The Digital entrepreneurship is broadly proxied by the quality of entrepreneurship as well as the extent and depth of the supporting entrepreneurial ecosystem, as captured by the 2018 Global Entrepreneurship Index (GEI) compiled by GEDI (2018). This index ranks 137 economies based on the ability and needed measures to build an entrepreneurship ecosystem. The GEI score for the African continent (18.3) is lower than that of low-income and lower-middle-income countries (25 and 20.1, respectively). In the World Bank recently released Africa’s Pulse Report, Volume 19 which is an analysis of issues shaping Africa’s economic future, at the other side of the spectrum, nine of the 10 countries at the bottom of the GEI scores are in Africa, among which five are in West Africa (in descending order) Benin, Burkina Faso, Guinea, Uganda, Sierra Leone, Malawi, Burundi, Mauritania, and Chad. The report stated that North Africa has made more progress in supporting these ecosystems than Sub-Saharan Africa (26 and 16, respectively). Only four African countries have 2018 GEI scores above the world median (27.8), namely, Botswana, Morocco, Namibia, and South Africa. Entrepreneurship is interpreted as the dynamic and institutional interaction between entrepreneurial attitudes, entrepreneurial abilities, and entrepreneurial aspirations by individuals, which drives the allocation of resources through the creation and operation of new ventures. According to GEDI 2018, attitudes refer to the way countries think about entrepreneurship, abilities are captured by entrepreneurial skills and aspirations are reflected in the capacity to build an ever-growing enterprise. The results for Africa and its sub-regions vis-à-vis other regions in the world are qualitatively similar to those of the overall GEI score. “The lower GEI scores for Africa might be attributed to the fact that the region’s entrepreneurs operate in weak business environments including unclear and complex laws and regulations, inefficient procedures, and excessive costs—and have low access to skilled labor, markets, transport, and supporting infrastructure” it writes. Despite the strong entrepreneurial mindset in Africa and the growing number of digital entrepreneurial intermediaries, the continent the World Bank says has not translated its potential into a vibrant or comprehensive digital entrepreneurial ecosystem with commercial digital hubs that can generate talent and ventures able to compete at the global level. For instance, only Nigeria and South Africa have been able to produce private companies with valuation exceeding US$1 billion. “A strong emphasis is needed to provide the foundational building blocks to support the realization of the entrepreneurial potential of the continent and for Africa to become an essential part of the global digital entrepreneurial ecosystem.” The analysis of regulation and competition in the digital economy as well as their impact on market development will be thoroughly examined in World Bank (2019a). In this context, the African Regulatory Watch Initiative (ARWI) report provides evidence on the regulatory impact on market development in ECOWAS (World Bank 2018e). Firstly, the countries with the highest penetration of broadband are Nigeria, Cabo Verde, Ghana, Senegal and Côte d’Ivoire which have a modern and transparent license framework or strong enforcement of the regulatory framework. Second, the countries with the lowest internet penetration rate and low growth rates are Benin, Burkina Faso, Guinea, Guinea-Bissau, Niger, Sierra Leone, and Togo have a restrictive license regime with severe restrictions on entry to the market. Third, the report argues that the openness of the licensing regime and its enforcement fosters competition and the development of broadband markets.
By Zainab Iyamide Joaque
Monday April 15, 2019.