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Trade and Technology in Africa: Rebooting Trade for the Digital Era

 

In the digital trade era of technological advancement and innovation, international trade has greatly benefitted from the development and integration of various electronic interfaces. Growing digital trade activities, e-commerce and artificial intelligence (AI) boosts the free flow of information and increase transparency while improving the efficiency of day-to-day trade processes. The digital economy appears to be a determining factor in innovation. African trade are showing the transformative potential associated with new technologies.

Africa is likely to benefit from digital trade in future due to technological advancement. For small businesses in particular, digital platforms have provided unprecedented opportunity to go global. Trade rules as reflected in AfCFTA and Bilateral Agreements can play role in supporting development of e-commerce and use of artificial intelligence in trade in Africa.


Pan- African free trade which came to effect into 1st January 2021 will be drive to economic growth by encouraging use of information technology for trade facilitation as elaborated in Agreement establishing AfCFTA Annex4 Article 17. The agreement is expected to enhance the use of IT in business and government operations including the use of robotics in manufacturing, medicine, delivery, logistics and maritime transport.

New jobs are to be generated from AfCFTA in the information and communication technologies sector, while the indirect creation of jobs will occur via increased demand and productivity. Industrialization  and transformation of agriculture will play greater role in economic growth as the agreement emphasize on production of value-added products and discourage trading of raw material and semi-finished goods.

Other possible benefits from the AfCFTA agreement include; a planned African passport, which will mean holders won’t require visas when they go to another African country and a new digital payment platform for African Companies that trade with each other.

AfCFTA encourages digital trade for easing process of importation from other African countries and enabling SMEs to set up assembly firms in other African countries, creating cheaper means of production. The AfCFTA is also building a mechanism to report non-tariff barriers, which disproportionately impact MSMEs due to their limited resources and access to information. AfCFTA offers numbers of benefits to MSMEs by allowing them to enter new markets create new products and expand customer’s base.


Bilaterally, Economic Partnership Agreements between some Sub-Saharan African countries/regional blocs and the European countries contain clauses on regulation and facilitation issues related to e-commerce. E-commerce has been proposed as a topic for the USA-Kenya free trade agreement Also, e-commerce features in the Morocco-USA FTA 2004. This FTA has a chapter which covers the supply of services through electronic means, the prohibition of customs duties on digital products, most-favoured nation treatment, and national treatment.

The growth of digital trade will affect international trade in a number of ways. One is the macroeconomic impacts of electronic interfaces and the related trade effects. For instance, AI increases productivity growth, and then this will increase economic growth and provide new opportunities for international trade. Current rates of productivity growth globally are low and there are various suggested causes. One reason for low productivity growth particularly relevant for understanding the potential link with AI is that it takes time for an economy to incorporate and make effective use of new technologies, particularly complex ones with economy-wide impacts such as AI. This includes time to build a large enough capital stock to have an aggregate effect and for the complimentary investments needed to take full advantage of investments, including access to skilled people and business practices.

 

 

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