![[Column] Patrick Ndegwa: Fostering new business models in the digital economy - what role does policy have to play?](Images/Key Persons/Patrick Ndegwa-SEACOM.jpg)
[Column] Patrick Ndegwa: Fostering new business models in the digital economy - what role does policy have to play?
The digital economy is changing both our lives and the ways we do business. It's driven by data and information, and we’re starting to see more startups exploit digitally enabled opportunities, giving large established enterprises a run for their money.
But why? Much of it comes down to new business models. Considering the flexible nature of startups and their ability to adapt to change, larger enterprises will be facing some serious competition if they don't also embrace digital opportunities. Emerging technologies also have an important role to play, and those with a firm grasp on digital transformation have a better chance of developing sustainable digital capabilities.
The result will be a digital economy that offers opportunities for disruptive ideas and innovative business models to help spearhead growth in the digital age.
Yet, if we are to facilitate this transition and help more sectors and businesses change, a different approach may be required. This approach needs to take into account fundamental changes that may challenge countries’ competitiveness in the short term, but provide long-term benefits.
Locally, we have a lot to gain from the digital economy, but before we can fully harness its potential, we first need to build ecosystems that facilitate digital transactions nationally, regionally, and globally. Published in 2019, the Digital Economy Blueprint presents a framework to improve Kenya’s and Africa’s ability to leapfrog economic growth. According to the document, Kenya’s digital economy will be “premised on ubiquitous provision of universal broadband access that will drive digitally enabled services for a digital people and economy.”
This tells us that countries that are able to harness digital technologies also need digital infrastructure, digital skills, digital platforms, and digital entrepreneurship to support their digital ecosystems. It’s because of this that digital-first policies and their underlying frameworks are essential for countries that want to transform their overall economic outlook.
Policies that foster new age business models
If we are to create vibrant, innovative digital ecosystems, we need to first assess whether systems are sufficiently responsive and agile, and whether new policies should be considered. For Kenya to keep pace with technological innovation and the growth of the global digital economy, we will need stronger digital foundations, which may include new regulations and policy guidelines designed to support the digital transformation.
The World Bank reports that in rural areas in Kenya, connectivity is less reliable, prices are higher and in many cases the fibre network does not reach them. Thus, there still remains a significant digital divide and widespread gaps in basic digital skills. This will take public investment and progressive policy measures to encourage private sector investment and innovative services to include these difficult-to-reach consumers.
Investment aimed at accelerating a dynamic and inclusive digital economy for Kenya combined with policies that work alongside business objectives and rapid digital market evolution are both critical for our country. Once we’re able to adopt modernised telecommunications regulations and empower an independent communications authority that can streamline regulatory procedures and enforcement to facilitate private sector investment, competition and consumer protection will follow.
An example of this is the crowdsourcing platform mentioned in the Digital Economy Blueprint; it’s a collaborative and innovation-focused approach where governments openly work with citizens, companies, other government organisations, or NGOs. In this approach, government serves as an orchestrator or hub for ecosystem collaboration, but with largely undefined roles for participants. These types of digital exchange platforms allow real-time data to be used to enable a country to transform, improve decision making, and initiate policy changes.
One of the fundamental policies needed to nurture digital businesses is a national ICT policy that takes into account modern, digital requirements - which are very different to what we needed even just 10 years ago. This policy should align to the national priorities of the country and provide a measurable plan to enable everyone to participate in the digital economy and reap its benefits.
Areas of transformation
Digital innovation increases competition as it tends to give rise to active startup creation connected to product innovation and low barriers to entry. Indeed, the digital economy has encouraged an entrepreneurial ecosystem that capitalises on technological adoption, builds companies of the future, and enables enterprises that will increase overall economic growth and job creation. So, what needs to be done to nurture this? Access to capital for startups needs to be improved and existing taxation and procurement policies which are not tailored for unique startup business models need to be reviewed.
Innovation requires a combination of different competencies as digital elements are added to traditional products. Networks and platforms are becoming more important, in turn enabling companies to provide ecommerce and digital services to Kenyan consumers. This will encourage local and international investment in digital infrastructure. With the right policies, the result will be increased competition, decreased prices, and a step closer to closing the digital divide.
The current trend where governments impose heavy taxes on digital infrastructure equipment, digital devices, and telecommunication services leads to excessive prices and decreased adoption. Instead, we need a responsive, interactive approach that considers the current landscape to drive digital business and government in a way that is locally relevant. Only then can these policies support new business models, future-proofing the Kenyan economy and ensuring that it thrives in a digital world.
Patrick Ndegwa is Business Sales Lead for SEACOM East Africa.
