The Africa Finance Corporation (AFC) has announced a partnership with Itana, a digital economic zone management company, to develop Africa’s first digital economic zone. This initiative marks a significant step forward in creating a unified platform for businesses to operate and scale efficiently across the continent, with a particular focus on leveraging digital technologies and innovation.

As part of the collaboration, AFC will provide project development funding and lead the financing for phase one of the Itana project, estimated to require an investment of around $100 million. This first phase will feature the construction of an eco-friendly tech campus in Lagos, Nigeria, alongside the provision of funding for startups through Accelerate Africa, a startup accelerator program launched by Itana in partnership with Future Africa.

The formalization of this partnership took place during the Global Africa Business Initiative (GABI), which was held on the sidelines of the 2024 United Nations General Assembly (UNGA) in New York. The partnership signifies a major development for Africa’s digital economy, which is set to transform the business landscape by enabling companies to remotely incorporate and operate within the digital economic zone under optimized conditions for digital commerce.

Itana Digital Economic Zone: A Gateway to the Future

The Itana Digital Economic Zone in Lagos is designed to function as an online jurisdiction, providing businesses with streamlined access to critical services such as tax incentives, immigration services, and banking facilities optimized for the digital economy. According to Itana CEO, Luqman Edu, “Itana intends to be to Nigeria and Africa what Delaware and Silicon Valley are to the U.S., the DIFC is to Dubai, and e-Estonia is to the European Union.”

Edu emphasized that the zone will provide an ideal environment for businesses looking to expand their operations across Africa. “Itana is poised as the gateway to doing business in Africa. Local and international businesses will naturally look to Itana as their point of entry for operations across the continent,” he said.

AFC’s Vision for Africa’s Digital Economy

Samaila Zubairu, President and CEO of the Africa Finance Corporation, expressed confidence in Africa’s digital potential. “Africa’s digital economy is poised for significant expansion and innovation following the rapid adoption of mobile technology, a burgeoning youth population, and the growing importance of digital commerce and services,” Zubairu stated.

With over 1.2 billion people, the African continent is the fastest-growing mobile phone market in the world. This presents a ripe opportunity for fostering digital trade, remote working environments, and tech-based businesses. “AFC is proud to be a pioneer alongside Itana in building Africa’s first digital economic zone. This initiative marks a pivotal step towards creating a thriving hub for the African digital economy, driving innovation, job creation, and sustainable economic development across the continent,” added Zubairu.

Alaro City: The Home of Itana

Itana’s physical presence will be anchored in Alaro City, located within the Lekki Free Zone in Lagos. Alaro City is a 2,000-hectare integrated, mixed-use development designed to serve as a commercial and residential hub. The city offers advanced infrastructure, including a free trade zone designation, which allows businesses operating there to benefit from streamlined processes and government support for international trade.

The integration of Itana within Alaro City further reinforces Lagos’ role as a major player in Africa’s tech landscape. Lagos is home to several successful tech startups and unicorns, and the establishment of the Itana zone will provide a much-needed platform to attract even more foreign direct investment (FDI) and cultivate homegrown talent.

Enabling a Digital Future

Once businesses are incorporated into the Itana Digital Economic Zone, they will enjoy a wide array of benefits, including tax incentives, the ability to repatriate capital, and access to a supportive business community. Companies in the zone will also be eligible for business banking services, special work and residency permits, and a host of digital infrastructure services tailored to facilitate international trade.

The newly launched Itana application is designed to streamline the onboarding process for businesses and individuals. It provides access to events, business visa facilitation, local bank accounts, and a curated marketplace for trusted vendors and consultants. Businesses that meet the zone’s criteria can easily register as a Free Zone Enterprise (FZE) and receive a Business Operating License. These licenses will enable companies to operate within Nigeria, similar to established digital giants like Reliance Info and Future Africa.

A Booming African Digital Economy

Africa’s digital economy is already showing strong signs of growth. The World Bank estimates that the African digital economy could contribute up to $180 billion to the continent’s overall GDP by 2025. This growth is being fueled by increased access to mobile phones and the internet, a growing e-commerce sector, and innovative technologies such as fintech, agritech, and healthtech.

AFC’s involvement in Itana is part of a broader effort to bridge the digital divide and create a unified framework for businesses to leverage digital innovation. The Itana zone will provide startups and established companies alike with the tools needed to scale operations, access new markets, and contribute to the continent’s growing tech ecosystem.

Itana’s Impact on Startups and Innovation

Through its Accelerate Africa program, Itana aims to nurture African startups by providing funding, mentorship, and a platform for scaling across the continent. The program is designed to help startups in areas such as fintech, agritech, and healthtech navigate challenges related to scaling and accessing international markets. It will also offer training on emerging technologies such as artificial intelligence, blockchain, and cloud computing.

This focus on nurturing innovation is critical to Africa’s long-term economic strategy. According to a report by the African Development Bank (AfDB), the continent needs to generate more than 12 million new jobs annually to keep up with its rapidly growing population. By investing in tech startups and creating new digital jobs, Itana is contributing directly to job creation and the development of a robust digital economy.

The Global Context: Africa’s Role in the Digital Economy

Globally, the digital economy is experiencing exponential growth, and Africa is quickly becoming a key player. Initiatives like Itana’s Digital Economic Zone position the continent to capitalize on this trend. According to the International Data Corporation (IDC), global spending on digital transformation is expected to reach $6.8 trillion by 2023. Africa, with its youthful population and growing adoption of digital services, stands to gain significantly from this digital revolution.

Countries like Nigeria, Kenya, South Africa, and Egypt are emerging as major tech hubs, attracting significant venture capital investment. In 2022 alone, African startups raised over $5 billion in venture capital, with fintech and e-commerce leading the charge. The development of digital economic zones like Itana will further enhance Africa’s ability to attract global tech talent, investment, and innovation.

Conclusion: A Vision for Africa’s Digital Future

The partnership between the Africa Finance Corporation and Itana marks a pivotal moment in Africa’s journey toward becoming a global leader in the digital economy. By building the continent’s first digital economic zone, AFC and Itana are laying the groundwork for future growth, innovation, and competitiveness in the global market.

As Africa continues to embrace the digital revolution, initiatives like the Itana Digital Economic Zone will play a crucial role in shaping the future of business on the continent. Through strategic investments in infrastructure, talent, and innovation, Africa is poised to become a global hub for digital trade, technology, and entrepreneurship.

The collaboration also highlights the importance of public-private partnerships in driving economic development. By combining resources, expertise, and vision, AFC and Itana are setting the stage for a digital future that holds immense potential for Africa’s businesses and its people.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

27th September, 2024