Building Resilient African Digital Economies Post-COVID– Key Takeaways From Nigeria
By Maeva Yrio
ATBN, together with the AfriConEU consortium of partners, is working to foster collaboration between African and European Digital Innovation Hubs (DIHs) and build a thriving EU-Africa innovation ecosystem. On May 19th, we hosted our second African Digital Ecosystems roundtable, this time focusing on Nigeria. Nigerian Digital ecosystem stakeholders were brought together to discuss how DIHs can help local startups and businesses harness the opportunities that have emerged from the COVID-19 pandemic and address the challenges they face. Below are some key takeaways from our panel discussion featuring Nneka Ukay (Executive Secretary, Innovation Support Network Hubs), Joel Ogunsola (Co-Founder, Emerging Communities Africa (ECA) – Nigeria), Mimshach Obioha (Former Executive Director, Ventures Platform) and Professor Ajayi (Federal University of Tech Akure).
How has COVID-19 impacted the Nigerian Digital Innovation Ecosystem?
The COVID-19 pandemic has catalyzed the acceleration of a worldwide digitalization. For both the population and businesses, transitioning online was not an option anymore but a matter of survival. In that sense, the impact of COVID-19 on economies has largely been dependent on the ability to leverage digital infrastructure and implement digital solutions. Mimshach Obioha highlighted that the pandemic could either be seen as a “blessing or a curse” depending on which end of the digital spectrum one found themselves.
On the market side, the pandemic has had a positive outcome for companies capable of harnessing the potential of digital tools. This digital shift enabled them to boost revenues and raise more capital as their attractivity soared in the eyes of investors. Fintech companies were among the ones who benefitted the most from this digital transition as demand for technology in the finance sector skyrocketed. The multi-million dollar investment and acquisition of Nigerian fintech startups Flutterwave and Paystack respectively exemplifies this. Overall, there has been a growing interest in Nigerian start-ups among existing and new investors as reflected by the increasing amount of funds invested.
However, businesses which heavily relied on offline operations and were unequipped for that digital transformation were the most hard-hit by the pandemic. For instance, Nigerian DIHs have faced financial challenges as many of them have based their business models around footfall and physical touch points - such as co-working spaces or events. Nneka Ukay mentioned that the key to hubs’ sustainability is the need to identify alternative revenue streams. Some successfully managed to pivot their operations towards services to meet the growing demand for digital solutions and diversified their activities to include consulting services for example. For Joel Ogunsola who runs a DIH in Akure, Nigeria, the impacts of COVID-19 were both positive and negative. One hand the number of participants generally increased during the pandemic as people were home and wanted to utilize their time to develop new skills. On the other hand, challenges such as poor digital infrastructure, connectivity issues and the cost surrounding online programmes prevented many people, particularly youth from attending the courses.
From a socio-economic standpoint, the pandemic highlighted a number of short-falls. In Professor Ajayi’s opinion, “we were not prepared for the pandemic as people but also as a continent”. He decried the passivity of many African economies which from his perspective are set up to be consumers of digital technologies rather than active participants in leveraging opportunities and generating wealth from them. Joel added that the regulatory framework within Nigeria for example was not conducive to frontier technologies - such as blockchain and cryptocurrency - which additionally limits the digital economy’s potential for growth. Furthermore, the COVID-19 pandemic has exacerbated existing issues like gender-based violence and youth unemployment as well as highlighted the barriers such as affordability, lack of infrastructure and skills that are excluding many from the digital economy.
What needs to happen next?
The digital economy has the potential to be one of the biggest drivers for sustainable development and economic growth in Africa. Some African governments are beginning to recognise this. In Nigeria for example, the Ministry of Communication has now been renamed to the ‘Ministry of Communication and Digital Economy.’ However, as our speakers noted, building a thriving Nigerian digital economy will take more than a name change. It will require systematic efforts to support digitalisation including investment into infrastructure and internet connectivity, education reforms to enable the development of a digitally skilled workforce that is aligned with market needs and policies that promote private investment into the digital sector.
The panelists agreed that a more collaborative and sustained engagement of diverse stakeholders across academia, corporate organisations and the government is needed if real progress is to be made in driving the digital ecosystem forward. They emphasised the need for various actors within the Nigerian digital ecosystem together to work on collaborative initiatives and proposed ideas such as joint social impact programmes for young people and partnerships between DIHs and Telecom companies to offer subsidised connectivity services and make digital programmes more accessible.As it stands, a large part of the population in Nigeria, unable to have digital access, remains overlooked and can not benefit from the multiple benefits brought by digital opportunities. For Nneka, developing a culture of innovation as a national policy in Nigeria is key to addressing the digital divides exacerbated by the COVID-19 pandemic and providing solutions to youth unemployment. She stressed the importance of including ICT courses as early as possible in schools curriculum - like China which has introduced AI courses in preschools - to drive the growth of Nigeria's digital economy.
For Mimshach, addressing the digital literacy gap and policy-based incentives to drive investment into the Nigerian technology sector is crucial. He further notes that it is essential for governments to listen and work in conjunction with people actively involved within the sector in order to be able to design effective technology-focused policies. According to Joel, one way to galvanise the government's support for digital innovation could be to clearly demonstrate the financial gains that the sector can bring to the economy for example by providing tangible revenue forecasts. Throughout the discussion and numerous ideas that were shared, what remained clear is that government support and more effective collaboration across academia, governments, DIHs and corporates are necessary if Nigeria’s digital economy is to fulfill its potential.