Scaling and Accelerating Growth: The role of technology

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An installation of fibre optic cables by Mauritius Telecom in Goodlands, in 2015. Fibre optic cables have transformed the economic landscape globally, reducing drastically the digital divide and accelerating the pace of technology diffusion, states the author.

Technology infrastructure backbone to enable connectivity, systems to improve production processes, enabling framework to promote the use and deployment of IT-enabled solutions and an innovation-led government have positive impacts on growth and development. It is established by the World Bank that a 10%point increase in fixed broadband penetration increases GDP growth by 1.21% in developed nations and 1.38% in developing economies.

Fibre optic cables and the wide use of international broadband gateways have transformed the economic landscape globally reducing drastically the digital divide, accelerating the pace of technology diffusion and enabling nations to gain significant strides in efficiency and productivity gains. Such transformation has also led to new businesses, start-ups and entrepreneurs.

The impact of technology and its disruptive force to bring about economic gains is more pronounced on the African continent. Indeed, technology is re-defining the economic agenda of many African nations, providing greater accessibility to basic services, ensuring the mainstreaming of the informal sector, assisting new breeds of entrepreneurs and contributing to elevate the working class and middle class income earners.

The IT infrastructure backbone is also improving rapidly. A number of major IT infrastructure projects have been launched with a view to expand the Pan African Backbone Infrastructure in Sub Saharan Africa. There are approximately 508,000 square kilometers of terrestrial backbone infrastructure (microwave and fibre-optic cables) operating in the region, 2 serving around three-quarters of Sub-Saharan Africa’s communications users. The remaining one-quarter of the region’s communications users utilize satellites for backbone connectivity.

Key initiatives include the Central African Backbone Program Communications and Infrastructure Technology Adaptable Program supported by the World Bank, the National Telecommunications Broadband Network project in Cameroon, the National Optic Fibre Backbone Infrastructure Extension Project in Kenya. In addition, national and international telecom players on the continent such as MTN, Airtel, Huawei, Telkom, Liquid Telekom, Bharti Telecom, Vodafone, Escom, Dark Fibre Africa, to name a few, are active in deploying broadband terrestrial telecommunication access linking cities, towns and villages extending across frontiers within Africa. And this is in addition to the wide undersea fibre optic cable system that surrounds the continent and connects to Europe, Northern America, Southern America, Asia through the Indian Ocean Island ensuring that the continent is digitally part of the global fibre network.

In Mauritius, the importance of IT as an enabler for growth was recognized as far back as 1997. This included enhanced satellite connections in 1997, the first fibre optic cable deployed in 2002 and more recently connection to the LION fibre optic cable in 2012. New initiatives with 2 additional fibre optic cables are under way. The enabling legal framework also accompanied this transformation with enactment of the Telecommunications Act in 1998, the ICT Act in 2001, the Investment Promotion Act with specific Regulations in 2001 to promote the ICT sector as an economic pillar, the Data Protection Act in 2004 and its update to be compliant with governing norms in 2017. In the course of this transformative journey, Government, by way of regulations, forced the reduction of telecommunication costs of the International Private Leased Circuit (IPLC) line for international broadband connectivity which assisted global and domestic companies in need of high bandwidth.

Such an enabling ecosystem in Mauritius allowed us as an Island State to position ourselves as a regional contender in IT and IT Enabled Services Platform. Today the ICT sector accounts for 5.7% of GDP with over 800 companies and counting 24,000 employees. The sophistication in the industry has been noted as our economy continued its transformation journey. From basic call centre activities and BPO/IT outsourcing, today the sector has evolved into greater sophistication through deployment of Virtual reality, Augmented reality, Platform as a Service, Software as a Service, Cloud Services, Analytics and Big Data and Financial Technology in addition to IT/BPO Outsourcing.

The evolution in the Mauritius IT landscape has provided the perfect ground for tech start-ups to be nurtured. Today, we have around 200 technology start-ups that are currently operating and employing more than 600 people. Activities range from provision of cyber security solutions, digital platforms, development of digital content, mobile apps, blockchain based applications.

