Designing digital trade provisions in the AfCFTA: Lessons from existing trade agreements

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Jana Misic

The discussion centred around the importance of articulating digital trade priorities of the African countries, particularly given the rapid acceleration of e-commerce post-COVID 19 globally. The panel addressed the challenges of current e-commerce proposals in practical terms for African businesses, particularly small and medium enterprises; the priorities of an African Commercial Free Trade Area (AfCTA) e-commerce protocol; and the lessons AfCFTA can utilise in making a new, comprehensive e-commerce ecosystem. The moderator, Mr Jamie Macleod (Trade Policy Expert, African Trade Policy Centre, UNECA) shared the latest findings from UNECA. While the COVID-19 pandemic has fostered digitalisation, the efforts in Africa have been stifled by the faulty foundations of the ICT sector, namely an unaffordable internet and limited coverage as a barrier to scaling digitalisation; lagging uptake of digital payments and telecom operator licenses for mobile money; and a poor postal delivery infrastructure where receiving physical goods is uncertain. Taken together with poor digital skills, the entire digital regulatory system is in need of a transformation.

These concerns were echoed in the research of Ms Karishma Banga (Research Fellow, IDS, UK and Digital Trade Policy Advisor, Commonwealth Businesswomen Network). Banga reported a study made in conjunction with private sector actors and in relation to lessons learned from South-South trade agreements. The analysis showed that e-commerce in Africa is primarily national and concentrated in ten countries that account for 94% of all online business on the continent, and which limits cross-border commerce. The low cross-border commerce is due to lack of consumer protection; to transaction platforms that allow only domestic sellers; and to the fact that only 20% of businesses offer online payments. The survey of the private sector actors highlighted the need for AfCTA to harmonise laws on electronic trade, initiate digital signatures, and harmonise data standards and privacy laws. The South-South trade agreements analysis showed a clear preference for facilitating provisions through ‘cooperation’ and ‘trust’, rather than through hard, legally binding committment. The top three provisions are on data protection and privacy, the provision of electronic authentication, signatures and certificates, and on consumer protection. Within AfCTA, considerable fragmentation and missing mandates by authorities can be found. Some lessons include establishing a mechanism for cooperation and creation of regional data protection authorities, formalising new e-transaction legislation, addressing the challenges of the SMEs and regional data centres, and providing better consumer protection as primary drivers of trust in e-commerce.

Continuing on the state of policy, Mr Jean-Bertrand Azapmo (Principal Adviser, Trade and industry, African Union) said that the end goal should be to bridge the digital divide and to secure a digital single market in Africa by 2030. In regard to the e-commerce strategy, the ideal is to push African policymakers towards a common continental market and a common vision for e-commerce, based on bringing all 55 countries to an acceptable level of harmonisation and interoperability in trade facilitation, cross border payments, investment, and competition. For all this, both the infrastructure has to be built up and policy has to be reset towards a more adaptive approach. ‘This means thinking beyond legislation’, Azapmo said. Policymaking has to adhere to multistakeholder platforms and to provide a role for the private sector in the design of standards and codes of conduct. Participation in the global governance frameworks and a focus on inclusion and sustainability are essential if e-commerce is to lead the digital transformation by being people-driven, competitive, responsible, and adaptable.

From the private sector, Ms Rose Maghas (Chief Technology Officer, Rova Digital) agreed that a big step forward would be more ministerial meetings with the private sector. Significant differences can be found among industries and a generic approach to implementing trade agreements will simply not do. Smaller groups can study the context per sector in order to drive negotiations. Maghas confirmed that the lack of access, poor delivery infrastructure of goods, and tariff barriers all hinder the development of e-commerce. Currently small to medium enterprises make up close to 70% of business on the continent, yet they are not able to accelerate their growth due to low connectivity. The regular citizen is exposed to security risks and, with the challenges mentioned, distrust overshadows e-commerce. Another challenge and a component for AfCTA to look at is the disparity between policy and implementation.

While Maghas talked about moving into the fourth industrial age, Mr Job Wanjohi (Head, Policy Advocacy, Kenya Association of Manufacturers, Industry Body) affirmed that the manufacturing sector is stifled at the outset. ‘Digitalisation demands steps, from capital and hardware, towards appropriate regulation and the free movement of goods and services’, Wanjohi said. Capital and the digitalisation of the manufacturing process is currently available only to those with collateral, and in the agricultural sector not many can afford that. Besides capital, many lack adequate technical capacity and cybersecurity tools to implement and advance the manufacturing processes. Africa also has to replace obsolete systems that the rest of the world has already discarded and harmonise data protection so that data can flow across the continent and start the transformation process.