Login

Lost your password?

Sign Up

Register

Login

Login

Lost your password?

Register

Wednesday, August 17, 2022
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion

Africa's
Investment
Gateway

The Exchange
  • Login
  • Register
Subscribe
This Month's Edition
Previous Editions
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
No Result
View All Result
The Exchange
LOGIN
e-Commerce is a vibrant internet enterprises. Kenya is killing its internet and future success. www.theexchange.africa

e-commerce. Digitalisation is the best bet for successfully rolling out the AfCFTA. [Photo/Nairobi Business Monthly]

Digitalisation best opportunity for AfCFTA, trade success

African digital payment, business platforms remain few

by Njenga Hakeenah
December 29, 2020
in Economic Growth
0
Share on FacebookShare on LinkedIn

How the digitalization of African trade will help realise the AfCFTA

The digitalisation of trade across the continent can significantly boost free trade in Africa, helping to realize the objectives of the Africa Continental Free Trade Agreement (AfCFTA).

To properly implement the AfCFTA, Africa will need digitalisation in the digital and virtual services and making it an enabler of trade in the different sectors.

By 2030, Africa’s population will have grown from the current 1.2 billion people to an estimated 1.7 billion. With this growth, the AfCFTA has to create an integrated African market for these consumers. The aggregated gross domestic product (GDP) from this market could see the market hit US$3.4 trillion after the opening up of the continent’s economic borders.

Read: Africa’s Cashless Payment Revolution

There are, however, various issues such as harmonising standards and improving the existing legal frameworks; enacting cybersecurity, consumer and data protection laws; and reducing the high cost of access all need to be addressed in order for Africa to take advantage of digitalisation.

More also needs to be done to facilitate electronic transactions to drive e-commerce and step up investments in ICT infrastructure for the digital economy to develop.

One of the largest overlooked investment opportunities of the past decade for the African continent is the Internet economy which has the potential for profound impact on development.

The mobile Internet is transforming lives across the continent with the support of growing local connectivity and mobility and a dynamic, young urban population.

With a potential to add up to US$180 billion to Africa’s gross domestic product (GDP) by 2025, depending on the usage intensity of digital technologies by businesses, the Internet economy is improving productivity and efficiencies across large swaths of the economy, including agriculture, education, financial services, healthcare, and supply chains.

The Internet economy’s potential to play a pivotal part in Africa’s GDP growth has led to burgeoning investor interest. Buttressed by increasingly large liquidity events in African technology, even in the wake of the pandemic, venture capital funding in Africa reached an all-time high in 2019.

Africa’s Internet opportunity is driven by the talent of young digital entrepreneurs who are solving some of Africa’s most challenging issues, such as access to healthcare for remote populations, employment opportunities for women, and the ability to securely send and receive money.

Advanced technologies—tailored to data-driven, scalable, and pan-African approaches—are providing new ways for Africans to conduct business and earn income. A robust collaboration between the private and public sectors is imperative to ensuring that African entrepreneurs succeed, not only in their home countries and regions but in the global marketplace.

In digitalisation, there is a need for policies to create an enabling environment for productive digital trade.

Trudi Hartzenberg, Executive Director at TRALAC, says that digital solutions can be the norm right from the start and that Africa now has a chance to leapfrog with the AfCFTA agreement since the Covid-19 pandemic has boosted digitalisation.

In addition, there is a need to pay attention to creating an enabling environment to facilitate digitalisation since this offers the best opportunity for Africa to harmonise standards to facilitate trade.

The digital economy revolution

The digital economy is projected to reach US$180 billion in Africa by 2025 yet the payments ecosystem remains largely untapped. This creates a crucial and lucrative opportunity for investors who are able to offer alternative payment platforms allowing small businesses to expand outside of offerings outside the traditional banking system.

Read also: The EAC should integrate to benefit from AfCFTA

Money transfer platforms and digital payments effectiveness is not in question because platforms like PayPal, Stripe, Payoneer, and many others have shown that innovation can facilitate convenience and accessibility of payments and money transfer.

While African digital payment platforms remain few and far between, they nonetheless have the same potential to leverage the ease, convenience, and reach of internet-based systems to create significant traction.

With Africa’s one billion strong youth population, demand for services such as these remains strong.

To tap into the opportunities offered by the AfCFTA, those who offer payment platforms will provide the missing link to ensuring the success of trade within the continent.

Digitization is bringing new opportunities to Africa with the continent becoming the next frontier for internet-based e-commerce solutions. Africa’s 21 million online shoppers have inspired the Nairobi e-commerce conference organised by UNCTAD. www.theexchange.africa
Online banking and shopping. In Africa, there is a digitalisation need to successfully implement the AfCFTA. [Photo/Pexel]
The digital payment ecosystem and cashless payment alternatives thus provide monumental impetus which is set to revolutionize the way Africa does business. The digital tech ecosystem is expected to continue to garner interest from investors, private equity, and venture capitalists alike.

What is noteworthy is that Africa has 107 unique land borders with varying regulatory standards making for a frustrating experience for those who need to do business across the continent.

The AfCFTA is however consolidating these economies into a single US$2.3 trillion market offering greater market opportunities at lower business costs which is attractive for those who would want to tap into these prospects.

Proponents say that a digital AfCFTA is a necessity for Africa.

The global digital economy is worth around US$12 trillion and Africa is lagging behind in this lucrative opportunity.

This African lag, according to Thierry Zomahoun, is due to a number of factors including inadequate infrastructure and the shortage of requisite skills.

