Discussions

Where do African Countries stand in various aspects of the Digital Economy?

Where do African Countries stand in various aspects of the Digital Economy?

12 Apr 2017

Tarik Oguz, tralac Research Advisor – ICT, discusses the growing influence of the digital economy in Africa and across the globe

Digital Economy is fast becoming “The Economy”. By 2025, 50% of the total value in the global economy is predicted to be generated digitally[1].

African countries need to be ready to benefit from this development and there are a number of steps required to be taken to achieve this.

Continued investment in infrastructure and capacity building are already firmly placed in all governments’ development plans for universal access to ICTs. However, there needs to be targeted government investment priorities in certain areas such as

  • providing public access WiFi locations in rural areas (schools, libraries, town halls);
  • focusing on digital literacy training in secondary schools;
  • training of public sector staff and
  • open government initiatives and providing streamlined transparent government e-services

to minimise the digital divide and reduce unemployment towards inclusive economic growth.

Beyond investment prioritization, governments are also responsible for successful implementation of

  • policy making and competitive market regulation through independent authorities
  • cyber-security and consumer protection (including protection of personal information)

by going through a multi-stakeholder consultation process.

African governments need to actively participate in initiatives by the global organisations to harness the full benefits of the ICTs for their citizens. According to the results of a study conducted in 2014 by the World Bank countries could increase their GDP-per-capita by more than 1% when they increase broadband internet penetration by 10% (1.2% for developed countries and almost 1.4% for developing countries).

In January 2016, the International Centre for Trade and Sustainable Development (ICTSD) in partnership with the World Economic Forum (WEF) published a series of policy options to be considered and implemented as part of The E15 Initiative to maximize the opportunities of The Internet for international trade[2]. The critical components of these policy options are updating the World Trade Organisation (WTO) Trade Facilitation Agreement (TFA) to support digital trade, and to adopt and implement the Information Technology Agreement (ITA).

The ITA was originally concluded by 29 participants at the Singapore Ministerial Conference in December 1996. Since then, the number of participants has grown to 82[3]. The participants are committed to completely eliminating tariffs on IT products covered by the Agreement. Only 3 African countries are participants to the ITA (Morocco, Egypt and Mauritius).

Adopting and ratifying the ITA will assist in reducing the cost of connectivity and increasing the use of the Internet in Africa, for low-income and under-privileged communities in particular.

A study by The Economist Intelligence Unit (EIU) found that after a decade of above world-average real-GDP growth Sub-Saharan-African Economies’ expansion slowed down in the last three years to less than 2% and is heading for a modest real-GDP growth of slightly less than 4% in the next five years.[4] The large economies of Nigeria, South Africa and Angola are expected to grow at a rate slower than the predicted average (all below 3%); and, economies of Kenya, Ethiopia, Tanzania and Uganda are predicted to grow above the average rate. The EIU made two assumptions in reaching these predictions: i. higher commodity prices; and ii. favourable weather conditions.

The onus will stay with the governments to invest in and create a digitally enabled trading environment to achieve and exceed these predictions.

Another initiative; the 2017 E-commerce Week in Geneva with the theme “Towards Inclusive E-Commerce” by the United Nations Conference on Trade and Development (UNCTAD) will take place in Geneva, on 24-28 April[5]. UNCTAD will unveil an online platform for the “eTrade for All” initiative on 25 April, 2017; which was launched in July 2016 in Nairobi, Kenya at UNCTAD14[6].

UNCTAD’s E-Commerce Week comes at a crucial time where many governments are exploring the impact of the digital economy and e-commerce on their economic growth potentials.

.


[1] McKinsey&Company, at http://www.mckinsey.com

[2] http://e15initiative.org/themes/digital-economy/

[3] https://www.wto.org/english/tratop_e/inftec_e/ita_map_e.htm

[4] Economist Intelligence Unit (EIU), at http://www.eiu.com

[5] http://unctad.org/en/conferences/e-week2017/Pages/Programme.aspx

[6] http://unctad14.org/en/Pages/ProgrammeDetail.aspx?eventid=12