Continental free trade area to boost e-commerce in Africa

High-level session at UNCTAD's Africa eCommerce Week shows that the continent has the potential to scale e-commerce enterprises - but its new free trade area will be key.

Opportunities abound for Africa to engage in and benefit from e-commerce and the digital economy as the African Continental Free Trade Agreement (AfCFTA) comes into force, speakers said at an 11 December session of UNCTAD’s Africa eCommerce Week in Nairobi, Kenya.

The High-level Dialogue on Trade and the Digital Economy in Africa addressed challenges such as the persisting infrastructure gap and the digital divide, inadequate regulatory and institutional frameworks, a weak enabling environment, and limited skills of both producers and consumers of digital products.

UNCTAD Secretary-General Mukhisa Kituyi said that global e-commerce had grown phenomenally, but even so, it remained constrained.

“It’s very clear that e-commerce and the digital economy do not happen by accident but as a result of purposeful actions,” he said. Governments must create a policy framework, invest in the right skills, protect the integrity of payment systems, and construct roads and delivery networks, he said.

“Today we must build momentum and governments cannot be left behind,” Dr. Kituyi said. When the Kenyan government said it would give a laptop to every schoolchild, only 20% of the country had electricity – now, although not all the laptops have been delivered, 80% of the country was electrified. In other words, he said, complaints about lack of infrastructure could have a reinforcing effect by satisfying a demand.

Dr. Kituyi said that the driving force must be “the developmental state” and an all-of-government approach to building enabling environments for digital economic activity.

“Today, broadband should be seen as a public utility,” he said.

It is possible!

European Commissioner for the Digital Single Market and Vice President of the European Commission Andrus Ansip said that it was important that mistakes made in the European Union were not copied in Africa.

He discussed the move to 3G (third generation connectivity) and the hiccups that slowed investment toward to 4G. Governments had stepped in to support the new generation technology.

“Affordable connectivity is the first precondition” of building the digital economy, he said. Europe’s new General Data Protection Regulation (GDPR) was now seen as a model of how to protect personal data online, he said.

The Digital Single Market in Europe also took time to build, he explained. Until it happened, Europe had lost start-ups to the United States. In creating an African digital single market, it will be necessary to avoid the fragmentation between small national markets that first beleaguered Europe: the AfCFTA, which was signed in March 2018, was a positive step in this direction, Mr. Ansip said.

Mr. Ansip said that Africa was full of creativity and it was important for governments on the continent to retain its entrepreneurs.

“Drinking water, roads, democracy – all of them deserve your attention, but Africans have the same dreams as people in my country, Estonia. We have made it. It is possible! You have to believe that you can be the best in the world.”

Ethel Cofie, chief executive officer of Edel Technology Consulting, said she saw the need to scale across national markets and for deregulation around payment systems.

“There is a lot of support needed,” Ms. Cofie said. The problem was that 80% of the venture capital entering the tech space in Africa went to just five countries and selected sectors like fintech. It was important to avoid creating a two-speed Africa that left some countries “in the dust” as capital came in, she said.

Not too big to fail

Daniel Annerose, chief executive officer of Manobi Africa, said that rural populations still dominated Africa and that digital technology offered a route to their economic emancipation. It also provided a way to improve performance, traceability and trust along the value chain in, for example, agriculture.

Ana Hinojosa, director of compliance and facilitation at the Customs Cooperation Council, said that border agencies everywhere were overwhelmed with small parcels and the solution was automation and non-invasive inspections.

In Africa, she said, customs services had practical concerns like the ability to raise the revenue needed and stop the smuggling of, for example, arms. They needed to boost their capacity to digitize and attract the funds to do so.

Universal Postal Union Director-General Bishar A. Hussein said that the postal service had existed since the dawn of civilization: with the formation of the UPU in the 19th Century, the service went global. Now, he said, it was the backbone of e-commerce. In fact, he said, the postal network was the starting point of the “inclusivity agenda” of the United Nations because it could reach the remotest village anywhere in the world.

The UPU had launched Ecom@Africa, he said, which was a new free-of-charge initiative to create a one-stop shop for e-commerce delivery in Africa.

Stephen Karingi, director of the Capacity Development Division of the United Nations Economic Commission for Africa (UNECA), said the African continental free area, foreseen by the AfCFTA, will require half of Africa to obtain a legal identity. This was a prerequisite of forming well-functioning e-commerce markets, he said.

“The continental free trade area will offer opportunities of scale and the free movement of people, goods and services,” he said.

Claire Messina, deputy executive director of the United Nations Secretary-General's High-level Panel on Digital Cooperation, said that her starting point was that “no single actor” can achieve digital transformation. She also noted that digital transformation was not an end but a means to inclusion and support for human rights.

“There is a massive upscaling of citizens and governments needed to move from an analogue to a digital world,” she said. “Digitalization is actually a form of democratization and returns agency from states to people. Africa is in a good place because it is full of entrepreneurs.”

Source: UNCTAD

Illustration Photo: Online shopping (CC0 Creative Commons from Pixabay.com)

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