Opinion: Action Needed For Africa To Benefit From Digital Trade

Fuelled by smart technologies, mobile devices, and 24/7 connectivity, the way consumers browse, shop, and pay is moving towards digital.

In response to these evolving consumer practices, commerce itself is undergoing a profound transformation, with businesses looking at digital solutions to improve sales, acquire new customers, and reduce costs.

Cross-border sales have opened the door to a world of opportunity and e-Commerce companies are eager to storm through.

A large majority (87%) of merchants believe that expanding online sales into new markets is one of their company’s biggest growth opportunities, according to new research in the Visa Global Merchant eCommerce Study. As technology pushes the pace of innovation even faster, seemingly anyone in retail can seize the opportunity to become more relevant to potential buyers across the globe.

Yet while the rise of digital commerce has opened the door to a wealth of new opportunities, there are numerous challenges to Africa’s e-commerce growth. Digitalization brings new opportunities. Digital services and platforms are helping to digitize many of Africa’s small businesses and can offer a pathway towards formalization.  However few entrepreneurs really go regional, much less global as they lack the relevant skills, have not yet seen the benefits of the digital economy or have concerns about more formalized trading.

According to some estimates, emerging economies stand to gain US$3.7 trillion in GDP by greater use of digital finance, yet only 34% of African adults made or received a digital payment in 2017. Intra-regional and global e-commerce trade remains small and regulations have not kept pace with digital developments[1].

Given the obstacles, how do we ensure e-commerce fulfils its promise of spurring economic growth, attracting investment, and supporting national development goals in Africa?

Creating the right environment domestically – including one that enables competition and fosters responsible innovation – is a good starting point, but given the inherent interconnectedness of the digital economy that alone is not enough.

Governments must look beyond their borders to ensure that local enterprises are not denied the benefits of the global reach of the internet by those countries still challenged in enabling digital commerce.

Various African countries have joined the World Trade Organisations’ (WTO) e-commerce negotiations. As the Director-General of WTO, Roberto Azevêdo, has said, “we have few international rules to facilitate cross-border electronic commerce and align regulations, and the absence of such rules risks fragmentation and unilateral action.” Engagement shows a strong appetite for international economic cooperation on digital trade for the benefit of people and businesses in each participating country and takes the world on a path towards predictability, interoperability and trust — and, of course, lower costs for businesses and consumers, according to Azevêdo.

Africa’s E-commerce Agenda, a call to action from e-commerce stakeholders on the continent to ensure that the jobs and inclusive growth potential of e-commerce is captured for Africa, encourages Africa’s policy-makers to pursue e-commerce priorities at multiple levels. It calls for anchoring e-commerce within the negotiations on the African Continental Free Trade Area (AfCFTA) and encourages more African governments to join the plurilateral negotiations on e-commerce at the WTO.

On the action agenda is to relook policies, and more specifically to “support the creation of national or regional e-commerce multi stakeholder associations to champion policies; develop the African Digital Trade and Digital Economy Strategy as mandated for the African Union Assembly in February 2020; agree an approach for incorporating e-commerce into the AfCFTA – whether as a stand-alone chapter, protocol or building on existing African Union instruments; intra-regional regulatory interoperability; and represent these interests globally.

Other action items include to expand connectivity; upgrade logistics; enable e-payments; manage data; grow the tech industry; coach small business; and join forces.

African governments do not need to shoulder this weight alone and making inclusive e-commerce a reality in Africa public-private partnerships, amongst others, are needed. As a company with a global presence, Visa has successfully cascaded into the continent with great impact with partners. It is through our partnerships, we as Visa are able to deliver services throughout Africa.

Visa partners with Branch International, a fintech start-up that uses smartphone data to expand access to credit in countries where the average middle-class borrower might not have a credit history or even a bank account. To date, Branch has issued more than 15 million loans in Kenya, Nigeria, Tanzania, Mexico and India. Through the partnership, Visa provides virtual, pre-paid debit cards to Branch’s customers. None of this would be possible without ensuring the free flow of data, and the ability to use high-quality global processing capabilities. 

In the digital payments industry, there are complementary roles for global networks, local fintechs, and other partners to facilitate the transition away from cash.  The needs of expanding access to financial services, improving economic outcomes for small businesses, and formalizing economies are too great to isolate the opportunity to one kind of provider.

The countries which will reap the greatest benefits from e-commerce are those that promote an enabling environment for partnerships among different types of stakeholders. 

Participation in the global process does not undermine or replace efforts at regional or sub-regional integration.  Rather, joining in the WTO process will enhance progress on bolstering intra-Africa digital trade by establishing the baseline rules from which stronger, more specific commitments can be made.

Other African members of the WTO can follow suit and use the opportunity to bring their perspectives, influence outcomes, and ensure that the benefits of digital trade are widely shared. Many African governments are debating upgraded e-commerce agendas and conversations are ongoing on navigating the wider digital economy agenda. This agenda offers a framework for constructive e-commerce growth in Africa. It is an invitation to seek and to generate opportunities that are within near reach.

Given that seven of the ten fastest-growing internet populations in the world are in continental Africa, mostly due to smartphone use, e-commerce barriers have every chance of being overcome. It is a critical moment. With action, e-commerce can become a driving force for sustainable development.

By Eric Coffie, Head of Solutions Visa Sub- Saharan Africa

Latest articles

Pree & Andy – The Yanos Evolution Vol. 2 Mix (Strictly Mdu a.k.a Trp, Bongza & Djy Biza)

Home » Songs Pree & Andy The Yanos Evolution Vol. 2 Mix (Strictly Mdu a.k.a Trp, Bongza & Djy Biza) Mp3 DOWNLOADPree...

soulMc_Nito-s – Stage piano

Home » Songs soulMc_Nito-s Stage piano Mp3 DOWNLOADThe fast rising producer soulMc_Nito-s comes through with this new killer track which is called...

soulMc_Nito-s – Broken Heart

Home » Songs soulMc_Nito-s Broken Heart Mp3 DOWNLOADHere is another new sound track from soulMc_Nito-s which is called Broken Heart.Have the track...

Related articles

Leave a reply

Please enter your comment!
Please enter your name here