The competition among African countries to become the next digital frontier

By Danilo Desiderio

The competition among African nations to emerge as the next Silicon Valley is growing more intense. In East Africa, countries like Kenya and Rwanda are striving to position themselves as digital leaders on the continent by launching initiatives aimed at attracting investments to technology hubs like Konza and Kigali Innovation City (KIC).

A recent report from the Overseas Development Institute (ODI) shifts its attention to West Africa, showcasing countries that can leverage their technological potential through the African Continental Free Trade Area (AfCFTA) to boost their digital economies, enhance international trade, and create new job opportunities.

According to the ODI report, Ghana stands out as a significant player with a rapidly expanding digital economy, primarily fueled by a robust fintech sector that has seen a steady rise in mobile money transactions. Valued at US$2.5 billion in 2022, this sector represents a substantial share of Ghana’s GDP.

Government initiatives like the Ghana Digital Agenda 2018 and the Ghana Beyond Aid Charter and Strategy 2019, alongside strong regulatory frameworks for e-commerce and digital transactions – including the Electronic Transactions Act 2012, the Electronic Communications Act 2008, and the Cyber Security Act 2020 – are further enhancing this growth.

However, several challenges must be urgently addressed to fully harness this potential. The ODI recommends capitalizing on the momentum from the AfCFTA, particularly the Protocol on Digital Trade, to implement necessary reforms. The primary challenges include:

1. Complex Legal and Regulatory Frameworks: The current frameworks governing digital trade are intricate and require simplification to create a more conducive environment for digital transactions.
2. Lack of Comprehensive Data Protection Legislation: The absence of data protection laws that meet both African and international standards presents significant risks to user privacy and regulatory compliance.
3. Inequities in Internet Access and Digital Skills: Disparities in broadband access and digital proficiency hinder participation in digital commerce, with stark contrasts in internet availability between northern regions (up to 50 percent access) and middle/coastal areas (50–90 percent access).
4. Need for Investment in Digital Infrastructure: There is an urgent need for investment in digital infrastructure, particularly in establishing new data centers and cloud systems to enable Ghanaian businesses to scale and grow.
5. Limited Awareness of Digital Trade Protocols: A survey of private companies engaged in the digital economy indicated a lack of awareness regarding the Protocol on Digital Trade and the legal and regulatory frameworks governing digital activities and platforms.

To maximize the economic benefits of the Protocol, several measures can be implemented:

By tackling these challenges and executing a robust digital trade strategy, Ghana has the potential to unlock significant economic gains. The ODI report estimates that full implementation of the AfCFTA Digital Trade Protocol could elevate Ghana’s GDP to US$71.74 billion and increase exports to US$25.83 billion.

This potential is also attainable for other African nations focusing on one of the most dynamic sectors of the modern economy.

Danilo Desiderio serves as the CEO of Desiderio Consultants Ltd in Nairobi, Kenya specializing in African customs, trade, and transport policies.