Africa’s Pursuit of E-commerce

Despite challenges, e-commerce has a big future in Africa

Following the global trend, Africa is pursuing ramping up trade through the use of digital technology, and jumping on the e-commerce bandwagon. Policy makers on the continent hope the expansion of information and communications technology in Africa will play an instrumental role in promoting economic development. In simple terms, the augmentation of using smartphones for trade can make an important contribution to poverty reduction among nations on the continent.

AFCFTA interest

E-commerce has now captured the attention of the African Continental Free Trade Area (AFCFTA). AFCFTA is an initiative of African Union (AU) member nations, which will be the largest free-trade area in the world in terms of participating countries, since the formation of the WTO.

Having online mechanisms for monitoring non-tariff barriers is to be among AFCFTA’S major operational instruments, while it could also provide a guiding framework for the governance of data flows.

There are players showing growing interest within the African private sector in regional e-commerce platforms and intra-regional data-sharing.

Yenebeb Abebe, General Manager of Info World Link, an Ethiopian-based IT company sees opportunities for the use and expansion of mobile trading systems in Africa.

For him, e-commerce can answer one of the fundamental questions of Pan-africanism - why Africa could not be able to ensure self-sufficiency to feed its people. “E-commerce can serve as a catalyst to integrate Africa through the application of mobile technology,” said Abebe.

Yet, despite the considerable growth of the e-commerce-driven economy, Abebe believes there is little action taking place to build momentum for continent-wide applicability of the system.

However, the AU Commission is developing an e-commerce strategy in order to strategically approach e-commerce and examine possible linkages with AFCFTA.

The traceable nature of their electronic trading system helps economies reduce informal trading practices, said Sisay Debebe, Lecturer at Addis Ababa University School of Economics in Ethiopia.

However, Debebe said, “In order to gain from the system in terms of macroeconomic stability, governments have to install institutional frameworks that help them switch informal businesses into formal modalities where there also comes ability to monitor transactions.”

Without proper Internet infrastructure, e-commerce remains a challenge; yet usage and literacy are also key elements in pushing Africa’s e-commerce quest forward.

“Unlike in other parts of the world, the Internet infrastructure has not been developed in Africa and that hinders the promotion of an electronic trading system,” said Debebe, adding that the future of business has the tendency to grow into e-commerce.

E-commerce optimism

Despite the challenges, according to International Telecommunication Union data, significant improvement in these areas have been made, which is helping make e-commerce an African reality.

In the context of digital technologies, the COVID-19 pandemic was a blessing in disguise. While e-commerce solutions have played a critical role in ensuring business continuity for many companies across the globe, in Sub-saharan Africa, the mobile industry is also playing a crucial role.

For many micro, small and medium-sized enterprises in Africa, e-commerce has offered a lifeline and can continue to play a principal role in their economic recovery.