngest place in the world. But because African heads of state tend to be older – with an average age of 62 – they are out of touch with African youth. At an event in London last April, Nigerian President Muhammadu Buhari suggested that young Nigerians were lazy and looking for government handouts, provoking a social-media backlash (hashtag: #LazyNigerianYouths) by young Nigerians who listed all of their productive pursuits.
For its part, the Nigerian mobile lending platform OneFi showcased some of its enterprising customers. With a small loan, one young woman was able to buy inventory for a wholesale plantain chip business; another young entrepreneur was able to build a poultry house that could hold 1,000 chickens.
African tech startups like OneFi largely owe their existence to the expansion of mobile Internet across the continent. With a projected smartphone user base of 725 million by 2020, and Internet access expected to grow by 130% in the next six years, Africa’s digital economy could create millions of jobs for young Africans.
Considering that almost two-thirds of Sub-Saharan Africa’s population is under 25, and a staggering 29 million young people are entering the labour market each year, a surge in employment opportunities is essential to Africa’s future. Unfortunately, a creeping trend toward government overregulation threatens to derail future job creation.
Like governments everywhere, those in Africa are constantly trying to keep up with the pace of technological innovation. As technology fundamentally reshapes daily life, changing the way Africans communicate, consume media, and pay for goods and services, many governments have only just awoken to the emergence of the digital economy. But instead of applying a light touch and creating a set of nuanced regulations, too many are implementing heavy-handed, top-down measures that could stifle the startup boom.
Consider Uganda’s recently imposed social-media tax, supposedly intended to discourage the spread of “gossip” and generate tax revenue from foreign social-media apps. In practice, the foreign companies have simply passed the costs on to the end-users through their telecom providers. For someone who uses social media daily, the cost of purchasing a prepaid data bundle has surged by 23-62%, leading to a 20% drop in mobile data subscribers. To purchase one gigabyte of data, Ugandans who earn less than the average annual income of $606 must now spend approximately 40% of their monthly earnings.