Four countries, among them Kenya, control 60 per cent of Africa's digital economy, according to a new report.
The study by the United Nations Conference on Trade and Development (UNCTAD) found that Kenya, Egypt, Nigeria and South Africa are leveraging data and various platforms to collectively control the lion’s share of the continent’s digital entrepreneurship activities.
Six second-tier countries - Ghana, Morocco, Senegal, Tunisia, Uganda and Tanzania - make up another 20 per cent, while the remaining 44 countries in Africa account for the remaining 20 per cent.
The UN agency, however, warns that the growing digital wave on the continent could be curtailed, particularly in Kenya where the Government is looking for ways to start taxing mobile applications and internet usage.
"While this kind of taxation may be attractive to governments, it can be counterproductive if it results in a decline in economic activity by reducing the number of active internet users,” says the report.
UCTAD said efforts to grow tax revenues could also hurt the growth of the growing online businesses as well as suppress start-ups.
According to the report titled Value Creation and Capture: Implications for Developing Countries, numerous developed countries are discussing or implementing interim and permanent measures to tax the digital economy.
These include Kenya, Uganda, Tanzania and Zambia. In Kenya, the National Treasury has proposed imposing an income tax and value-added tax on items bought on different e-commerce platforms. The proposals, contained in the Finance Bill 2019, are currently being debated in Parliament.
Commenting on the findings, UN Secretary-General António Guterres said digital advances have generated enormous wealth in record time, but that wealth has been concentrated around a small number of individuals, companies and countries.
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