A new report by Naspers and the Mapungubwe Institute for Strategic Reflection (Mistra) has called on South African regulators to create an enabling environment for the growth of digital platform businesses – by not regulating them into the ground.

The e-commerce giant, which owns Takealot, has had a number of skirmishes with the Competition Commission in recent years. The commission has focused attention on Takealot’s marketplace operations, proposing a series of interventions that have drawn criticism from the e-retailer. The commission also previously torpedoed Naspers’s attempt to buy WeBuyCars, a move that drew a sharp rebuke from Naspers chairman Koos Bekker.

According to the Naspers and Mistra report, titled The Economic Opportunity for Digital Platforms in South Africa, regulators should consider the relative newness of the country’s digital businesses and the digital economy at large, and regulate such platforms in line with the country’s level of maturity and development.

Speaking at the launch of the report in Sandton on Tuesday, Naspers South Africa CEO Phuthi Mahanyele-Dabengwa said the digital economy can become the “flywheel” of South Africa’s economy. To get there, however, government cannot come up with a regulatory framework on its own.

“Too tight a regulatory grip can stifle the growth of the industry,” said Joel Netshitenzhe, executive director at Mistra. “Regulatory dexterity and a societal approach to regulatory policy development will stand the country in good stead.”

According to the report, the regulatory environment for South Africa’s platform economy is evolving, with promising developments designed to foster innovation, boost competition and enhance customer protection.

Regulatory sandboxes

However, challenges remain due to regulatory uncertainty and inconsistency, particularly in highly regulated sectors such as financial services and transportation. The report highlights the country’s burgeoning fintech sector, saying businesses are navigating regulations that were designed for traditional businesses, not digital start-ups.

The report says regulators should adopt a “regulatory sandbox” approach to managing digital platform businesses. This will involve creating categories that catalogue digital businesses according to their level of maturity while keeping the maturity level of the sector in which they operate in mind.

These regulatory sandboxes will help relieve the regulatory burden and encourage growth and innovation while giving regulators the opportunity to monitor new growth sectors and use the data gathered to create sound rules.

Meanwhile, the report calls for additional support for “hyperlocal” platforms such as DeliveryKaSpeed, Zulzi and YeboFresh. These last-mile delivery specialists are driving the uptake of e-commerce platforms in the townships.

“We must not regulate too early or overreach, so that we give smaller players and young tech start-ups an opportunity to survive without being bogged down in regulation. We need to give these platforms special concessions so they have springboard they can use to grow to the next phase,” said Shamiela Letsoalo, director of corporate affairs and communications at Naspers, who also spoke at the event.

Also key to improving the regulatory landscape is speeding up regulatory processes. According to the report, it can take up to 180 working days to process some approvals, which hampers timely access to digital infrastructure and services.

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The report also found that regulators are struggling to keep up with the growth of some digitally driven sectors, leading to gaps in data privacy, cybersecurity, consumer protection, employee rights in the case of gig workers and, in the case of offshore e-commerce platforms such as Shein and Temu, tax collection. – © 2024 NewsCentral Media