Global trade remains important to Africa, even as developed countries struggle with economic dependency realities as well as problems brought about by Covid-19 such as global supply chain disruptions. The world is having to significantly change how it trades.
The future of enterprise and work requires a shift in our thinking mode to a system where trade meets technology. Where value is created at the touch of a button long distances notwithstanding.
In recent times, Africa has looked East; and the East too, mainly China, has looked to Africa to build its Silk Road trade route. And now, their current reality dictates that they engage in a new version of the silk road, the digital silk road.
The Chinese government introduced the Digital Silk Road (DSR) in a 2015 white paper as a component of its Belt and Road Initiative (BRI). It is essentially the technology dimension of the BRI and encompasses all things technology related. From the development of the digital service sector, such as cross-border e-commerce, smart cities, telemedicine, digital currencies and internet finance, to accelerating technological progress.
Asian countries, especially China, India, Malaysia, South Korea, Singapore and Japan, have become central to Africa’s economic, social and political landscape, hence the ‘Look East’ Policy adopted by the majority of African governments.
In a growingly interdependent world of South-South relations, this presents whole new sets of economic, political and social linkages, thus allowing African countries opportunities to pursue a wider and diversified set of relations with non-traditional trading and investment partners.
What does this mean for Africa? While the traditional mode of investment saw the East invest in Africa, the moment is calling for the digital silk road to go both ways. This dual pathway creates a whole new segment of entrepreneurs and owners of capital in Africa. On the 6th of January 2022, Kenya and China signed six bilateral trade agreements that will facilitate commerce, leading to the inevitable explosion in trade volume between countries.
If the overall aim is to make Africa competitive in global trade, then lowering the cost of transactions and increasing the speed with which the deals happen gives Africa the much-needed competitive edge. Africa has demonstrated leadership in developing not only financial inclusion, but also access to payments and finance (the lifeblood of trade), through technologies such as mobile money.
So, how do we give Africa more leverage? First of all, the China-Africa trade balance stood at $50 billion in 2021, which is the largest among the regions of European Union, and the US. For comparison the trade balance between Africa and the European Union was $4 billion while the trade balance with the US was just $3 billion.
At Wapi Pay, we have now fully integrated with Tencent’s WeRemit platform to make trade easier for people and companies between Asia and Africa, in an efficient process that gives everyone better transparency and visibility, at a faster and cheaper way to pay. The ultimate goal is to facilitate trade with Asia by providing fast, secure, reliable and affordable payments between Africa and Asia and strategic partnerships are integral to our development and growth.
Eventually this will realise a global market place for digital global cross border commerce through new technologies such as e-commerce.
The writers are co-founders of Wapi Pay.