Part 4 (last part)
Despite the policy and legislation challenges to support e-commerce on the continent, the fledgling African e-commerce market is proving fairly resilient and showing signs of promise, even in the midst of the current coronavirus pandemic.
Covid-19 as an occasion to better understand opportunities opened by digital economy
There has been a rise in the use of digital solutions in Africa - and first, to support efforts to combat the virus. Across Africa, scientists are producing Covid-19 test kits, 3D printed personal protection equipment, artificial intelligence (AI) platforms and low cost ventilators.
In Nigeria, a health start-up developed a Covid-19 triage tool – an online platform allowing users to self-assess their chances of having the virus. In Tunisia, the National Institute of Applied Sciences has developed an AI platform that analyses lung X-ray images uploaded over the internet and detects if an individual has coronavirus or not. Kenya has rolled out 3D printing of PPE (plastic face shields) and prototypes of ventilators using open source developed in Sweden, and in South Africa, 3D printers have enabled the design and production of over 100 masks on a daily basis for use in hospitals.
These tech solutions can augment existing health infrastructure by bringing immediate and seamless healthcare to patients through affordable solutions such as telehealth and telemedicine, thereby leading to healthcare inclusion.
Second, in terms of the general business situation, e-commerce platforms such as Jumia, one of the largest players on the continent, are reaching more people across Africa including in remote areas, while online pharmacies, online retailers and streaming companies are all doing robust trade in the face of the pandemic. Safaricom’s MPesa was already a leader in the mobile money market in Kenya and it has come into its own now that consumers are encouraged to move towards cashless transactions. On the back of M’Pesa, PesaPal is enabling e-wallets and e-commerce payments for African consumers. Others such as WeCashUp, and OuedKniss are also ensuring a strong backbone for e-commerce platform payments on the continent.
In order to further support the varying solutions across the continent, the AUC formulated a digital emergency plan to support efforts to fight the pandemic in Africa, increase resilience and support post-pandemic recovery, which was approved by African ICT ministers earlier in May 2020. The emergency action plan is intended to increase resilience among African countries and ensure a path for recovery from the pandemic using technologies and digital solutions.
To date, the International Trade Centre estimates that there are 630 business to customer (B2C) e-commerce market places operating in Africa in 2020. ITC’s Africa Marketplace Explorer shows that just 1% of Africa’s e-commerce marketplaces are responsible for 60% of the marketplace traffic on the whole continent. And only 11% of the marketplaces websites enable financial transactions. All the rest are classified sites with sales made offline, and this limits the possibilities of international sales. This is an important pointer for especially SMEs, which want to penetrate international marketplaces, since they would need to ensure that they use safe payment solutions for their online sales.
A symbiotic relationship between e-commerce and the AfCFTA
The landscape of e-commerce has also seen new players coming into the continent. Following Alibaba in Rwanda, Facebook in Nigeria and Google in South Africa, several other mega companies are setting foot in the African market, very likely because of the signal about the integrated market being created through the AfCFTA.
Indeed, the activity of African e-commerce firms (even in the face of the pandemic) points to the symbiotic relationship that e-commerce and AfCFTA are likely to have in this sense: e-commerce can help to realize the objectives of the AfCFTA and in turn the AfCFTA can provide unlimited opportunities for e-commerce to thrive on the continent. The AfCFTA, presents a tremendous opportunity for the development of regional value chains and the shift of African economies towards industrialization. E-commerce and digital trade have a key role to play in this shift towards production and trade of finished products and more knowledge intensive services on the continent. The opportunities for digitalization and intra-African trade brought forward by the current crisis, due to increased reliance on online services and transactions as well as local and continental supply chains have been shown up in sharp relief.
Two instruments that can enable Africa to develop its human, technological and commercial capacities in the area of e-commerce
ICT innovations and the digitization of economic activities are transforming trade and other social and economic aspects of life at an incredible pace offering new opportunities and opening the doors to several risks and challenges. To take advantage of such opportunities, Africa now has two instruments that can enable it to begin to develop its e-commerce human, technological and market capacities: the AfCFTA and the DTS (Digital Transformation Strategy).
The AfCFTA enables Africa to progressively eliminate import duties and other charges on trade in goods. On trade in services, countries can progressively liberalize such trade by eliminating barriers to trade in services, with the first round of negotiations including liberalization of communication services. The AfCFTA also provides Africa with a stronger voice to negotiate as a powerful bloc in relation to other countries and regions.
The DTS gives African countries the choice of their own digital pathway to socio-economic development.
"Africa must decide whether it will rise to the occasion."
Africa has shown that despite the health and economic challenges of COVID-19, it has been able to make use of available digital solutions to mitigate the effects of the pandemic. What African countries must do now is to take the decisions that ensure the overhaul of old rules and legislation to enable the permanent implementation of technologies that have been shown to be efficient during the crisis, for instance, in remote learning, telemedicine and remote work. In effect, what has been made abundantly clear for African countries through this entire period is the need for broader, faster, and cheaper access to internet connections that will enable the use of digital technology to address challenges and drive innovation for the benefit of its people. Africa must decide if it will rise to the occasion.
The End.
Tribune (in 4 parts) by Beatrice CHAYTOR, Senior Expert – Trade in Services, African Union Commission.