Africa Needs To Know What It Can Trade As A Continent, Speaker Says At E-Commerce Week

A number of African countries just joined the newly established African Continental Free Trade Area. However, e-commerce remains very marginal on the continent, which is struggling to keep up and reap the benefits of this booming business platform. During a panel of the United Nations Conference on Trade and Development E-Commerce Week, an African entrepreneur gave his vision of what is hindering Africa’s e-commerce development, including the lack of awareness of what Africa has to trade.

UNCTAD’s E-Commerce Week is taking place from 16-20 April.

During a panel organised by the Global Express Association (DHL, FedEx and UPS companies), Chris Folayan, founder of Mallforafrica.com, an African global e-commerce solution, explained the reasons why e-commerce is not successful in Africa.

According to the UNCTAD 2017 Business‐to‐Consumer (B2C) E‐commerce Index [pdf], internet shoppers in Africa are few. For example, in 2014, according to a table featuring internet shoppers as a share of internet users, only 6 percent of internet users shopped online in South Africa, 5 percent in Kenya and in Botswana, 4 percent in Nigeria, and 1 percent in Ghana and Zambia.

The index also found that less than a quarter of the population in Africa uses the internet. To facilitate more inclusive e-commerce, African countries need to catch up in all policy areas, it says. According to the 2018 Global Digital suite of reports, internet users in Africa are up by more than 20 percent year-on-year.

Lack of Awareness of African Resources, Trust

In order for trade to occur, one needs to know what Africa has to sell, Folayan said. One of the main brakes to developing trade is the lack of awareness from African countries about what other African countries have to trade, he said.

For example, he said, ginger is a plant which is plentiful in Nigeria, with medicinal applications, and mango shavings can be used to manufacture shoes, but those applications are mostly unknown.

Another problem is trust, he said. Most people in Africa associate quality with expensive and foreign items, and there is a common perception that goods made in Africa are sub-standard, he explained. The question is how to get African to see African products as quality products.

Many small and medium-sized enterprises in Africa lack knowledge and suffer from exposure deficiency, he said, they are lacking resources, and the understanding of basic business principles, such as business plans.

Finally, he said, the continent lacks a concerted effort as countries are working in silos. There is no joint African e-commerce initiative, he said.

Problems hindering the growth of e-commerce are several, among them is the fact that intra-Africa trade is hampered by the difficulty and the cost of moving items from country to country.

The de minimis values, which put a threshold below which no customs taxes will be collected, should be raised. For example, in Kenya they are between US$20 and US$25, he said, indicating that low-value orders could be shipped without custom taxes.

However, things are changing for the better, he said, mentioning the recently adopted African Continental Free Trade Area, signed by 44 countries.

Last month, 44 African countries [pdf] signed into the African Continental Free Trade Area. According to an African Union press release, the free trade area should lift the barriers between countries. “Our peoples, our business community and our youth, in particular, cannot wait any longer to see the lifting of the barriers that divide our continent, hinder its economic take-off and perpetuate misery, even though Africa is abundantly endowed with wealth,” said Moussa Faki, chairperson of the African Union.

Folayan also mentioned the African Made Product Standards, which are meant to improve business relationships between Africa and other countries.

Global Association Push for WTO TFA Implementation

Amgad Shehata, chairman, Global Express Association, the global trade association of the express delivery industry (DHL, FedEx and UPS), underlined the urgent need to help countries implement the 2013 World Trade Organization Trade Facilitation Agreement, which entered into force in February 2017 to boost e-commerce. He mentioned the Global Alliance for Trade Facilitation, launched in 2015, and jointly led by the International Chamber of Commerce, World Economic Forum, and the Center for International Private Enterprise, in cooperation with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the German government development agency.

WTO: E-Commerce Discussions Picking Up

Victor do Prado, director of the WTO’s Council and the Trade Negotiations Committee Division, said e-commerce presents great opportunities for growth for companies, but a lot of challenges persist for small and medium-sized enterprises. Those include poor IT infrastructure, the lack of appropriate policies and regulations, lack of e-payment systems, consumer protection, and the knowledge gap.

He called for a multistakeholder approach to address those issues. E-commerce discussions at the WTO have been gaining traction for the last two years, he said, with “a lot of ideas put forward” by member states. In particular, the 71 WTO members who signed the Joint Statement on Electronic Commerce [pdf] during the last WTO Ministerial conference in December are being very active, he said.

Some nine different papers have been put forward by the group recently, said do Prado, concerning a range of issues such as regulatory issues, cybersecurity, e-signature, and provisions on developing countries and how to help them reap the opportunities given by e-commerce. He remarked that lot of signatories are developing countries, and said e-commerce is not a North-South issue.

A number of developing countries at the WTO are resisting a negotiating mandate for the organisation on e-commerce. They have particular concerns about topics such as free flow of data, and no data localisation requirement, allegedly pushed by some developed countries.

The proposal for no localisation requirement, is seen by some as a special preferential treatment awarded to giant digital companies to locate their data centres wherever they want, maximising profit, benefiting from economies of scale, and if they chose to be located in the European Union, for example, be able to provide data to marketers without investment, or tax.

Mandatory binding rules on e-commerce also would prevent the preservation of the policy space needed for the development of the digital industrial policy of developing countries, some say (IPW, WTO/TRIPS, 29 September 2017).

 

Image Credits: Catherine Saez