During his keynote address at the "Workshop on Digital Transformation in Africa: Leveraging the Promise and Addressing New Challenges", Dr Nimrod Zalk, Industrial Development Advisor in the office of the Director-General of South Africa's Department of Trade and Industry (DTI), explained how a global process of rapid technological change, involving unprecedented growth in digital information will have far reaching consequences for South Afrika and other countries across Afrika. According to Dr. Zalk, because of the rise of digital platforms and e-commerce, Afrikan countries need to start developing policy responses that address the rise of digitization in ways that ensure the policy space can harness potential benefits and improve on the potential negative consequences.
The workshop was convened by the Global Economic Governance (GEG) Africa and the African Trade Policy Centre (ATPC) of the United Nations Economic Commission for Africa (ECA) and took place on 10 September 2018.
5 key policy responses needed given rise of e-commerce
The 5 key policy responses that Afrikan states need to consider, based on Dr. Zalk's keynote address, are:
1. Afrikan countries need to secure the policy space in multi-lateral, regional and bi-lateral fora and processes to develop responses to digitization that are tailored to domestic conditions and policy considerations.
2. As data becomes the "primary resource" of an increasingly digitized economy, Afrikan countries need to secure a degree of national sovereignty with respect to issues of data ownership, privacy, cyber security, structural transformation and economic inclusion objectives.
3. National taxation systems need to adapt to the rise of e-commerce and digital platforms. This requires ensuring an appropriate taxation regime in relation to e-commerce and other digital and their suppliers and to address issues of transfer pricing and profit shifting to low taxation jurisdications.
4. Policy must address issues of market dominance, competition and market access. The EU has for instance begun to put in place competition policy responses to the impact of network effects that attract users to the largest and fastest growing platforms which result in “winner-takes-most” outcomes.
5. Developing countries need to develop digital industrial capabilities including ensuring high speed and cheap broadband, building linkages between digital platforms and domestically produced goods and services, the provision of industrial financing instruments to do so and the adaptation of technology and skills curricula and institutions to new digital realities.
As the 4th Industrial revolution and its associated technologies play out in Afrika, one finds that the policies of various Afrikan countries are lagging behind. Oft times we have observed that when a new technology gains traction in a country and seems to be disrupting well established industries, legislators tend to go with "banning" it rather than deliberating on how to better regulate it so it benefits citizens.
Dr. Zalk, during his address, added that the manner in which the rise of the 4th Industrial Revolution and digitization are conveyed, are often in hyperbolic terms which tend to assume either unbridled opportunities to “leapfrog” into a brave new world or a disastrous collapse in employment. Rather than assuming either of these extreme outcomes, African countries need to actively engage in understanding and developing appropriate policy responses to the implications of expedited technological change.
Cover image credit: Samuel Zeller