The next question is how does a Government support and contribute to the development of these start-ups? What resources and support should Governments provide and the enabling environment to ensure these tech companies thrive seamlessly? What market position should a small country like Mauritius adopt? What market entry conditions should be present to ensure attractiveness of the destination? This is where innovation can become a game changer. We know that the world is changing and nations that forge ahead in building innovative capacity today will own the global economy tomorrow. Mauritius has well understood the importance of innovation and technology and created the enabling environment.

Countries like Tunisia, Ghana and Nigeria have clearly demonstrated how entrepreneurship and the start-up ecosystem can be stifled as a result of antiquated legislations and necessitated a complete overhaul in the system with disruptive approaches to enable a start-up ecosystem to flourish. African nations not only must remove these outdated laws but should also incentivize start-ups and ensure a conducive business environment to operate. But success stories of start-ups with significant positive impacts in transport, health care, agri-tech and finance exist in Egypt, Angola, Nigeria and Kenya. In Mauritius, for several years, innovation was stifled due to unclear regulations but gradually positive outlook are registered.

The Regulatory Sandbox Licence, introduced in 2016, has triggered a shift in the regulatory mindset moving from a framework based on bureaucracy, friction and permission to one based on accountability, transparency, opportunity and innovation. The structuring of a Regulatory Sandbox Licence now allows the swift structuring of tailor made regulations to allow innovative projects to operate. As at date, some fifteen licences have been provided for a diverse portfolio of projects: crowdlending platforms, film completion bonds, blockchain based self-automated lending platforms using crypto currency as collaterals, blockchain based KYC systems, e-wallet systems, digital asset exchanges, among others.

Mauritius firmly believes that, as a relatively small nation with mature institutions, highly educated and qualified professionals, it can position itself as an innovation embryonic hub for Africa. It is with this very intention that an African Fintech Association aiming at federating network capacity, pulling of experts, raising of capital, structuring sound regulatory framework was created. Today, more than 30 start-ups are paving their way in developing the required applications for the Africa continent and supported by international experts and corporates.

Fundkiss as a crowdlending platform is already providing services in East Africa, namely in Kenya and potentially extending to Rwanda and Uganda. Three companies are presently deploying e-payment systems in Africa, an essential requirement where retail banking penetration in the continent stands at 38%. Two companies are developing their broodstocks (oyster nacres and vanilla) for onwards large-scale commercialization in Africa. And all this is being done from the innovative ecosystem provided from Mauritius.

In addition, the National Incubator Scheme (NIS) was created as an enabler for symbioses between Government, the private sector and entrepreneurs. The NIS provides for Governmental matching grants to recognized incubators to support innovative entrepreneurs. At date, more than 100 technopreneurs are involved in some 6 recognized incubators. Innovation is furthermore all about borderless interactions among experts, institutions and companies. The innovators’ occupation permit has been established in Mauritius and now allows for innovators to live, work and play in Mauritius as long as they are registered within a recognized incubator.

The next step in enabling the establishment of a full-fledged innovation framework is the structuring of a sound IP sharing and protection framework. It is with this very spirit that this week itself, Mauritius will be enacting its industrial property bill. The bill will capture the essence of the Government vision to spearhead innovation by creating a conducive environment enforcing intellectual property protection. In addition, it will streamline and consolidate under one comprehensive enactment the provisions for the different tools related to innovation protection namely: patents, utility models, layout-designs of integrated circuits, breeder’s rights, industrial designs, marks, trade names and geographical indications. This will provide for the accession of Mauritius to the Patent Cooperation Treaty, the Hague Agreement (industrial designs) and the Madrid Protocol.

Technology across Africa is making tremendous strides by removing physical barriers, unlocking growth potential, assisting the burgeoning of new start-ups and entrepreneurship and the technology framework provides a perfect breeding ground for innovation. Many countries across Africa through timely investment in telecommunications infrastructure deploying terrestrial fibre and microwave networks, connecting to undersea fibre optic cables and promoting enabling telecommunications legislations will soon reap the dividends of such a transformation.

By Ken Poonoosamy,

(Deputy Chief Executive Officer, Economic Development Board (Mauritius) & Chairman and Board Member, COMESA Regional Investment Agency)

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