Inside Africa’s new plan to tap power of e-commerce


Africa's dream of thriving e-commerce is taking shape following the rollout of an online trade platform. PHOTO | SHUTTERSTOCK

Africa's dream of thriving e-commerce is taking shape following the rollout of an online trade platform.

The initiative, launched on Monday, is part of the continent’s plan to accelerate its move towards plugging into, and reaping the rewards of, the global digital economy.

Innovators and businesses across the continent will now enjoy a one-stop platform from the African Continental Free Trade Area (AfCFTA), which eliminates hurdles in cross-border transactions while also reducing tariffs on 90 percent of all goods traded.

AfCFTA secretariat told Digital Business that the project also seeks to help business owners find funding for their innovations, an initiative it believes will boost trade across the continent ahead and after the January 1, 2021 timeline for the commencement of the free-trade programme.

"The quick launch of the AfCFTA group of apps and the Vision Challenge to resource our innovators and entrepreneurs with the key instruments to drive trade on the continent shows the unique passion being invested in this enterprise," said Francis Mangeni, director of trade promotion and programs at the AfCFTA Secretariat.

The same app is also meant to issue every organisation or business interested in benefiting from the initiative a "trusted identity" so that it can find partners across Africa, export and import goods under the low duty regime, and satisfy some digital identity requirements at banks and financial institutions.

The AfCFTA App which can be downloaded online is also a knowledge creation and sharing platform and a bridge to the upcoming African Trade Observatory.

This comes barely two weeks to the extraordinary Summit of the African Union Heads of State slated for December 5, 2020 that will take many critical decisions about the direction of AfCFTA.

The project could be Africa's "biggest opportunity" to transform its economy into a global powerhouse since it is now the world's biggest free trade area in terms of participating countries, with a combined population of 1.3 billion people.

The secretariat hopes that the app will be the enabler of its broader vision.

The platform is an African Union initiative in partnership with Sankoree Institute, an affiliate of AfroChampions. The two said they intend to propel the project to success with the backing of the continent's development finance institutions.

"It is true that Africa has seen a number of trade agreements at regional level, but AfCFTA is different because it is being set up as the ultimate programme to fulfill the dreams of the founders of the African Union: a truly single market big and strong enough to compete for the biggest of global opportunities," added Mr Mangeni.

Once fully operational, economists say AfCFTA would considerably expand intra-Africa trade whilst helping the continent move up the value chain in multiple industries, helping achieve the vision of Agenda 2063 of a united, prosperous continent relating on equal footing with its peers on the global stage.

Founder of Harare-based technology and energy company Econet, Strive Masiyiwa acknowledges the power of digital technologies in growing businesses and African economies.

However, according to him, to attain inclusive benefit from the new technologies, where all 54 nations walk at the same pace, African governments must design a workable plan.

"Digital tools have enabled entrepreneurs access markets and have also supported governments to deliver services more efficiently to citizens. But without visionary planning and 21st century skills training for everyone, these same technologies over time could lead to job losses and escalate financial inclusion snags," he cautions.

He gives the example of the global Artificial Intelligence (AI) market which is estimated to be worth over Sh1.8 quadrillion and this money, it emerges, will be split between the United States and China who will take up 70 percent of it.

"Of the remaining 30 percent, the African bloc should strive to get at least 10 percent. Let's create our own version of Silicon Valley, our own platforms whilst including everyone," he remarks.

AU commissioner for Trade and Industry, Albert Muchanga recently pledged AU's commitment in utilising AfCFTA to foster digital sovereignty through innovation harnessing digital technologies but said internet penetration is still way below the global average.

"We have prioritised creating an enabling environment for the digital platforms to adopt the digital transformation strategy. A plan is in place for September 2021 to provide a platform to 150 youth across the continent on a competitive basis to interact with professional tech players and probably have their start-ups funded by the partners," he noted.

Prof Bitange Ndemo of the University of Nairobi's Business School calls for more commitment towards the actualisation of the trade bloc, to ward off vulnerability to technological manipulation by the developed world, as African states remain stuck in disjointed progress in the Fourth Industrial Revolution.

"Time is running out for the unification of all 55 nations. We need to enhance efforts of strengthening AfCFTA which will be a 1.3 billion people digital single market for Africa to negotiate in the global digital economy. We cannot compete as independent nations, we have to unite so that the world can listen to us," he remarks.

A recent research study, E-conomy Africa 2020, released by Google and the International Finance Corporation, estimates that by 2025 the internet economy will contribute Sh19.5 trillion to the Africa's GDP, with a projection of Sh77.5 trillion by 2050.

Driving the continent's digital transformation is a combination of modern innovations in the fields of fintech, e-commerce, telemedicine, edtech, entertainment, transport, food delivery and e-logistics.

Since 2000, the number of people with internet access has grown to over 520 million, which is 40 per cent of the population; with 60 per cent of them accessing the internet via mobile phones.

"Increasing internet access to reach 75 per cent of the population could create 44 million jobs. By 2025, 167 million more people from Africa will have subscribed to mobile services, reaching 623 million users, and smartphone connections in the region will more than double," the report projects.

Some 144 mobile money services are available across Sub-Saharan Africa, serving more than 469 million registered accounts, with daily transactions amounting to over Sh130 billion by the end of 2019, compared with 298 million registered accounts for traditional bank accounts in 2017.