Learnings from the Nigerian Innovation Policy Dialogue by AfriLabs and UNDP Accelerator Labs by Amadou Sow (UNDP Accelerator Labs), Serge Ntamack (AfriLabs), Tessy Okolo (AfriLabs), Tayo Akinyemi (UNDP Accelerator Labs) and Joshua Omena .A. (AfriLabs).
Currently, it is difficult to inventory policies in Africa, and as a result of this, we have fragmentation and siloing in policy development, analysis and understanding. This sets the stage for the relevant dialogues on our innovation policies. We need to know where we are in terms of the progress made in creating a supportive policy environment for startups.
Discussing innovation policy is worthwhile given Africa’s potential, its ecosystem and its creativity that makes it resilient despite the enormous challenges the continent faces. The low inventory of policies creates a dissonance in enabling startups across Africa. While some African countries have implemented policies that aim to help startups, many have not. This presents an opportunity for alignment between stakeholders and increased support for innovation. In the presence of a thorough dialogue (or series of dialogues) between stakeholders in a country’s innovation ecosystem, the right policies will be an appropriate response, incisively dealing with the identified block roads.
These opportunities for learning and improved support for the innovation ecosystem are glaring especially when we examine the macroeconomic outlook in Africa, alongside the booming startup industry. According to the World Bank, the economic fallout of the COVID-19 pandemic was predicted to slow growth in Sub-Saharan Africa by -3.3% in 2020, pushing the region into its first recession in 25 years. However, there will be a sluggish and multi-speed recovery with significant variation across countries partly owing to higher commodity prices and private consumption and investment as confidence strengthens and exports increase. Simultaneously, funding for Africa’s startups is at a record high, with Nigeria and Kenya serving as the hotspots for Venture Capital investments including $307 million and $305 million raised in 2020. Further, it is predicted that capital funding for African startups will reach a record of $2.25 billion and $2.8 billion in 2021. The role of policy in the recovery and sustainable growth of the innovation economy is crucial and worthy of interrogating conversations.
The UNDP Accelerator Labs, through its network of 91 labs covering 115 countries around the world, including 35 in Africa, partnered with AfriLabs, the largest pan-African network of 347 technology and innovation hubs across 52 African countries and the diaspora. This partnership aims to advance the development agenda in Africa – through capacity development, linking policy and practice to advance innovation as a driver for development. To achieve the ambition of this partnership, both organisations identified national dialogues on innovation policies as a good first step. The first edition was held online in December 2021 and focused on Nigeria. The conversations attempted to address various issues around innovation policies in the West African country, through the eyes of the stakeholders on ground. The stakeholders that were present included Nigerian government representatives, local innovation hubs managers, startup founders, local investors, corporate bodies, development agencies and others.
The dialogue on the innovation policies in Nigeria provided a space for an inclusive discussion and policy exchange among key and diverse stakeholders, on how innovation policy can best serve development and help achieve sustainable goals. It focused on the following priority areas:
- Innovation and SDGs
- Startups
- Policy framework and prospects
Innovation and achieving the SDGs
It was highlighted during the conversations that we need to improve how we communicate about the SDGs and what we are doing to achieve them. The conversations emphasized the role of collaboration and aligning of interests between private and public sectors, and the need for connecting the national role of the Innovation Support Network (ISN) and the continental role of AfriLabs. Stakeholders also suggested a seat for innovators at various levels of government and policy-making, both the regional and country level.
To build an enabling environment for innovation and ideas that tackle the SDGs, an inclusive and bottom-up policy development approach should be encouraged. Sustainable and decentralized funding and infrastructure development should also be a must. Governments and other stakeholders should support local solutions, develop local talent and encourage youth engagement while integrating innovators into decision-making and technical regulatory and overseeing bodies. We ought to also prioritize measuring and demonstrating impact and reinforce the role of the R&D function within the ecosystem.
Supporting startups’ sustainability
The government needs to make more effort to understand the startup environment. In the words of one of the stakeholders during the dialogue: “The government uses the same hammer that it applies on the big companies, on the startups. They correct the baby with the same method as the adult”. We need to ease the bureaucracy for startups and support them with incentives. For example, the new postal tax on logistics companies (i.e. 2% of total revenue applied to transportation startups to help the national post office) is not how you encourage growth in the logistics startup scene. We also need to encourage the geographical distribution of the installation of hubs and innovation poles. This will help reduce the drainage of resources towards the large economic and political centres and give all towns and cities in the country a chance to grow their local innovation economy.
Mobilization and diversification of funding sources
We need more local funding opportunities. Another idea shared was that the state should play the role of a guarantor for access to credit to remove certain barriers such as requiring a track record of 3 to 5 years of activity. Emerging sectors, not just Fintech, need to be supported and focused on, especially sectors like agriculture, healthcare, transportation, trade, real estate and the creative industry. It was also noted that the evolution of skills is required for startup sustainability. Stakeholders were encouraged to embrace negotiation, diplomacy, and a single and united voice to engage the Government on the needs of startups.
Policy framework and prospects
We need to agree on common objectives. What is an inclusive policy framework? It should have a bottom-up approach, be geographically aligned, capitalize on assets (existing policies, involvement of all actors including local innovators etc.) and cover small and established actors. We also need to build trust between the government and the ecosystem and approach policy from a regional and continental context. We need to speak the same language across the board and establish a mechanism for mutual understanding.
“People in government don’t understand the ecosystem, they have their way of doing things.”
We have to deepen engagement and collaboration while also bringing the conversations back to the local level. The call for a proactive system ecosystem should be normalized, likewise our familiarity with government practices as stakeholders. There should be space and platforms to allow transparent engagement and encourage co-creation and partnership, which was illustrated by advocacy for the Nigerian Startup Bill. This collaborative approach led, according to President Buhari, to an enabling regulatory framework for Nigerian tech startups:
“The Bill will ensure that Nigeria’s laws and regulations are friendly, clear, planned and work for the tech ecosystem. This, we believe, will contribute to the creation of an enabling environment for growth, attraction and protection of investment in tech startups.”
The conversations were eye-opening and the ideas shared could change how innovation is supported and enabled in Nigeria. However, this is the first of several African innovation policy dialogues to be hosted by UNDP Accelerator Labs and AfriLabs. We recently concluded another policy dialogue with stakeholders in the Kenyan Innovation Ecosystem, and we will be sharing the outcomes soon.