By Chiamaka Adinnu
In July 2023, African leaders convened in Nairobi, Kenya to discuss the integration of the African Continental Free Trade Area (AfCFTA) across the continent. The high-level summit was the African Union’s (AU) 5th mid-year coordination meeting. Talk followed centred on the critical issues of African integration and division of labour. African leaders extolled AfCFTA implementation as the solution to attain economic prosperity. However, the desired economic freedom cannot be achieved with the existence of cross-border restrictions among AU member states.
African leaders should prioritize addressing the numerous customs and border operations with digitalisation. The African continent, home to 54 diverse countries and untapped economic potential, is primed for a transformative leap into the digital age. The barriers that have historically hindered cross-border trade can be dismantled through the adoption/use of digital platforms, data-driven insights, and advanced logistic solutions. Furthermore, regulatory harmonisation and infrastructure development are viable means to promote seamless cross-border trade.
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Prospects and challenges of tech-enabled trade
The prospects of cross-border tech-enabled trade in Africa are immense. Technology facilitates access to a global customer base through e-commerce platforms and digital marketplaces and allows African countries to expand their export capabilities and drive economic growth.
Additionally, technology has the more significant benefit of connecting producers and farmers directly with buyers. This direct connection eliminates intermediaries and enables fairer pricing, ensuring that more of the profit reaches the hands of the producers.
Furthermore, digital solutions can revolutionize supply chain management. For instance, blockchain technology offers a level of traceability which can enhance transparency and reduce fraud in the movement of goods. This is particularly crucial in the food sector, where ensuring the safety and authenticity of products is paramount. Creating such an immutable record of every step in the supply chain through blockchain technology builds trust among trading partners and consumers alike.
Despite these prospects, numerous challenges exist that must be addressed to realize the potential of cross-border tech-enabled trade in Africa. African countries face challenges such as digital divide, poor infrastructure, and fragmented markets. These challenges severely limit the full potential and realization of cross-border tech-enabled trade in most African countries.
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However, technology presents a transformative solution to these challenges. Digital platforms, enabled by the internet and mobile technologies, represent a unique opportunity to circumvent Africa’s cross-border issues. African leaders must prioritize investment in digital infrastructure including constant electricity supply and broadband connectivity. Such measures will foster inclusivity in tech-enabled trade by ensuring that remote regions have access to e-commerce platforms and online marketplaces.
Another substantive issue hindering cross-border tech-enabled trade in Africa is the issue of outdated custom processes which often leads to delays and increased costs. A worthy prerogative for African leaders is to invest in modernizing customs procedures by implementing digital platforms for electronic documentation, pre-clearance, and risk assessment. Such measures reduce clearance times and enhance trade efficiency.
African countries operate on varying regulations and trade procedures and such inconsistencies create barriers to cross-border trade. African leaders should jointly harmonise custom procedures, trade regulations, and standards
African countries operate on varying regulations and trade procedures and such inconsistencies create barriers to cross-border trade. African leaders should jointly harmonise custom procedures, trade regulations, and standards. Furthermore, the need for the efficient implementation of the AfCFTA as the African trading bloc is ever so glaring. A trading bloc is a form of intergovernmental agreement in which regional barriers to international trade are minimised or eliminated among participating states, to allow them to trade as quickly as possible with one another. Africa could learn from the EU whose successful implementation of their trading bloc has amassed economic benefits and recognition as a powerhouse in global trade. The EU has achieved this strong position due to its large and integrated market, unified trade strategies and commitment to free trade.
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The need for collaborative solutions
Addressing the inherent trade barriers in Africa calls for collaborative solutions. At the AU meeting in Nairobi, the Kenyan Foreign Affairs Cabinet Secretary, Dr. Alfred Mutua reiterated the need for collaboration to unlock the collective socio-economic potential in Africa. He urged African Member States to embrace integration, create synergies and build on comparative advantages to facilitate free and seamless trade among member states. To this end, Dr. Alfred Mutua emphasized Kenya’s commitment to deepen bilateral and multilateral relations by abolishing visas to citizens from AU Member States to facilitate ease in investing and doing business in Kenya and across Africa.
“The destiny of Africa is in our hands to shape it into a place of prosperity, full of socio-economic activities and hope for our people. Present and future African generations deserve to live on a continent of hope and opportunity for all,” said Dr. Mutua. Indeed, Dr. Mutua’s statement represents the reality of our beloved continent and should serve as a beacon of hope to all Africans and a call of duty for our African leaders.
Adinnu is a trade fellow at the Ominira Initiative for Economic Advancement. She is currently studying for a master’s degree in Food Safety and Quality Engineering.
