What Does President Biden’s Election Mean for African Tech?

The relationship between technology and government is the epitome of a “Love, Hate” affair; so now the world is waiting to see if President-Elect, Joe Biden will be the one to reignite the passion. At one point in time, the US government represented Prometheus, giving the earth the building blocks of world changers like the internet and GPS. Decades later, the relationship has become more contentious as the same government levies anti-trust lawsuits and legislative hurdles to reign in the multinational growth of household names like Google and Facebook. The bigger question remains, even if President-Elect Joe Biden is for growth in the tech sector, where does Africa fall in that equation.

To answer this question effectively, We have to understand the immense size of US tech companies to realize their impact on global technology. The majority of the top thirty Dow Jones Index companies by market capitalization are either tech companies or highly dependent on tech innovation as a way of maintaining their competitive advantage. Microsoft, Apple, and Visa; the top three biggest companies in the US, would be number five behind Germany on the list of GDP by country or 8.5 times the GDP of Nigeria, Africa’s largest economy. This speaks to the ability of US technology companies to engage the far reaches of the globe to convert customers and this reach also comes with influence. The United States has a long history of leveraging advanced technology to enforce foreign policy and the influence of tech startups does not go unnoticed.

We are all aware of the advanced explosives, drones, and cyber tools in America’s war chest, FAANG companies like Google can also be bullets in the USA’s digital gun. China vs America is an example of how wars will be fought in the future with the digital tools we use every day to shut down the aims of economic foes. 5G currently represents the heart and soul of 4IR and the US cannot allow China’s Huawei to be the global supplier of this advancement. On one side Trump’s administration was putting political pressure on allies, disrupting national infrastructure agreements with Chinese companies, and arresting the Huawei CEO. However; Huawei was also stripped of access to Google services like Google Maps and the Android operating system; temporarily crippling sales of the devices and the usage of the current devices of one of China’s largest contributors to their immense GDP. 

America is not alone in its use of technology as a way to enforce policy at the highest levels of government. US government forces and allies have used viruses to cripple the infrastructure of their adversaries like when Iran’s nuclear reactors were mysteriously shut down. Other players have taken queues from America’s advances and are finding ways as both national strategies and empowered individuals to enforce their will. Saudi Arabia’s Crown Prince Mohammed bin Salman is said to be behind the murder of journalist Jamal Khashoggi and the hacking of Amazon CEO Jeff Bezo’s phone via an Israeli cybersecurity firm. Russian hacker elite “Cozy Bear” a purported arm of Russia’s FSB, was previously accused of US election tampering and more recently with attempting to steal COVID-19 vaccine research. Africa tends to have a higher tendency to shut down access to the internet as a way of shutting down government dissent. With dissent high across the world, this makes the new president’s position more important than ever. 

Although President-Elect Joe Biden’s administration has yet to begin we can use some insight from the Obama administration. President Obama, the first social media president, exposed then-Vice Presidential candidate Joe Biden to the power of social media and other technologies. A 2016 Article by the Intercept reports that not only did President Obama average more than one meeting a week with Google executives, the administration also exchanged over 250 employees with Google during his tenure. Although Obama wasn’t considered perfect in the eyes of the tech giants due to his policies in areas like intellectual property and privacy; we can comfortably assume Biden served within a presidency that grasped the importance of technology across varied use cases. 

We can also take a historical look at how the Democratic Party has engaged tech as a party. The new brand of US techies doesn’t currently fit into any political model based on what they stand for. They typically vote democrat because of the youth driving tech value education and see the role of government as more of an investment partner than a regulator. The truth is that neither side thinks very highly of big tech but for very different reasons. Democrats think that big tech companies like Apple and Google have monopoly power, Republicans think social media companies discriminate against them, and both sides want to break up their power. 

With all that President-Elect Joe Biden can do for America, what does he mean for Africa? We can expect a more stable foreign policy executed through existing coalitions instead of head-on collisions that stood out in the Trump and China relationship. Biden’s plans for access to the internet bode well for Africa. His willingness to invest $20 Billion into America’s rural broadband infrastructure makes doing the same in Africa more digestible. Biden has proved to be open to various forms of free trade deals but has also been one to put human rights violations at the forefront, potentially muddying waters for African countries like Nigeria. There’s a lot we don’t know, but I have a few educated guesses on what will happen next. 

What The Joe Biden Presidency Means for African Tech:

1. Tax Implications 

Corporate Tax – The Trump administration tax relief given to big companies will be revoked both increasing income tax rates by almost 15% and possibly removing the tax break given to income earned overseas. The result will be less foreign capital injected into US subsidiaries based in Africa as the tax incentive will no longer exist.

