Leveraging Technology and Innovation for Africa’s Growth
The rise of digital technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), 3D printing, and blockchain technology all stand to significantly impact trade costs and international trade. While the true impact of these innovations and many more to come is yet to be experienced, these technologies have the potential to profoundly transform the way we trade, who trades and what is traded. For example, the coronavirus (COVID-19) pandemic escalated the shift in the way people shop, communicate and access information. A survey by United Nations Conference on Trade and Development (UNCTAD) reveals that following the pandemic, more than half the participants now shop online more frequently and rely on the internet more for news, health-related information and digital entertainment. Most of these participants, came from emerging economies.
While the COVID-19 pandemic has dramatically reduced global trade, with trade falling a drastic 12.7% in the second quarter of 2020, it has provided an opportunity to reset the playing field, allowing global trade players and nations, rethink their long-term trade strategies and policies. Post-pandemic recovery is crucial, and will depend on the ability of businesses and policy makers to jump into the digitalization wagon in order to build resilience and sustain growth. The Future of Trade Report 2020 by DMCC, follows the shift in the global composition of trade towards services that points to future changes in the global labour market. Value chains (pg. 80) in the digital economy are less labor-intensive and prize skills over labour. Additionally, automation and additive manufacturing undermine the role of labour in goods value chains.
The role of transport infrastructure remains important in a digital economy. There is also a need for more focus on digital infrastructure such as undersea cables, satellite systems, servers, and a reliable energy supply to keep them going. In the future, an economy’s geography will become less important than its digital connectivity, the report further indicates. There will also be implications on the legal infrastructure and institutions, from laws on intellectual property, privacy and data flows, heavily in need of international integration, gaining in importance even over customs and tariffs.
These implications are particularly critical to developing and least developed countries, who will have to develop skills, digital infrastructure and policy and legal frameworks, the cornerstones of trade competitiveness and comparative advantage, in the future digital economy (pg. 80-81).
Digital trade is a reality and consumption has been rapidly digitized in the form of entertainment, e-commerce, and food delivery. The United States (US) and Canadian e-commerce saw a 129% year-over-year growth from January to April 2020 and a 146% growth of all online retail orders (pg. 93). In Africa, the pandemic saw a spike in site and app visits of e-commerce giants like Jumia, Kilimall, communication apps like Facebook, Instagram and Zoom and entertainment sites like Showmax, owned by African entertainment giant Multichoice. These trends make digital infrastructure and digital education, especially in African economies, more important than ever. In addition, a drive for policies addressing issues of data protection, consumer protection, and access to information on a broad spectrum will be critical in building consumer trust within the continent, pushing for more coverage. Furthermore, there was a high demand in telehealth services, with respondents from the UNCTAD survey switching to online means of acquiring pharmaceuticals.
According to the former UNCTAD Secretary General “the COVID-19 pandemic has accelerated the shift towards a more digital world. The changes we make now will have lasting effects as the world economy begins to recover.” It will be critical for businesses, particularly MSMEs to invest in technologies to reduce trade costs, take advantage of new trade technologies such as digital platforms, drive for policy change that is favorable for the implementation of technologies that facilitate trade and contribute to the development of international agreements and standards on interoperability, data and other aspects of trade and technology (pg. 107).
Governments, on the other hand, will need to work intensively with businesses to remove obstacles to technological trade employ regulatory changes that would facilitate the application of technology in trade, prioritize investment in digital infrastructure, retrain and reskill its citizen on digital skills and cooperate internationally to streamline international regulation and facilitation of e-trade (pg. 107).
The Phase II and Phase III negotiations on the AfCFTA, seek to address the areas of intellectual property rights, investment and competition policy for Phase II and e-commerce for Phase III. Negotiations could be geared towards securing IP rights, especially on technological advancements within the continent, creating incentive for cross-border flow of investment. The African Regional Intellectual Property Organization (ARIPO) continues to make progress, having held the Tenth Session of the Working Group on the Improvement of the ARIPO Protocols Relating to Industrial Property from 13th to 14th May 2021. The African Intellectual Property Organization (OAPI) also seeking to consolidate protection of intellectual property among its member states.
E-commerce under AfCFTA will also open up new channels for trade, allowing several member state trade digitally at a time, creating endless opportunities to markets and traders previously inhibited by logistical and administrative challenges. “Member States must critically review approaches that are being made to them by bilateral partners to enter into bilateral e-commerce legal instruments with them in order to ensure that Africa is able to negotiate and implement an AfCFTA protocol on e-commerce such as data and products being traded under e-commerce. This will promote the emergence of African owned e-commerce platforms at national, regional and continental levels,” says an AU Report.
Against this background, it is important for African countries to position themselves to reap big from the digital trade and technological advancements even post COVID-19 pandemic. Artificial intelligence, blockchain technology, e-commerce, all have the potential to improve lives and the time is ripe, for African countries to promote these technologies and further innovations to be able to solve its own problems, be self-sufficient and effectively trade on the global market. With expanding mobile broadband coverage lifting millions out of poverty, ICT innovations, and other technological advancements, if encouraged in the continent, will only further lift more people out of poverty due to economic growth. Investment should therefore be made, by both public and private sector to realize this goal.
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