Exploring Digital Innovation in Promoting the AfCFTA

On May 3, 2024, Zenpay Limited, a subsidiary of Zenith Bank Plc, signed an agreement with the African Continental Free Trade Area (AfCFTA) secretariat, committing to developing and deploying the SMARTAfCFTA portal. The development of this platform is a significant step towards revolutionizing intra-African trade through digital innovation. Factors such as limited access to reliable internet infrastructure, low levels of digital literacy, regulatory barriers, and insufficient financial inclusion have contributed to Africa’s lag in digitized intra-African trade.

The SMARTAfCFTA digital platform presents the opportunity to streamline trade processes and bridge information gaps. The platform provides comprehensive trade-related information and empowers businesses to make informed decisions. African countries must embrace digital innovation and leverage the power of technology to facilitate trade, drive economic growth, and promote inclusive development if they are to reap the full benefits of the AfCFTA.

Although Africa has about 18 percent of the world's population, it contributes only about 2.9 percent to the global GDP and 2.2 percent of world exports, with intra-African trade accounting for only about 20 percent of total trade. The AfCFTA is a huge opportunity for businesses within Africa to thrive, especially if digital strategies are developed to utilize this remedy for Africa’s economic decline fully.

One of the obstacles to trading within Africa or implementing the AfCFTA is the cumbersome administrative procedures. Businesses struggle to comply with complicated trade regulations, which limits their access to profitable market opportunities. To overcome this, African governments must work together to standardize trade rules and simplify administrative processes. Initiatives like digitizing customs and implementing single-window systems, as seen in Ghana and Ethiopia, showcase steps toward smoother trade operations continent-wide. Emulating these advancements can streamline trade and minimize bureaucratic obstacles across African nations.

The absence of a centralized trade data platform presents a significant challenge in Africa. To address this, African governments should establish digital platforms like SMARTAfCFTA to consolidate trade information and make it accessible continent-wide. Such platforms would empower businesses to access market trends, customs tariffs, and export opportunities seamlessly. Successful examples like Kenya TradeNet and Rwanda Electronic Single Window demonstrate the effectiveness of such initiatives in streamlining trade processes and improving efficiency. Leveraging platforms like SMARTAfCFTA aligns with Africa's Digital Transformation Strategy (2020-2030), driving sustainable economic growth and unlocking the continent's vast potential in intra-African trade.

Cross-border payments in Africa are hindered by inefficiencies, high costs, and limited accessibility due to fragmented financial infrastructure and regulatory disparities. The collaboration between the African Export-Import Bank and the AfCFTA Secretariat, exemplified by the Pan-African Payment and Settlement System (PAPSS), should be expanded and enhanced. This can be achieved by integrating PAPSS with platforms like SMARTAfCFTA to create a comprehensive ecosystem for digital trade. This collaboration would reflect a strategic approach to leveraging digital innovations for the benefit of the entire continent.

Collaborative governance and infrastructure investment are crucial for leveraging digital innovation to promote the AfCFTA. The necessary foundation for digital connectivity and trade facilitation across the continent can only be enacted through infrastructure investment. Governments, private sector stakeholders, academia, and civil society must join forces to foster an ecosystem of innovation and entrepreneurship. Public-private partnerships can also drive investment in digital infrastructure, promote technological adoption, and facilitate knowledge exchange, propelling the AfCFTA towards sustainable development goals. Prioritizing the full implementation of the AfCFTA by African governments is essential to create a conducive environment for digital innovation to thrive and drive economic growth.

TheAfrican Union’s Agenda 2063 emphasizes the indispensability of building digital economies to facilitate continental integration and achieve sustainable and inclusive development. By embracing digital innovation, African countries can overcome traditional trade barriers, unlock new opportunities, and promote prosperity. As the continent moves towards digital transformation, initiatives like SMARTAfCFTA are essential for creating inclusive and prosperous economies across Africa.

Chidera Ezeokoli is a Social Media Intern at African Liberty.