Regulation destroys Innovation. What should innovators do?

September 28, 2020

“When you go to the regulator to ask for permission to launch an innovation, what capacity do they have to judge this innovation?” asks Professor Bitange Ndemo, Lecturer of entrepreneurship at the University of Nairobi.

Regulators thought M-PESA was another Anglo leasing waiting to happen. They couldn’t fathom the concept of an old lady in the village being able to send and receive money on her phone without having to visit a Posta or a Bank Branch. Having an economist for a President at the time was a saving grace for M-PESA. President Kibaki analysed it economically. Economically, it meant all the money sitting in mattresses would end up in the banks. That was enough for him, and M-PESA flourished. M-PESA would have died if they had sought regulation before rolling it out.

According to professor Ndemo, the new Kenyan education curriculum will bring up more innovators, as it enables individual capacities to be nurtured. If we inculcate in these children the need to always ask for permission, we will curtail entrepreneurship and innovation. Let them thrive, and let regulation keep up with them. That’s how you build Googles and Facebooks out of Africa.

The Kenya Markets Authority recently launched a legal sandbox that allows you to launch and test technology innovations without having to pursue regulation for a 12 month period. These are steps in the right direction, but the reality of innovation is it’s always futuristic, and regulation is intrinsically retrospective. Therein lies the conflict.

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