Digital Disruption in Africa – Mapping Innovations for the AfCFTA in Post COVID Times

Image: Getty, dem10
Image: Getty, dem10

This special report looks at the development of the 4th Industrial Revolution (4IR) in Africa, against the backdrop of the African Continental Free Trade Area (AfCFTA or CFTA) and makes proposals for policy makers.

Summary:

The COVID pandemic has shown to the world the impact that digital innovations can have in resolving some of the most critical challenges facing the world today. Digital solutions have been the lifeblood that has helped many businesses and economies stay afloat in these times of crisis. In Africa the use of digital solutions is nothing new, indeed the continent is recognised for its utilisation of mobile based payment systems including M-Pesa and many other innovations. Digital solutions have also been hailed by the African Union (AU) and other international bodies as critical for Africa’s development and growth.[1] As the world pivots into the digital economy, trends are showing that digital innovations will continue to play a key catalytic role in supporting not only the recovery but sustainable growth and prosperity benefiting Africa and helping to support the implementation of the CFTA.

Across many economies in Africa digitisation has been used to leap-frog over traditional banking and land-line telecoms infrastructure, helping businesses to innovate and scale up operations. As highlighted in this paper the rise in ecommerce particularly with the onset of COVID, signals a strong foundation upon which to leverage 4IR to support digitised inter-regional trade, large scale industrialisation and creation of a vibrant African economy. An economy that creates more jobs and opportunities for Africans to thrive on the continent.

Developments in technology within 4IR (otherwise known as Industry 4.0) are rapidly evolving, particularly in Artificial Intelligence (A1), Blockchain, Machine Learning, as well as a greater desire for more knowledge around data science, analytics and BigData – but how can these new innovations integrate and become relative in the African context? How can they assist the renaissance of African business, intra-regional trade, economic development and support within the implementation of the AfCFTA? These central questions are important, and we give some recommendations on how emerging technology and data-driven innovations such as Blockchain can be utilised to address some of the challenges. Blockchain, the  trust  machine, a novel technology that still requires further technological advancements,  needs better understanding to take full advantage of its benefits, especially the critical role it can play in facilitating seamless and transparent inter-regional trade utilising see-through supply chains and better access to liquidity flows through digital financing systems. This is particularly key for Africa’s dynamic and expanding Micro, Small, Medium Enterprises (MSMEs).

The AfCFTA has massive transformative potential and will enable 55 African countries with a combined GDP of $3.5 trillion to boost continental integration and cross-border trade. By taking advantage of the data revolution, building data capital and using emergent technologies (with caution) can be hugely beneficial to tackle barriers to cross-border trade; to open market access; strengthen regulatory frameworks; and support the capacity building of Africa’s youthful population. Business can benefit from economies of scale when marketing beyond the safe haven of the national marketplaces. AfCFTA’s objective is to grow internal intra-Africa trade, which in turn will encourage the industrialization of Africa, pave way for economic diversification, boost manufacturing and agricultural sectors. As we embrace a more digital world, an ecommerce driven Africa, it is essential  to ensure that these digital platforms operate within the parameters of high security ensuring protection of consumers including having in place robust consumer and data protection  measures and harmonised common rules that are not heavily restrictive or become a hinderance to innovation or the free flow of data across Africa.

Trade can be stimulated by adopting digital applications throughout the value chain, this can lead to greater productivity particularly if we ensure end-to-end digitisation across the value chain. The paper examines the advantages of online business, for example ecommerce as a driver, and the challenges, specifically the lack of available investment and access to affordable telecommunications data on the continent. It sheds light on some of the digital solutions that can help to deliver Africa’s CFTA ambitions. A major concern is the infrastructure and internet connectivity gaps in Africa which add additional pressures and widen the digital divide with many of the most vulnerable falling into a cycle of continuous poverty. Women, the youth, rural communities, informal workers often sit on the wrong side of this digital divide – about a quarter of Africans have no access to data or telecommunications. New technology solutions are helping to solve this challenge; however, these technologies need to be properly understood. An African-wide emerging technology education programme and capacity building programme around digital trade and trade facilitation is highly recommended to help re-skill and equip Africans with the digital skills needed for the digital era.

This paper is a snapshot in time in a fast-changing environment, in which many African entrepreneurs, academics and government bodies are seeking African solutions to African challenges. Digitisation is part of the solution, but the winning ticket is a combination of that, people-centric policies, functioning interoperable digital financing systems, closing the digital divide and enabling a more connected Africa. African ambassadors must be sought to raise the profile of Africa and establish the quality of the ‘Made in Africa’ brand.

11 Dec 2020
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