Capital Gains Tax – The current venture capital model gives discounts on money earned from investments. Biden plans to disrupt this model by expanding the tax to include those who make over $1M from their investments. This will discourage using VC investments as a way to earn cheaper money, negatively impacting investment in general especially Africa. 

Brad Baum of Chicago-based VC Lightbank – “If there’s less limited partner investment in a fund, you’ll see smaller funds with less capital to deploy, and tighter investment terms that are potentially less favorable to [startup] founders.”

2. H-1B Visas

The Trump administration and their immigration policies made the H-1B visa application, a process that allowed big tech firms to hire specialized talent, an arduous journey. A recently passed law in this area requires H-1B visa recipients to be paid at least $208k to be eligible causing concern for many currently under this status. 

The Biden administration plans to reform the H-1B visa policies and possibly eliminate green card caps by country. This means there will be increased opportunities for top-level talent to find jobs in the US working for big tech companies. We can assume there will be a less contentious relationship with the US and immigration going forward. 

3. Social Media Censorship & Privacy

Nigerians have been up in arms for the past year due to an Anti-Social Media bill introduced on November 5th, 2019. International communities have spoken out against the measure and it’s draconian punishments. However; people would be surprised to know that Nigeria isn’t the only country to attempt to stem the power of social media.

President-Elect Joe Biden’s plans to stop harassment on social media would seem innocent enough if not for this past of voting on and introducing legislation that gave the FBI more authority to surveil communications including internet traffic and VOIP calls. This act will create more backdoors into communications allowing governments all over the world more access to private information. 

Those in the music industry may have to fear lawsuits when sharing music files or allowing music files to be shared. Joe is seen as a champion of Hollywood and copyright laws making it a felony in some cases to download and share music. This may not have a huge impact on major artists, but will impede the free sharing of music that may have introduced Africans to lesser-known artists and vice versa. 

4. Antitrust Lawsuits

Antitrust laws are meant to keep companies from getting so big that no one can compete with them. By breaking these companies up into smaller pieces, it forces them to operate under different laws, financial structures, leaving room for more companies to participate in the space. 

Companies like Google are facing backlash about their control of areas from online advertising to underwater cable laying capacity. Breaking up these larger corporations leaves room for niche players that answer to the needs of specific audiences to become top of mind. Lawsuits of this nature can take years giving savvy African technology companies the time to build a solution to fill profitable gaps.

5. African / US Investment

Trump’s “America First” policy featured a break from common associations and allies that pushed money into Africa. Biden will soften that stance resulting in more income flowing into organizations like WHO and the Paris Climate Agreement that support the infrastructure of African countries.

President-Elect Biden will meet a Republican-led Senate ensuring a more aggressive foreign policy regarding funds deployed from an FDI perspective. Republicans are typically ready to wheel and deal if the right deal is on the table. The US also prefers to deal with national parties over regional ones leaving Nigeria well-positioned. 

The new president will be interested in quick wins to build momentum. The same will hold true for the African continent. Extending AGOA and supporting the African Continental Free Trade Zone would be easy ways to gain political capital that will inherently create opportunities for tech companies to build the digital infrastructure necessary for these industries to grow sustainably. 

Is the Biden administration a positive sign for Africa, as usual the answer is not really. However; the current President-Elect’s policies will leave more room at the table for African leaders and companies to negotiate. We can assume that the same social issues that plague America internally will continue in the usual ways, but the outward policy will most likely be one that does not choose to refer to Africa and other developing regions and continents as s#!t-hole countries. For now, that’s a start…

Sources:

  1. Top 30 Dow Jones Index List
  2. GDP by Country
  3. China vs America
  4. Iran’s nuclear reactors 
  5. Murder of Journalist Jamal Khashoggi
  6. Hacking of Amazon CEO Jeff Bezo’s Phone
  7.  “Cozy Bear” a purported arm of Russia’s FSB
  8. Africa tends to have a higher tendency to shut down access to the internet
  9. President Obama, the first social media president
  10. Silicon Valley’s President
  11. The new brand of US techies
  12. Stable foreign policy executed through existing coalitions
  13. Biden’s plans for access to the internet
  14. Biden has proved to be open
  15. Biden administration plans to reform the H-1B visa policies
  16. Legislation that gave the FBI more authority
  17. Joe is seen as a champion of Hollywood
  18. The US also prefers to deal with national parties
  19. Extending AGOA and supporting the African Continental Free Trade Zone