Zomahoun, who is the President of the African Institute for Mathematical Sciences (AIMS), says that these are real challenges holding back the growth of innovation and the emergence of industries linked to new technologies.

He adds that such barriers ultimately prevent new areas of activity from being created on the continent. To counter this, Zomahoun says that basic digital infrastructure that meets the needs of the type of economy that will emerge and be in place in the future must be developed.

In addition, new training methods should be established to enable young people to equip themselves with the requisite skills and to create new value chains and business sectors.

Financing is also a big challenge since converting laboratory-made solutions into products that can be sold all over Africa requires a lot of investment to the tune of billions of dollars.

UNCTAD Secretary-General Mukhisa Kituyi says that Africa trails behind the rest of the world in its preparedness to engage in and benefit from the digital economy. As it is, three-quarters of the African population have yet to start using the Internet.

But it is not all doom and gloom since the continent is showing progress in key indicators related to B2C e-commerce.

Since 2014, Kituyi says, sub-Saharan Africa has surpassed world growth on three out of the four indicators used in UNCTAD’s Business-to-Consumer (B2C) E-commerce Index.

In 2018, UNCTAD estimated that there were at least 21 million online shoppers in Africa a year earlier which was less than 2 per cent of the world total. Nigeria, South Africa and Kenya were the three countries accounting for almost half of this number.

Nevertheless, the number of African online shoppers has surged annually by 18 per cent since 2014, faster than the world average growth rate of 12 per cent.

Read: Here are Africa’s biggest online shopping countries

Tags: AfCFTAAfrica Continental Free Trade AgreementCovid-19 pandemicDigital economyDigitalisationICT infrastructureTrade standards

STATE OF ECONOMY - GET THE REPORT

ASSESSING EAST AFRICA

Loading...

Njenga Hakeenah

I have 10 years of experience in multimedia journalism and I use the skills I have gained over this time to meet and ensure goal-surpassing editorial performance. Africa is my business and development on the continent is my heartbeat. Do you have a development story that has to be told? Reach me at [email protected] and we can showcase Africa together.

Related Posts

Africa

Unlocking Africa’s gas riches: Nigeria-Morocco gas pipeline a game changer

July 4, 2022
Africa

Powering Africa: Renewables safest bet for sustainable future

July 4, 2022
www.theexchange.africa
Africa's Development

Rwanda: AfDB gives Kigali $180 million to support electricity, clean energy projects

April 26, 2022
Next Post
Covid-19 Impact on East Africa tourism sector 2020

Covid-19 Impact on East Africa tourism sector 2020

Solar panels on a roof. Africa receives several hours more of bright sunshine in a year than any other continent making it one of the sunniest places on the planet. www.theexchange.africa

AfCFTA and solar power penetration in Africa

Uganda’s power qualms: Can excess output mean boost of economy?




This months edition

Features

The leaders of the BRICS nations meet at the group’s summit in Osaka in June 2019. Concerns are India might pull out of the group over tensions with China. (Photo/ Reuters)
Countries

What does Russia’s invasion of Ukraine mean for Southern Africa?

by Albert Nangara
August 3, 2022
0

When the United Nations General Assembly voted overwhelmingly on March 2 to condemn Russia’s invasion of Ukraine, African countries accounted...

Read more
Logistics and transport startups will play a major role in enabling Africa’s largest free-trade area (Photo/ Quartz Africa)
Industry and Trade

Trends shaping the future of logistics in African markets

by Albert Nangara
August 3, 2022
0

Digitization of logistics and compliance with sustainability policies will shape the future of logistics in African markets. Digitalization involves the...

Read more
Biometric systems are expected to lead the market for airport security systems in growth over the next five years, as the market increases at an 8 per cent CAGR through 2024 (Photo/ Biometric Updates).
Tech & Business

Machine learning, Artificial Intelligence changing Africa’s Airports

by Albert Nangara
August 2, 2022
0

According to Frontiers, AI has been recognized to have a wide potential to reduce human workload or increase human capabilities...

Read more
www.theexchange.africa/
Investing

ESG global mining and the social license

by Laurence Sithole
August 2, 2022
0

In terms of achieving net zero carbon emissions, the largest mining companies in the world have several options – each...

Read more
Some of the group members learning the components of the new briquette making machine. The machine can produce 500 briquettes per day. www.theexchange.africa
Investing

Reusable, organic charcoal: Answer to Africa’s cooking fuel challenges

by Njenga Hakeenah
August 2, 2022
0

United for Green is working to ensure that Africans do not get to these extremes. By empowering women, the plan...

Read more

News

Banking
Industry & Trade
Investing
Money Deals
Regional Markets
Tech & Biz
Opinion

Countries

Kenya
Tanzania
Uganda
Burundi
Rwanda
Southern Africa
Ethiopia

More

My Account
Contact us
Advertise
About us
Help Center

Subscribers Center

E-paper
Premium Stories
Education Rates
Corporate Subscriptions
Weekely Newsletter

  • My account
  • About us
  • Advertise
  • Contact
  • Privacy Policy
  • Refund Policy – The Exchange
  • Sitemap

No Result
View All Result
  • Home
  • Banking
  • Industry & Trade
  • Investing
  • Money Deals
  • Regional Markets
  • Tech & Biz
  • Countries
  • Opinion
  • Login
  • Sign Up
  • Cart

© 2021 The Exchange - Powered by MediapixManaged by Supported by Digihandler,

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In