The role of technology and digital innovation in trade and development in Africa

In September, I had the privilege of joining other thought leaders on a panel session at the World Trade Organisation Public Forum 2022 in Geneva, where we discussed harnessing technology and digital innovation to advance trade and sustainable development in Africa. It was a fantastic experience, and I’m glad to have contributed my two cents to help our dear continent advance toward sustainable development.

Technology is the backbone of digital innovation and is essential for economic growth and development. This is clear in recent technological innovations facilitating trade, expanding quality education, and allowing access to capital for the society’s poorest.

The internet, mobile money, satellite data and imagery, machine learning, and blockchain are some of the technologies advancing progress in our society today. There is also trade tech, leveraging the internet of things (IoT), artificial intelligence, 5G, cloud-based platforms, and other Fourth Industrial Revolution (4IR) technologies to improve processes in digitising global trade and trade finance.

According to UNICEF’s Information and Communication Technology Division (ICTD), 113 countries used real-time information technology at scale in 2020 alone. These countries make up 75 percent of world countries, and African countries are among them.

Innovators within the continent are using technology to solve various challenges, from borderless payments to healthcare delivery, financial access, agriculture, and logistics. Undoubtedly, Africa is improving in using technology for development (T4D) thanks to the brilliant young Africans rising to the occasion.

I know that Africa is the new frontier. It is in the continent’s interest for policymakers and stakeholders to prioritise using technology and digital innovation to create solutions that will improve trade and sustainable development for Africans

Still, to achieve more with T4D, African governments need to support and not hinder these innovations. Let’s look at four ways African countries can harness technology to boost trade and ensure sustainable development.

Improve Internet access, and open data.

As of December 2021, Africa had over 590 million internet users. Although internet penetration has been increasing in recent years, only 42 percent of the continent’s population are active internet users. This shows that improving internet penetration will make international trade and other activities seamless for consumers, producers, and investors.

As of May 2022, over 12 countries have rolled out 5G on the continent. Although many of these countries face teething problems, some analysts predict that 5G will add $2.2 trillion to Africa’s economy by 2034. Governments in Africa are optimistic about using 5G to do large-scale farming using drones, plug into the metaverse, introduce autonomous cars and machinery, activate smart homes, and improve cybersecurity.

Asides from these areas, 5G technology can also enable port systems the needed capacity to process data and aid the interconnectivity of port operations. Some of the busiest ports in the world are fully automated, using big data and 5G technology. For instance, a Chinese port uses big data and 5G technology to automate its processes with less human involvement.

Also, broader internet coverage can solve trade blind-spot challenges, enabling rural and urban locations to connect easily and facilitate trade activities. There is a need for uninterrupted internet connectivity, as this will enhance digital trade on the continent. However, Africa must continue to invest in the required infrastructure to strengthen internet penetration.

Take advantage of AI and the Internet of Things (IoT)

The Internet of Things (IoT) are innovations that enable physical objects to have processing ability made possible by sensors, software, and other technologies that connect and exchange data with other devices and systems. IoT can improve trade terminal operations systems for cargo shipping and payment, port logistics systems for cargo call-up and transportation, and automatic identification systems for cargoes and containers. It can also enhance delivery tracking from producer to consumer. These are some of the ways digital and technology systems are used in the maritime industry, and we can replicate these innovations in Africa’s maritime sector to boost trade within the continent.

Also, with the aid of AI, automated vehicles can serve as logistics solutions for transferring cargo to dry docks, warehouses, and end users. All these can enable swift business decisions and prevent shortages.

Read also: Three ways companies can attract, retain local tech talent

Implement Blockchain Technology (BCT) in trading activities

Blockchain technology enables real-time tracking and management of logistics activities, including asset locations within the supply chain. It also ensures the safe sharing of data among related parties. This technology is already being operated in the Port of Busan using the Chain Portal system to control vehicle booking, inter-terminal transport, and monitoring system.

African trade systems can have an enterprise blockchain to facilitate connectivity and trusted data exchange between business ecosystems. Adopting this for trading activities will enable smart automation and process optimization in ways that make data available in a distributed, verified, and secure way. For instance, Nigeria introduced the National Single Window concept in 2006 to enable goods’ swift and efficient movement at the ports.

Although it is yet to fully implement the system, the nation has started the process. It will deploy scanners to improve cargo turnaround time and promote efficiency and transparency at the seaports. When done like in Ghana, Togo, and Senegal, this platform can accommodate blockchain technology. A blockchain-powered supply chain can also aid in the systematic documentation of shipment, transaction records, date, location, quality, and certification of goods to improve transparency and accountability in African trade.

Improve digital payments

Cross-border payment has been a critical challenge for Intra-Africa trade, and despite the rise of FinTech companies in Africa, this issue persists. However, with the launch of the Pan-African Payment and Settlement System (PAPSS), a centralised cross-border financial system was created to enable payment transactions across the continent. It looks like a solution has come in that area, even though the adoption has been slow.

A seamless payment system is the backbone of trade. Unlike the European Union (EU), which has a single currency, Africa has forty-one currencies. It therefore needs an efficient and functioning payment system like PAPSS to effectively facilitate international or regional trade.

I must say that some African countries like Kenya, Nigeria, and Ghana have done well through their many FinTech platforms allowing financial and payment access to the poor and unbanked. Yet, there’s more to be done, and governments should do more to encourage these entrepreneurs with policies that will improve the business environment and enhance digital trade.

I know that Africa is the new frontier. It is in the continent’s interest for policymakers and stakeholders to prioritise using technology and digital innovation to create solutions that will improve trade and sustainable development for Africans.