Trade in the Digital Economy: a tralac collection
At any given moment, international trade is being transacted across Africa. The supermarket buyer emails the supplier she met at a recent trade show to place a sample order. The car manufacturer uses the proprietary supply chain software for their company to obtain more seatbelts for the factory. The informal cross-border trader WhatsApps her customers for today’s orders. The farmer checks the weather app. A truck driver uses an online map to navigate a new route. A shipper secures warehouse facilities using the online booking system of a logistics firm. A customs agent processes a shipment of goods using ASYCUDA. A migrant mine worker sends money home to his family... and so on.
The wheels of international trade are powered by the Internet. From the smallest informal trade to a major supply agreement, contracts are transacted online; whether via email, e-commerce store, or digital platform. Any formal trade relies on the Internet for implementation – financing, documentation and logistics are all digitally driven, and becoming more and more so. Whether it is an emailed order, an online purchase, or merely the financial arrangements behind the transaction, the Internet will inevitably be used in conducting international trade.
This is not the future; it is not some hazy tomorrow that we cannot predict. This is the current reality of trade, even on a continent where connectivity lags and digital literacy is low by international standards. Digitalisation will be an inevitable part of trade in 2020 and beyond.
There are huge opportunities for digitalisation to increase and improve Africa’s trade environment. It is crucial to the success of the African Continental Free Trade Area (AfCFTA) that the reality of today’s digital economy is recognised and reflected. The AfCFTA Agreement itself has a role to play. Although not shaped as the kind of 21st century agreement that would provide a rules-based framework for the digital economy, there are areas, still to be negotiated, that have potential to shape the free trade area in a more digital-friendly way.
More importantly, the AfCFTA is not just a free trade agreement, it is a flagship project of the African Union (AU), situated within Agenda 2063, Africa’s framework for structural transformation. This means that the development of the continental free trade area need not rely only on the text of the AfCFTA Agreement but will be supported by a suite of other Agenda 2063 initiatives. It is through these initiatives that African Union (AU) members have the best chance and the most promising opportunities to create a free trade area that does not stand in the way of the digitisation of the economy and encourages trade and economic development within the digital economy.
The trade-related benefits to be derived from the digitalisation of the economy are well known, but bear repeating. In particular, our work suggests digitalisation can enable e-commerce; reduce transaction costs; reduce barriers to cross-border trade; automate production, thereby improving efficiency and reducing costs; and improve logistics. In addition, digitalisation is transforming how we trade in services – from offshoring, to cloud services, to online outsourcing – the Internet has made all kinds of new services trade possible. E-commerce and digitalisation particularly offer opportunities for marginalised groups, such as young people, rural citizens and women to more easily engage in the economy – but policies are needed to ensure that access gaps are narrowed.
This volume brings together tralac’s work over the past five years (updated where necessary) on the digital economy, e-commerce, information communication technology and related developments. We present data on the current state of the digital economy in Africa; identify some of the most important interventions for catch up; examine some of the key trade policy issues arising from digitalisation; and offer policy recommendations for making the most of this fundamental economic and social shift.
© 2020 tralac, the Australian Government and the Government of Sweden
All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed herein remain solely those of the author(s).
* A user account is required to download these files. Registration to the tralac website is free of charge and for monitoring purposes only.