Africa has 54 countries but only four countries dominate the digital revolution going on in the world. According to the United Nations Conference on Trade and Development (UNCTAD) Kenya, Egypt, Nigeria and South Africa are leveraging data and various platforms to collectively control the lion’s share of the continent’s digital entrepreneurship activities.

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• Apart from the Kenya, Egypt, Nigeria and South Africa, six second-tier countries — Ghana, Morocco, Senegal, Tunisia, Uganda and Tanzania — make up another 20 per cent, while the remaining 44 countries in Africa account for the remaining 20 per cent.
• The UN agency, however, warns that the growing digital wave on the continent could be curtailed, particularly in Kenya where the Government is looking for ways to start taxing mobile applications and internet usage.

‘‘While this kind of taxation may be attractive to governments, it can be counterproductive if it results in a decline in economic activity by reducing the number of active internet users,” says the report.

UCTAD said efforts to grow tax revenues could also hurt the growth of the growing online businesses as well as suppress start-ups.

According to the report entitled Value Creation and Capture: Implications for Developing Countries, numerous developed countries are discussing or implementing interim and permanent measures to tax the digital economy.

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These include Kenya, Uganda, Tanzania and Zambia. In Kenya, the National Treasury has proposed imposing an income tax and value-added tax on items bought on different e-commerce platforms. The proposals, contained in the Finance Bill 2019, are currently being debated in Parliament. This is also the case with Nigeria which has proposed to tax all ecommerce companies.

Commenting on the findings, UN Secretary-General António Guterres said digital advances have generated enormous wealth in record time, but that wealth has been concentrated around a small number of individuals, companies and countries.

There Is Wide Disparity In Digital Revolution Across The World

The report also noted that the world’s top digital firms are highly concentrated geographically . Among the world’s 70 highest valued digital platforms, most are based in the United States, followed by Asia (especially China). Latin American and African digital platforms are only marginal. In terms of market capitalization value, digital platform companies from the United States increased their share in the global total from 65 per cent to 70 per cent. An analysis of web traffic data confirms the dominance of the large United States digital platform companies. The report also noted that the United States hosts more than half of the top 100 websites used in 9 of the world’s 13 subregions shown in the table. Even in Western Europe, the most-used websites are based in the United States.

Challenges Confronting Emerging Economies

The report noted that the some of the problems confronting developing economies and other entrepreneurship ecosystems include the small size and scope of their markets.

It is rare for them to be able to reach international markets. In the diverse sample used in one study on Africa, 117 out of 135 enterprises (87 per cent) targeted their domestic markets. Enterprises typically focused on using digital technologies to cater to a nearby niche market, the report notes. 

Indeed, few African digital enterprises reach customers beyond the boundaries of their home city. This is because they have to engage with customers directly, and also because only customers in cities have the minimum necessary infrastructural access or technological readiness to engage with a variety of digital products, the report further notes. 

The report further notes that Africa still has fewer capital and other entrepreneurial resources than any other regions in the world to boost its digital economy.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.