For the past few months, Africa has been going through a buzz trend; “the digital economy”, for good reason ofcourse, with many African governments talking digital transformation and roadmaps of how they will get there.
But what exactly do we mean when we say ‘digital transformation for the digital economy’? Are we talking policy? infrastructure? human capital? ecosystem? Where exactly does one begin?
One of the popular definitions says ‘Digital transformation is not about replacing the analog product with a virtual service. It defines the digital changes brought to the value chain to develop, produce, promote, distribute and sell a product or service. During this process, the data generated can be utilized to understand and boost customers’ experiences and increase efficiency.’
Sounds very technical, but in laymans language, it basically means how we use and intergrate digital technologies and platforms in our everyday lives. Tanzania has over 28 Million+ internet users as per TCRA’s December 2021 report and has forecasted onboarding of 700,000+ new internet users per year. We are easily talking of 30 Million+ internet users by 2025 which also happens to be the year we have pledged to achieve more than 80% of internet network coverage, committed by President Samia Suluhu Hassan in several speeches on anything technology since she took office.
However, is access to mobile network/internet the only priority we should be focusing on? What else can we do to leapfrog to the digital transformation we need for a thriving digital economy which is crucial now more than ever lest we get left behind particularly now, with the African Free Continental Trade Agreement as it unfolds.
According to the World Bank, ‘Regardless of rapid urbanization, approximately 70 percent of the Tanzanian population still lives in rural areas, where poverty is deeper when compared to the population in urban areas. Out of the 11.3 million rural poor, some 3.5 million live in extreme poverty. Furthermore, population keeps growing fast, adding approximately 1.5 million people annually, which puts pressure on the economy, natural resources, infrastructure including digital, urban planning, and job creation.’
The same population living in extreme poverty, are also the major denominator in the informal economy which has youth and women as the majority i.e Agriculture employs 56% of the total women labour force and even with increasing mobile usage and mobile money penetration, the income/earnings for many of these women are not enough to transition to formal businesses that can scale up.
In my humble opinion, ensuring access to mobile networks and the internet in these areas is commendable, however we also need to look at an industry based approach that can encourage creation of more products and solutions that are affordable for the above mentioned population.
Data costs in Tanzania, although claimed to be one of the cheapest in the region are still not reflective of the average income of this particular population and therefore what has been happening is not enough meaningful online connectivity and participation because even when the few afford to get online, they cannot stay online long enough.
This is also contributed by the fact that even with the big numbers onboarding onto digital platforms, they are going in blind, with little if none at all knowledge on basic digital literacy which includes tips on how different platforms work, which one is best suited for their purpose online, and the general dos and don’t of the internet which by the way could very well play a huge role in creating safer online spaces free from harassment and cybercrime.
In reference to the same majority population, when it comes to an agenda like job creation and employment for youth and women, The digital economy could be one of the most important drivers of innovation and growth for them in Tanzania as they are the majority who partake in entrepreneurial and SMEs ventures.
What we need beyond just access and affordability, is to also support them with digital identities, products and solutions that can leverage on platforms like mobile money to provide avenues and entry points for their financial inclusion through access to finance.
How do we support the majority of women and youth engaging in entrepreneurial activities in Tanzania through digital and financial skills, but also products that will not require a high level of literacy to use, but can provide simple navigation on i.e record keeping and stock taking that will allow them the much needed structure in monitoring their sales and profit margins, which can project the growth of their businesses and allow them to become ‘bankable’ and eventually ‘loanable’.
A few months ago, Tanzania had a scare mainly caused by misinformation on businesses that run online being TAXED, but in all honesty I think it was to provoke a conversation on how they should be subjected to the general tax threshold as other businesses as long as they hit the mark.
Interestingly, It wasn’t long after that though before Tanzania had a visit from FACEBOOK representatives who met with the tax authority and before we had a formal statement there was more rumor on how the supposedly newly introduced tax would have negative effects on the end user. Observing the conversation that ensued after, Not many of us did our homework to learn how other countries have introduced this particular taxv and the effects it has had, neither did many of us question on how we have let these digital platforms run their business through ads and data that clearly give them revenue without having physical presence in the country. It was even more interesting to observe the uproar which did not even take into account how many Tanzanian users these platforms have that might possibly influence their decisions on these matters.
Moreover, from the recent parliament budget presentations, a recommendation on introduction of 18% VAT as digital services tax was mentioned and passed but I doubt if as the public, we have had enough dialogue to comprehend what this might actually mean for the digital economy in Tanzania.
Let’s now talk about E-commerce and how as a major component of the digital economy, Tanzania might also need some extra efforts put into this. Women and youth entrepreneurs are limited AGAIN by their ‘informality’ when it comes to onboarding them onto digital platforms which need them to be formal i.e business license, tin number etc for compliance purposes.This is continuing to become a missed opportunity for many even with the presence of innovative platforms like Tunzaa an E-commerce platform which allows buyers to pay for products and services in instalments — encouraging a saving culture amongst Tanzanians but also allowing promoting inclusion with options like paying in instalments which majority of Tanzanians need because of prioritising the other much needed essential needs that are still unaffordable to many.
Surprisingly, for some of the women and youth entrepreneurs their feedback to this is formalizing their business is not an attractive option because of the taxes and fees they get subjected to from having physical addresses and businesses. As the growth rate for many of these businesses is somewhat micro, many opt for spaces and environments where they can still conduct their businesses without having to pay the hefty fees and taxes which eat into their profits. We need to again review this particular business environment that continues to pose a huge barrier towards women and youth inclusion in economic activities and now, the digital economy.
For African enterprises (and governments) to take full advantage of new digital opportunities we must build a shared strategic vision to guide future coordinated actions for using digital technologies.
Also according to the Next Einstein Forum (NEF), there are five pillars of the digital economy framework, that can guide the process to digital transformation for a digital economy as observed in the illustration below.
It is encouraging that most of the components highlighted here, have also somewhat been addressed in ‘The Digital Tanzania’ project, a $156 Million initiative supported by The World Bank
The big question would be where are we when it comes to these five pillars and what do we need to do to get to this framework?
I know as a country we are currently on a mission to have postcodes nationally which also speaks to the infrastructure needed in the above framework. We also have reviewed the online content regulations which used to subject digital content creators to hefty fees further excluding them from this avenue of the digital economy. So there is SOME progress.
However, talent is a priority that we keep diverting attention from. With the technologies, we need the talent to execute and implement. Are we truly working towards creating and nurturing human capital with the much needed talent for the digital economy across our priority sectors or as per our national development vision? Where does the digital economy fit into the Tanzania national development vision? Is the 2016 ICT policy reflective of the strategy we need to arrive at a robust digital economy?
Let’s continue the conversation on Twitter- @carolndosi