Digital finance and integrated innovation ecosystems: challenges for Africa’s future

Olufunmilayo B Arewa, Shusterman Professor of Business & Transactional Law, Temple University Beasley School of Law

Stories about digital finance and other disruptive technologies today often draw needed attention to the dissemination of technologies that may enhance the wellbeing of many. The development and diffusion of such technologies should not, however, be considered in isolation, either in time or space. Digital finance offers the prospect of alleviation of a range of acknowledged problems, including those connected to access and participation in financial networks that have become so pervasive and prominent today.

The promise of digital finance in Africa must be considered within broader local and global contexts. The impact of digital finance will likely be more sustained and robust in Africa if approaches to digital finance are integrated with innovation policies more generally. Approaches centered around innovation ecosystems can also incorporate ongoing monitoring of the impact and outcomes of digital finance and other new technologies within Africa in light of current and historical experiences within and outside of Africa.

An integrated innovation ecosystem approach could have a number of advantages. Such an approach could enhance our understanding of how success and failure should be defined and assessed in the digital era within potentially shifting contexts of implementation and use. Innovation ecosystem approaches could also cut across existing bureaucratic and other silos and take account of lessons of past and present experiences with digital era technologies.

One clear lesson of the digital era is that even if disruptive and other new technologies increase social welfare generally, they may also have significant detrimental distributional and other effects. Anticipating and planning for the consequences of such potentially detrimental effects should be one focus of integrated innovation policies.

Digital finance alone cannot fully address problems of poverty and inequality. Rather, digital finance must be aligned with broader innovation policies that link legal and regulatory environments and technology, economic, business, and other policies, with attention to the impact of such policies on human beings.

Finally, the impact of digital finance and other new technologies is an empirical question that must be continually evaluated to assess the impact of such technologies on inclusion and inequality and other important indicators of human conditions.

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