E-commerce holds huge promise for enhancing free trade in Africa

E-commerce can significantly boost free trade across Africa and therefore help realize the objectives of the Africa Continental Free Trade Agreement (AfCFTA), participants at UNCTAD’s eCommerce Week 2019 were told.

“E-commerce has the potential to lift intra-African trade from the current rate of 18% and to boost Africa’s share of global trade, currently estimated at less than 3%,” said Ajay Kumar Bramdeo, the African Union’s ambassador to the United Nations in Geneva, at a session on “Digitalization and the realization of the African Continental Free Trade Area for digital transformation in Africa.”

Participants celebrated the impending entry into force of the AfCFTA, a milestone achieved on 2 April when the agreement reached the minimum number of ratifications required, 22, thanks to its approval by Gambia’s parliament.

The AfCFTA seeks to create an integrated African market of 1.27 billion consumers, expected to reach 1.7 billion by 2030, with an aggregated gross domestic product of up to $3.4 trillion, said Amani Abou-Zeid, the African Union commissioner for infrastructure and energy.

Digitalization has the potential to lead not only to Africa’s digital transformation, but also to serve as a catalyst for the continent’s overall structural transformation, Ms. Abou-Zeid said.

However, various issues need to be addressed for Africa to take advantage of current technological innovations and facilitate the achievement of the objectives of the AfCFTA, which was adopted by African Union nations at a summit in Rwanda in March 2018

“In many African countries, adequate and affordable information and communications technology (ICT) connectivity to enable digitalization to take place is still an issue,” Ms. Abou-Zeid noted.

The other issue is whether Africa currently has the legal framework and enabling environment for digital trade and other digital-related activities to flourish in the future AfCFTA market. Other concerns include trust, data privacy and cyber security.

“We are moving towards an integrated African market. Isn’t it appropriate to factor in the digital dimension of such a market?” Ms. Abou-Zeid said.

She underscored the importance of synergies between development and technical partners, noting that though only 1% of all funding provided under Aid for Trade is currently allocated to ICT solutions and multilateral development banks are investing just 1% of their total spending on ICT projects, Africa still boasts a plethora of initiatives related to digital trade.

Source: Unctad