AFC, Itana partner to create Africa digital economic zone

The Africa Finance Corporation (AFC) has joined forces with Itana to create a digital economic zone in Africa aimed at supporting the growth of technology, finance, and service-based businesses across the continent. This strategic partnership seeks to address the challenges faced by startups in Africa, such as outdated regulations and inadequate infrastructure, by providing them with a conducive environment to operate and scale their businesses. Amadou Wadda, Senior Director and Head of Portfolio Management and Optimization at AFC, discussed this groundbreaking initiative in an exclusive interview with CNBC Africa. Wadda highlighted the rapid growth of the tech sector in Africa, driven by the digitization of various industries like banking, e-governance, and payment systems. He noted that investments in the African tech ecosystem have surged from $2 billion to nearly $6.5 billion between 2020 and 2022, signaling a significant threefold increase over a two-year period. Despite this growth, Wadda emphasized that the sector faces challenges such as restrictive regulations and a lack of essential infrastructure, including reliable power supply and high-speed internet connectivity. As a result, many African startups are registering their businesses outside the continent, undermining Africa's potential to become a global tech hub. To combat these challenges, the AFC has partnered with Itana to launch the ETANA project, which aims to establish a digital economic zone in Nigeria and ultimately across Africa. The project comprises three key verticals: a virtual free zone allowing companies to register without physical relocation, an accelerator fund to provide early-stage financing, and a startup campus offering essential amenities for tech companies and service providers. By creating this supportive ecosystem, the ETANA project aims to equip African tech companies with the resources needed to compete on a global scale. Wadda also addressed the regulatory aspect of the project, highlighting that the Nigeria Export Processing Zone Authority has granted Itana a license to operate within a free zone complex, akin to established models like the Dubai International Financial Centre and e-Estonia. This regulatory framework ensures tax incentives and other benefits for companies operating within the digital economic zone. In terms of timelines, Wadda outlined a phased approach to the project's development, starting with an initial investment of $100 million encompassing the accelerator fund, virtual free zone, and startup campus. With AFC already committing $3 million to kickstart the project, Wadda expressed optimism about attracting more companies to the digital economic zone as the initiative progresses through subsequent phases. Regarding market reception, Wadda highlighted strong enthusiasm and support for the project, especially from stakeholders in the technology sector who view Africa's digital economy as a key growth frontier. He underscored the importance of local partnerships and expertise in fostering startup success, citing the involvement of prominent African tech entrepreneurs within the ETANA project as a testament to its potential impact. In conclusion, the collaboration between AFC and Itana to establish a digital economic zone in Africa represents a significant step towards unlocking the continent's tech potential and fostering economic growth through digital innovation.