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The Effect of eCommerce on Intra-Africa Trade

Effects of eCommerce on intra-African trade

Written by Yomi Ashiru

30 Oct, 2019

The Effects oF eCommerce on Intra-Africa  Trade

 

According to a report on intra-Africa trade, just over a fifth of the African population uses the Internet compared to two-thirds in Western Asia. The African continent even though endowed with evenly distributed natural resources, has relatively impoverished groups of people compared to other continents, many of its inhabitants are located in rural areas, where the benefits to be derived from ICT and e-commerce have not been felt. The sparse nature of ICT infrastructural development in most countries of the continent has resulted in major differences in the sizes of the overall economies, the level of expertise available, and other development issues.

The obstacles to e-commerce are many and varied.
Legal Frameworks: Most countries are yet to institutionalize the intra-Africa trade legal frameworks that will handle issues concerning Intellectual Property Rights, and Consumer Protection in the digital arena, digital signatures, and contracts in cyberspace.

Financial Environment: e-commerce as a strategy to boost intra-Africa trade is yet to take its proper shape in Africa due to skepticism about the use of Credit cards for online transactions and payments. Major gaps exist in most African countries. While some economies in the African continent have embraced the cashless society as experienced in developed countries, many economies are almost entirely cash-based. In such cash-based economies, credit cards are virtually non-existent and central bank clearing facilities are very limited.

Information Infrastructure: When looking at intra-Africa trade through the lens of information infrastructure there is a high cost of equipment and connectivity of e-commerce as relates to physical goods or teleservices in the African continent. Limited bandwidth adds to the problem of providing offline teleservices and online teleservices as such services demand high-quality fast network access.

Transportation and Delivery System: The placing of an instant order (and perhaps the equally quick debiting of appropriately quick delivery of the goods. While this is eminently feasible for virtual goods such as music files, it is far from that when it comes to physical goods. Airfreight is risky, infrequent, and expensive in Africa; customs clearance procedures are long and complex; local warehousing facilities hardly exist.

Human Capacity: brain drain has become a major setback in the attempt to bridge the digital divide among countries in the African continents and the western world. The right people required for the effective implementation of e-commerce must be ICT compliant, deeply oriented towards the digital economy, and conversant with web languages and technologies. Most people who have these skills leave their countries in search of greener pastures in Europe and America. And undoubtedly these challenges have marred the positive results e-commerce is projected to have in Africa.

Yeah, there are many issues to be redressed and proper energy must be channeled toward exploring e-commerce to Africa’s advantage considering its resources and potential as a continent. In spite of the challenges, it is imperative to highlight some positive effects on intra-Africa trade through e-commerce across the continent: In the past five years, Africa has had the most rapid Internet growth rate in the world. In places like Kenya and Nigeria, consumers and sellers have enjoyed convenience in online transactions: The rapid growth in internet connectivity has led to consumers and producers seeing the advantages of e-commerce with convenience forming the major enticing factor for online businesses. Furthermore, people living in Africa can also now buy and sell goods from anywhere on the globe by placing orders and paying over the Internet. Also, product advertisements and shipments of these goods can now be done electronically providing leeway for African entrepreneurs to tap into the vastly larger markets for their    goods

Trade in Online service: Online Forex trading, online airline ticket booking, and reservations, online banking services, online taxi/bus booking services, online auctions, and supplies have become fully operational in African countries facilitating efficient intra-Africa trade by providing timely access to vital business information. The massive deployment of globally accepted electronic payment cards (MasterCard, Visa card, etc.) by African banks and fintech solutions providers has bridged the gap in trade and payment methods between the continent and the western world.

It is observed that the global growth rate of e-commerce is at a rate of 25.8%. Nigeria, South Africa, and Kenya are the top three countries that shop online which has contributed immensely to the growth of their economies. E-commerce has come to stay and the African continent cannot work in isolation. There is an urgent need for a paradigm shift in our approaches to business and methods of business transactions, to conform to the modern way of transacting business, which is more efficient, timely, and globalized. Investments in ICT infrastructure and appropriate legal framework to guide and protect the emerging e-commerce in the continent have therefore become inevitable. For effective development and utilization of e-commerce potentials in Africa, the following issues have to be addressed should be made affordable and available even in the remotest parts of the region literacy training programs among producers and users (consumers) effectiveness and use of Electronic payment systems to boost their level of confidence on the system.

local content to ensure easy maintenance of the systems. countries should be well branded and recognized globally in transportation) should be highly efficient and less expensive. Monitoring and taxing of transactions legal framework to build trust remove or avoid trade barriers Chambers of Commerce, Cooperative societies, and NGOs in Africa can bridge the economy of scale on the technology required for e-commerce by setting up online malls showcasing a pool of their members’ sites, products, and services. With the following measures, it is certain Africa would enjoy the complete benefits of e-commerce and manage the risks well-prepared and better.

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