Businesses in developed economies may find themselves annoyed, frustrated, or even stifled by government regulation and bureaucracy. African startups, on the other hand, are actively lobbying their governments to put more rules in place.
Just look at the growing number of countries exploring “startup acts,” inspired by Tunisia, which in 2018 enacted legislation to define “startup” and provide incentives like tax exemptions and paid leave to pursue entrepreneurship. A recent report ranking Africa’s tech ecosystems praised countries following Tunisia’s lead—Morocco and Ghana among them—for enacting reforms that position science and technology at the heart of their economic transformation.
Legislation allows startups to operate with the certainty afforded by a clear framework for expansion. Take the case of telemedicine, which is growing rapidly as a result of the coronavirus pandemic, but struggling to scale because of inconsistent rules within and between countries. Or ask Nigerian entrepreneurs, who recently requested the government consider a regulatory framework for startups after a surprise ban on crypto platforms by its central bank. Being at risk of getting wiped out by a government policy flip-flop doesn’t make for an encouraging operating environment.
On the flip side, businesses should be wary of any truly heavy-handed approach. “Without forward-looking approaches that strike the balance between protecting African ingenuity and scaling up, increased regulation can reduce foreign interest and stall the momentum on the continent,” says Yaw Thompson, a Quartz Africa contributor and senior analyst at Forbes Tate Partners in Washington DC.
Thompson cites his own telemedicine example: The CEO of Accra-based African Health Holdings, Sangu Delle, has said that in order to grow, the company must contend with Ghana’s chronic shortage of healthcare workers. “Potential solutions…would require increased investment,” Thompson says.
“Growing calls for regulation aimed at improving the business environment for African innovators…should also include forward-looking measures, such as the facilitation of skills and technology transfer in order to make these homegrown solutions more scalable, and sustainable,” he concludes. “Most importantly, it should strike the balance between protecting African ingenuity, and fostering stronger investor relationships in the long term.”
Sign up to the Quartz Africa Weekly Brief here for news and analysis on African business, tech, and innovation in your inbox.