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Digital Economy

Kenya and South Africa

offer Insights into Digital

Economy Challenges and

Alternatives

The World Bank is warning of the real danger of a How can we explain this gap between promise and
massive economic downturn across the world. In a re- reality with digital economy investments in sub-Sa-
cent analysis, it warned that many countries – including haran Africa? And how can investments lead to more
those in sub-Saharan Africa – will be facing economic sustainable growth? In my recent study, I analysed
challenges due to rising food and fuel prices. At the the historical case of global business services in
same time, however, there is unshakeable optimism Kenya and South Africa to examine why governments
around the growth potential of African economies as and businesses make certain investment choices over
a whole and specifically the digital economy. The rap- time, and how they can learn to be more in tune with
id rise of tech hubs and startups in urban areas in the context of sub-Saharan Africa.
sub-Saharan Africa in recent years seems to support
that. The main finding is that global templates of success,
such as meeting global standards and developing
Many observers have identified the digital economy scalable business models, often stand in the way of
as an important driver of long-term growth in Afri- realising the full potential of locally specific skills and
ca despite current global challenges. The reality is business opportunities. As I show below, this has
that experiences with promoting the digital economy fundamental implications for today’s digital startup
in sub-Saharan Africa have been mixed. Following scene in sub-Saharan Africa.
great hopes in the promise of “digital connectivity”
in the early 2000s, many scholars have observed that Flawed hopes
the ability of African businesses to turn connectivity The promise of the digital economy has always been
into success in global markets has been limited. a double-edged sword. Many global consulting firms
and international organisations initially saw “digital
The future of Africa’s tech scene is equally uncertain. connectivity” as a key driver for the future growth of
Despite great potential, the tech startups scene is un- African economies. Even today, there is a strong be-
derfunded, and several tech hubs have had to shut lief that you just need to have the right infrastructure
down due to bankruptcy. in place for the digital economy to grow and create
jobs.

32 SERVICE DELIVERY REVIEW | Volume 15 • No. 1 of 2022