E-Commerce and the Digital Economy

Third Phase of AfCFTA: Protocol on E-Commerce

This meeting explored the topic of Digital economy and connectivity in Africa, and the continent’s readiness towards the prospective Protocol on E-Commerce under the 3rd Phase of the African Continental Free Trade Area (AfCFTA). CUTS presented the findings of a recent research study on the subject, titled ‘Mobilising E-Commerce for Development in Africa through AfCFTA’.

Opening statements

As African leaders were negotiating on e-commerce, there was a need for more countries to join the discussion and take on regional e-commerce projects. CUTS has taken part in two main studies on the topic, namely: (i) ‘E-commerce and Regional Trade Agreements’, which explained the potential implications of e-commerce policy and regulatory frameworks; and (ii) ‘Mainstreaming Gender in Key ecommerce Policy Areas’, which explained the ways in which countries are and could mainstream gender through various cross cutting areas of e-commerce such as e-payments, infrastructure and ICT.

Study on ‘Mobilising E-Commerce for Development in Africa through AfCFTA’

The study was inspired by the various debates on how Africa is endeavouring to establish suitable environments and regulatory frameworks that facilitate cross-border e-commerce. The study explores progress in this regard and concludes with a four-step roadmap to continental integration on electronic commerce.

The study held that there are many key issues such as the digital divide, taxation and platforms that crosscut with e-commerce. However, policy makers need to take all of these areas into account when drafting policy. The aim of the study is to advise negotiators on how to consider all these areas of e-commerce and come to a decision through the help of a strategic set of suggestions.

The study highlights the link between e-commerce and Sustainable Development Goals (SDGs) as well as e-commerce and Agenda 2063. Additionally, the study suggests starting points in order to answer the key question of “How we can integrate e-commerce into Africa’s vision, and what can the continent do to secure its place?” The standing points are as follows: (i) High level of SME representation, i.e. 80%; (ii) Intra African trade – that provides a far larger share of growth in Africa’s value; (iii) Covid-19 revealed how e-commerce can be key for development; and (iv) Agenda 2063 promotes digital economy.

The study encourages the “Growth of digital platforms and e-commerce businesses” through a four-step approach:

  • Step 1: (i) SME’s need to be at the centre of focus to navigate the ecommerce process chain, adopting a bottom up approach; (ii) Establishing an online business is essential in order to grow digital platforms. Countries need to focus on their e-commerce infrastructure, skills, connectivity, and access to platforms; (iii) International E-payment needs to be addressed through the facilitation of services that support SME’s in all activities. Additionally, Cross-Border delivery issues such as trust issues, custom duties and De-Minimis need to be overseen; and (iv) Regulatory framework issues that occur through After Sales also need to be addressed.
  • Step 2: Build on African Union (AU) digital transformation strategy – No need to start from scratch as there is enough information to build upon from the AfCFTA in order to promote and maximise digital system for African countries.
  • Step 3: Scale up national and Regional Economic Communities (Rec) strategies and promote a digital ecosystem, this can be done through e-trade, e-logistics, e-legislation and facilitating cross-border payments and interoperability.
  • Step 4: There is need to formulate common positions towards issues and negotiations – this is important as many countries are individual, and e-commerce is complex and multi-layered. The cross-cutting nature of e-commerce can sometimes have implications on other areas and vice-versa is not addressed with accuracy.

Concluding discussions

Delegates remarked that AfCFTA is a platform for consolidating e-commerce rules and regulations across the continent. It has the goal to establish Africa’s integrated digital market business. It was also stressed that it is important to: (i) place the cross-border e-commerce process chain at the heart of the regulatory framework to ensure SMEs can scale up; (ii) promote a digital economy ecosystem; and (iii) remove trade barriers and manage risks.

As African countries were very careful not to join the Joint Statement Initiatives (JSI) out of the fear that they were not ready for the e-commerce aspects. Covid-19 has shown us that we may need to put a bit more effort in this area so that the SME’s can use e-commerce as a resource and take advantage it’s such avenues.