How Africa can reimagine the trade of tomorrow

E-commerce platforms allow companies to reach a broader customer base in domestic and international markets, regardless of size or location.

Photo credit: Shutterstock

As the world prepares for what is becoming known as digital wars, the African continent is deploying digital solutions to accelerate its economic growth.

With a rapidly growing population exceeding 1.4 billion, a vibrant entrepreneurial spirit, and a 4G mobile phone penetration rate projected to reach 50 per cent by 2030 (GSMA), Africa is poised for a digital revolution.

Digital trade, the cross-border exchange of goods and services facilitated by digital technologies, presents a potent opportunity to unlock economic growth, foster innovation, and improve livelihoods across the continent.

This is why various leaders gathered in Rwanda early in December, to imagine how trade on the continent would look in a few years. The 2024 Africa Development Forum held in Kigali, Rwanda, between December 2 and 3, painted a picture of tomorrow's trade in Africa, in the wake of an evolving technology space.

Delegates sought to answer what it would take to build a digitally connected and economically inclusive Africa.

The most significant opportunity for Africa lies in the African Continental Free Trade Area (AfCFTA). However, this will only become a reality if the continent adopts innovation to fast-track the adoption and use of digital trade through innovation.

AfCFTA presents a significant economic opportunity for the continent. However, a robust digital infrastructure and harmonised regulations are essential to unlock this potential fully.

The AfCFTA has an ambitious goal of creating a Single Digital Market (SDM). With the adoption of the Digital Trade Protocol in February 2023, the ambition of establishing the SDM has grown closer. The vision for the AfCFTA’s SDM is to dismantle digital barriers and create a unified digital trade environment across Africa. This will involve several critical areas of focus.

First, streamlining digital trade procedures like e-customs, paperless trade, and digital certificates can significantly reduce transaction costs and expedite cross-border trade.

Secondly, it is crucial to establish clear and consistent frameworks for data governance. This should ensure data security and privacy while facilitating the free flow of non-sensitive data across borders. The African Union is already taking steps in this direction through Agenda 2063, highlighting the importance of data protection and privacy for Africa’s digital transformation.

Lastly, standardising e-commerce, digital services, and intellectual property regulations, is vital for creating a stable environment for businesses operating across borders.

According to the Innovation and Digital Trade Development Strategy by TradeMark Africa (TMA), digital trade will be a key driver of economic transformation and development on the continent. The strategy sees a trade revolution in Africa being driven by e-commerce and digital platforms.

Digital trade will also strengthen market systems and integrate businesses from Africa to participate in global value chains, thereby enhancing their competitiveness.

The continent also must intentionally bridge the current digital divide, ensure sustainable digital development that prioritises environmental and social responsibility, and establish robust data governance frameworks to protect privacy and security.

The growth of e-commerce, particularly online platforms like Jumia and Konga, is already revolutionising how Africans buy and sell goods, setting the pace for what lies ahead. E-commerce sales in Africa are expected to expand market access for businesses.

Digital tools can help simplify customs procedures, expedite the movement of goods, and reduce transaction costs for businesses engaged in international trade.

This can significantly reduce trade costs for African companies, making them more competitive globally.

E-commerce platforms allow companies to reach a broader customer base in domestic and international markets, regardless of size or location. This can be particularly transformative for businesses in remote or underserved areas. In addition, digital trade can help African enterprises integrate into global value chains by facilitating access to information, resources, and potential partners.

The AfCFTA, with its potential to remove tariffs on over 90 per cent of goods traded within Africa, creates a significant market opportunity. However, players like the International Monetary Fund (IMF) have noted that streamlining trade procedures through digital solutions, will be crucial to unlocking the full potential of AfCFTA.

The increasing demand for digital services – such as software development, cloud computing, and online marketing – also presents a significant growth opportunity for African businesses and skilled professionals.

According to the World Bank and the World Trade Organisation, across the continent, enhanced use of digital technologies is projected to increase digital services exports by US$74 billion from 2023 to 2040, doubling Africa’s global share.

That is why TMA's digital trade development strategy presents a transformative vision for Africa’s trade development. It harnesses the power of digital trade to create new opportunities for businesses, foster inclusive growth, and position Africa as a key player in the global digital economy.

The writer is the Director of Digital Trade at TradeMark Africa. Email: [email protected]

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