South Africa has 18 export councils and 20% of its exports go to African countries. Since there are very few malls in Africa, the potential for e-commerce is considered to be huge. However, there are many pitfalls, least of all the fact that South Africa is the third most popular target in the world for cybercrime.

A one-day workshop to debate the future of e-commerce regulation and its implications for SA and Africa was recently held. The intervention was part of the Global Economic Governance Africa II programme funded by the United Kingdom’s Department for International Development and was attended by Mariana Purnell of Agbiz Grain. The programme aims to assist South Africa and African countries to understand the impact of evolving international regulations on e-commerce, calibrate domestic regulatory responses, and assist them to influence those regulations in international economic governance forums such as the World Trade Organization.

Vital to the success of e-commerce is the enabling environment – regulation, infrastructure and skills/knowledge. Some of the challenges are lack of e-customs, data privacy and tax on goods and services. The first step was to define e-commerce and scoping the evolving international regulatory terrain. Jamie MacLeod, Trade Policy Fellow from the African Trade Policy Centre (ATPC) at the United Nations Economic Commission for Africa gave feedback on the view from Geneva, and implications for Africa.

One exciting concept is a database of trade policies called Digital Trade Estimates which covers 65 countries world-wide. This database, which was developed by the European Centre for International Political Economy (ECIPE), provides a comparative analysis of the ease of e-commerce trade in the various countries.

The information resorts under 13 categories that are grouped under: i) Fiscal restrictions; ii) Establishment restrictions; iii) Restrictions on data and iv) Trading restrictions.

SA is quite average on the DTE scale, but our BRICS partners, especially India and China, are very restrictive in e-commerce.

Quick Facts:

• The UK is the biggest e-commerce country in the world with 18% of all trade taking place over the internet. In SA it is less than 1%.

• Africa is the only continent with a mobile internet penetration rate lower than 20% while fixed broadband penetration is lower than 1%.

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The Future of e-Commerce Regulation: The View from Geneva and Implications for South Africa and Africa – Jamie MacLeod, ATPC

E-Commerce at the WTO Now

By July 2016, seven new proposals have been submitted to the WTO on e-Commerce, with suggestions that new rules adopted by December 2017 (next Ministerial). But this may detract from priority ‘remaining DDA issues’.

There are suggestions that e-commerce will be the revolution that developing countries have been waiting for. Especially for MSMEs – therefore, should there be rules at WTO? What kind of rules? How would they help developing countries? What are the challenges facing developing countries with e-commerce?

Could Africa take advantage of e-commerce rules?

E-commerce is hailed as an opportunity for developing countries and MSMEs – it reduces costs traditionally involved in cross-border trade (infrastructure, insurance, storage space, etc). Celebrated African success stories are found only in larger African countries, but still a Digital Divide exists:

• Africa only region with mobile internet penetrate <20%

• Fixed broadband subscriptions <1% (more expensive, and slower than elsewhere)

• Very limited cross-border e-commerce

• Logistics problems

Regional Integration and Intra-African Trade

Regional integration is hugely important to African industrialisation: 60% of EAC exports to other EAC countries consist of manufactured products (50% to other African countries). But only 6% of exports to the EU.

Will continuation of moratorium on e-commerce customs duties undermine regional integration? Is there a scenario whereby customers in Africa are able to access goods and services from outside the continent more quickly, easily and cheaply than from a local supplier?

Conclusions

Challenges?

• Care should be taken that new issues, incl. e-commerce, do not divert progress with DDA priorities

• E-commerce as avenue for strengthening TRIPS+ restrictions and reinforcing dominance of developed countries in e-commerce

• Provide a liberalised ‘back door’ into developing country markets, both for services and goods

• Digital Divide: Africa currently behind RoW

Opportunities?

• Easier for SMEs to access benefits of trade (higher SME concentration in Africa)

• Reduce barriers for trade (higher barriers in Africa)

Infant industry protection, industrial development, macro-economics, employment are reasons why developed and developing countries alike erect barriers for suppliers who may not be competitive on the world market. In the Doha negotiations, Membership has acknowledged the importance of tariffs for developmental reasons (hence why LDCs have not had to undertake tariff reductions).

But these concerns are not replicated with electronically transmitted trade – issue not huge today, but e-trade is expanding and decisions made today will be projected into the era 25 years from now.

The Internet is the trade route of the 21st century: how can we craft this so that developing countries can industrialise and catch up with technologies and development?