Afreximbank, in collaboration with the African Union Commission (AUC) and African Continental Free Trade Area Secretariat (AfCFTA), has established a digital policy working group to serve as a high-level platform and point of contact for public-private sector engagement on African Digital policy issues in the context of the rapidly evolving digital economy of Africa. The working group was launched during a workshop held on 6 and 7 April 2022 in Cairo, Egypt. The working group comprises digital “scale-ups”; mature digital ventures in Africa with clear trade-enabling products and services, operations and business models that transcend a single domestic market and provide services across the continent – working alongside representatives of the AfCFTA and AU member states. The working group will provide AU Member States and AfCFTA State Parties with a direct line of sight to the African digital economy and the opportunities that exist within it, as well as insight into the challenges facing the companies operating in the market.
The launch of this working group will help guide digital and ecommerce policy in the region, informed by the insights and experiences of the venture companies, and leveraging on the relationships established by Afreximbank, the African Union and the AfCFTA. The working group will deepen the relationship between African venture companies and the sovereign nations in which they operate, as well as their supporting multilateral institutions, leading to the continued exponential growth of the African digital ecosystem. The African scale ups that presently make up the working group members are Afrikea, Farmcrowdy, Lori Systems, MFSAFrica, MPharma, Sokowatch, SunCulture TradeDepot, Trella and Kobo360. These venture companies operate in sectors ranging from agriculture to cross-border payments and logistics, have established product-market fits, and are currently facilitating intra-Africa trade in various capacities. Afreximbank serves as the secretariat for the working group.
The working group will initially focus on key digital policy areas that hold potential to transform Africa’s digital environment and support African development under Agenda 2063; at the inaugural workshop, the group deliberated policy and regulatory considerations that need to be addressed to accelerate Scale-Up participation in Africa, based on the insights and challenges faced by its African venture founders. These include:
• Regulatory Passports – supporting scale-up entry into new markets by agreeing a standard set of regulatory requirements that would ensure either automatic or rapid set-up in each African market signed up to such an arrangement.
• Taxation: the need to resolve the challenges of double accounting of VAT and Withholding tax facing scale-ups, as well as issues with taxation on top-line turnover for currently loss-making businesses, and the impact of VAT on working capital and transfer pricing.
• Movement of Talent: creating allowances for the ease of onboarding talent from elsewhere in Africa (or global talent in specific situations) to work in scale-up ventures – an industry-wide challenge.
• Recognition of Scale-Ups: identifying scale-ups as a unique business category, and the prioritization of scale-ups in private sector policy discourse given the catalytic role that they play in bringing vast numbers of SMEs into formal trade through their platforms
The digital policy working group will bring these and other emerging issues before policy makers and regulators across the continent through informed policy papers, forums and direct engagements with the goal of building the policy framework that supports extra and intra-African trade, investment and pan-African enterprise for digital ventures across the continent.