Jumia Group has urged African governments to implement the right policies that will support the realization of a digital economy.
At the Group’s 2020 closing remarks, Juliet Anammah, Chairwoman, Jumia Nigeria and Head Institutional Affairs Jumia Group, identified areas governments’ could consider reeling out business friendly policies to support digital services.
According to her, “there should be reduction in minimum taxes that small and medium enterprise (SMEs) should pay; Removal of all roadblocks to access foreign capital as well as not placing new responsibilities on SMEs as they provide jobs in the economy”.
She advocated for the use of fiscal measures to incentivize African Trade and MSME trade in particular to shift from largely offline/ cash based informal economy to formal and traceable digital platforms.
“Traceability drives better planning, attracts capital and drives growth. A good example is rebates or reduced VAT / Sales tax for digital transactions made via mobile money or card payments. Such a shift also expands the taxable base in Africa.”
Digital business models such as eCommerce she said: “have long lead times to break-even (circa +10 years) and till eCommerce fully matures in Africa (attains up to 15-20% of total Retail on the continent), policies can support by ensuring there are no roadblocks such as -additional taxation that applies to eCommerce only and not other channels of commerce.
– Direct / indirect foreign equity caps that impede the ability of resident eCommerce platforms to attract long term equity to grow.
– Since a smart phone is part of digital infrastructure that enables digital business models, African countries can remove tariffs on low end smart phones till countries attain desirable levels of smart phone penetration. The target penetration level could be set at 70%.
“African media needs to support the digital economy and companies operating in that space in order to see successful outcomes and achieve the development needed. This can come in the right narratives that will encourage investment into the sector,” she noted.
She explained that, Africa is also experiencing rapid urbanization with rural dwellers moving to the few megacities and placing enormous pressure on the physical, political, economic and societal infrastructure of these cities.
“Africa thus needs millions of jobs that will provide meaningful work, livelihoods and provide people with a pathway out of poverty. Due to the impact of CoVID, GDP is expected to contract to -2.5% in 2020 from 3.4% in 2019, the first recession in 25 years.
“Jobs in Africa today come from MSMEs. Of the 418 million people employed on the continent, 83% are employed by MSMEs. Africa has 85 – 95 million MSMEs and of these 96% are micro enterprises and half of them are engaged in Trade. 87% of African MSMEs are in 10 countries with 77% of the total African GDP – Nigeria, Kenya, Tanzania, Egypt, Morocco, South Africa, Ethiopia, Algeria, Ghana and Angola,” she said.
Africa has an advanced digital infrastructure
Average Internet penetration in Africa is 39.5%, 525 million people have access to the internet. In 6 countries, Kenya, Libya, Seychelles, Morocco, Mauritius and Tunisia, mobile internet penetration is above 65%. 80% of Africans have mobile subscriptions. Smartphone adoption is 40% and projected to be 67% by 2025. This digital infrastructure is an asset which Africa can leverage to leapfrog development, create jobs and accelerate economic recovery post-CoVID.