Towards Realizing the Startup Economy in Africa, What Can We Learn From Each Other?
This article is a recap of the startup policy dialogues organized by I4Policy and partners as part of the Transform Africa Summit 2023 #TAS2023. The information shared in the article is based on comments and feedback from leaders and champions of the startup ecosystem on the continent.
It has been a busy two weeks; On my way to Helsinki and Turku, Finland, I wanted to recap what I learned last week at the Transform Africa Summit. A few years ago, discussion about startups was a thing of young and desperate youths exploring alternatives to formal employment in Africa. Fast forward now, Presidents and Ministers of State have officially recognized that "digital" and "startup" are the current and future, and they have to do something about it.
It was great to hear about the progress made by countries such as Tunisia, Nigeria, Algeria, Rwanda, Congo, and Estonia in creating policies that create a conducive environment for the growth of the startup economy. It was fascinating to hear about the different approaches adopted by the countries to localize the concept to fit in with their legal and regulatory environments while considering the local and international markets' needs. The discussions covered political sponsorship, committed entities, agile environments, collaborative processes, cross-border collaborations, localization of legal tools, and financing mechanisms for startups in Africa.
One clear thing, the intention is to build friendly and robust; legal and regulatory systems to support startups on the continent. In comparison, some countries have made massive progress, like Nigeria, which passed its act in October 2022 and Tunisia, which is currently reviewing the first five years of the Tunisia Startup Act. The second version of the Tunisia Startup Act addresses the inadequacies of the first one. Countries like Rwanda and Algeria are taking a different approach in which, among other things, they are incorporating provisions for startup issues into existing acts such as income and procurement laws to favour startup companies.
The critical success factor of the Startup Acts has been the effective integration of the acts with the existing legal and regulatory systems. Sometimes considered "VIP SMEs", startups seem to be a complicated beast to tame since they involve complex interactions between public entities with diverse legal and regulatory mandates. Sharing the experience of Tunisia, the challenge of engaging public entities with separate legal franchises is still there. Even after the successful implementation of the act, several engagements with the central bank and other government entities need to be carried out to ensure the effective adoption and implementation of the Acts. The key word is "agile"—creating agile policy systems for startups is the next challenging puzzle to solve for most African countries taking this path.
The lessons from Nigeria were based on two key issues; the importance of having political sponsors and a collaborative process. The path towards realizing the act in Nigeria involved all critical actors in the ecosystem who have mentioned or engaged with the keywords "Startup Act". The goal was to ensure no one was left behind to avoid future obstacles by assessing all possible challenges the act might face during the implementation process. All processes, including the initial timelines, have been captured on the dedicated web portal, Nigeria Startup Act. The crucial lesson in Nigeria is political will and champions. If there isn't one of the two, there is no act. For countries like Nigeria with state political structures, it is vital to have strategies for integrating the show at the national and state levels.
In creating a startup act is always friction between what the startup intends to do and what the policymaker “regulator” is mandated to do. The primary goal is to create policies and regulations that favours people solving the most complex problems facing our society today — Oswald Osarentin Guobadia
The Ministry of ICT and Innovation in Rwanda is taking a slightly different approach towards addressing startup policy challenges in the country. The country has conducted consultative meetings with stakeholders to reflect on the Startup Act by prioritizing integrating startup issues into existing and new legal and regulatory frameworks. Crucial issues facing startups are addressed in the review of the procurement and income laws of the country. One of the main issues Rwanda is currently addressing is the localization of the definition of startup to ensure that the proposed policies reflect the needs of local startups. The country is also reviewing all startup-related fees and visa requirements for startups. Rwanda is keenly exploring approaches around artificial intelligence, intellectual property, and other emerging issues related to startups.
The Algerian government is working on a new set of bills to address startup challenges in the country. The bills are expected to address cross-cutting issues affecting startups in the country. The Algerian government has a dedicated ministry for startups, the Ministry of Knowledge Economy, Startups, and Microenterprises. Some key priorities the country is looking to address include; access to funding for startups, retaining Algerian talents to build startups from home, cross-border collaborations, and creating supporting infrastructure for startups. The government has established the Algerian Startup Fund, designed bills directly affecting startups, promoted and started incubators, and entered into bilateral agreements with Tunisia to encourage collaboration between Algeria and Tunisia's startup ecosystem.
It was great to hear The Democratic Republic of Congo (DRC) startup bill has been approved. The Bill is part of the national digitalization plan "Vision Congo Digital 2025". The startup bill was signed into law on September 20, 2022, by President Felix Tshisekedi and published in the government's official journal. At the Transform Africa Summit, the Minister affirmed the DRC's commitment to the digital economy and supporting youth through digital businesses. The things addressed include mobility and IP issues, among other things.
As part of the discussions, there were lessons shared by innovation ecosystem builders in Estonia, building a case on how a small European country has created many unicorns in the past few years. Startup Estonia is a governmental initiative to supercharge the Estonian startup ecosystem. The platform provides information, tools, and resources to individuals and organizations looking to engage with the Estonian startup ecosystem.
Tools and Resources
During the sessions, there were multiple reports, publications, and tools that I4Policy and partners shared to help African governments and startup ecosystem stakeholders fast-track the process of designing and implementing legal and regulatory frameworks favoring the continent's startup economy. The tools included;
- Innovation For Policy Foundation Benchmarking Small Business Acts and Startup Acts
- Innovation For Policy Foundation Entrepreneurship Policy Toolkit 2023
- Innovation Policy Foundation’s One-Day Policy Hackathon Approach (ADDIS Tool)
- Nigeria Startup Act Toolkit.
- Tunisia Startup Act.
Moving forward, African countries are looking beyond addressing policy issues at the national level to address challenges facing startups to scale in secondary markets within the continents. Countries such as Algeria and Tunisia have already signed agreements encouraging the movement of talents and solutions between the two countries. Also, how to effectively integrate startup acts with existing local and regional legal structures. The second version of the Tunisia Startup Act is looking to address some of these issues. We must learn from each other to avoid unnecessary mistakes in the future.