A Continental Africa Free Trade Area (AfCFTA), where Angola is included as a member state, is the largest free trade zone in the world. Here are the top five technology and communication developments needed to make this region successful.
The Continental Africa Free Trade Area (AfCFTA) is the largest free trade area in the world in terms of the number of participating countries. While governments and businesses have worked to ensure smooth collaboration between countries and regions since the inception of AfCFTA in January of this year, there is much work to be done on technology infrastructure to ensure the free trade area delivers on its promise to improve the economy. of the 55 member states.
Cross-border payment platforms, telecommunications networks and Internet access are necessary ingredients to guarantee the success of this commercial area.
"If connectivity between markets, data access and lightweight infrastructure are essential for successful trade agreements, then by addressing these issues early on, AfCFTA can gain much more traction than previous trade agreements." said Wamkele Mene, secretary general of the African Continental Free Trade Area Secretariat, in the Foresight Africa 2021 report.
Technology adoption has not progressed evenly across the continent, however, and the lack of reliable ICT infrastructure in certain areas has the potential to stifle progress in the new area of commerce. But if planning is done well by interested organizations, governments and the private sector, the following communication and technology systems will drive commerce on the continent.
Stronger Supply Chain Systems
For goods to move easily across borders, a well-established supply chain needs to be in place. But the challenges surrounding supply chain management, including poor communications and transport infrastructure, have been a pain point for Africa.
The good news is that a new generation of companies has deployed emerging technology to facilitate the flow of goods across borders.
Startups such as Nigerian freight management company OnePort365 and Kenya-based e-logistics platform Amitruck seek to facilitate the movement of goods through digital tools. These African supply chain logistics and digital freight management startups could open up more trade between member countries.
Amitruck uses analytics and an IoT network to track vehicles and goods, and is supporting supply chain companies like Twiga Foods, which supplies 8.000 suppliers, and products from approximately 17.000 farmers.
In turn, OnePort365 uses digital tools for online booking, managing and tracking local and international shipments. Its data tool offers cargo owners transparent, end-to-end shipping service pricing.
African e-logistics companies play a key role in AfCFTA, “reducing transport costs and delays and improving service quality along transport corridors,” said Vera Songwe, executive secretary of the United Nations Economic Commission for the Africa, in an IFC report.
Already thousands of cargo owners now have the opportunity to take advantage of digital tools to compare prices, request shipping, make payments and track deliveries. These modules can make the products cheaper on the market.
A World Economic Forum document cited the success of the African Medical Supply Platform (AMSP) in procuring medical equipment from verified manufacturers. Its implementation was carried out between the African Union and various foundations, companies and governments around the world.
“Its unique interface enables volume aggregation, quota management and payment facilitation, as well as logistics and transportation to ensure equitable and efficient access to essential supplies for African governments,” said the World Economic Forum.
Interoperable payment platforms
Mobile money has become a staple in more advanced regions such as East and Southern Africa. However, it is the direct child of telecommunications companies, shifting the challenge from cross-border telecommunications to mobile payments.
For businesses to easily pay for goods, digital payments need to be harmonized and interoperable. This challenge has opened up opportunities for startups such as Flutterwave, Eversend and Chipper Cash, which offer digital payments to merchants and international money transfers.
Mobile money applications have also opened up opportunities for business in Africa as they allow people who don't have traditional bank accounts to do business. These mobile money applications are now morphing into mature payment platforms.
Grandes players, like Safaricom's M-Pesa, for example, have built robust mobile money payment systems. M-Pesa, for example, will allow third parties to use its API in their programs and also launch e-stores within the M-Pesa application.
For the banking sector, the African Export-Import Bank (Afreximbank) and the AfCFTA Secretariat have launched the implementation of the Pan-African Payments and Settlement System (PAPSS), a system that will facilitate cross-border payments, keeping in mind the various local systems, and currencies in each country.
The system will also save the continent more than $5 billion in payment transaction costs each year, reducing the overall cost of goods.
“Implementation of the Agreement establishing the AfCFTA will improve intra-African trade, necessitating, in this regard, the establishment of a payment system to facilitate affordable and efficient cross-border trade transactions,” said Wamkele Mene, Secretary General of African Continental Free Trade Area, in a statement announcing the launch of the PAPSS.
cross-border telecommunications
Continuous telecommunications are needed to facilitate cross-border trade under AfCFTA and interconnection agreements and tariffs should be negotiated for ease and accessibility, according to a report by UNCTAD (United Nations Conference on Trade and Development).
Telecommunications are critical to facilitating trade. However, the different rates for international calls come at a cost for companies across Africa. In East Africa, the implementation of the One Network Area has been seen as a way to reduce roaming costs for the region.
Lowering cross-border telecommunications fees for services in East Africa (Burundi, Kenya, Rwanda, Tanzania, Uganda and South Sudan) could inform the rest of the continent on how to implement such initiatives to secure support for trade.
By 2025, the GSMA expects unique mobile users in Africa, with an estimated population of 1,3 billion people, to reach 615 million. This means that mobile communication will be critical for realizing low-cost, cross-border or mobile roaming packages to improve communication.
Broad Internet penetration for cloud services
Stable and reliable Internet access that it can support is needed to be the backbone of a digitized business system for the region. While data centers are being built to support African SaaS and the cloud services that can enable commerce, broadband penetration in Africa is still uneven, with some countries such as Kenya, South Africa, Mauritius and Nigeria failing to surpass your peers.
Regions with low internet penetration or unstable connections are doomed to lose trade across the country, says Elraaid de Lamah. Elraaid insists that reliability, not just providing an Internet connection, is critical.
“So, while the first step is to ensure that the Internet can facilitate cross-border commerce, the (weak) reliability of Internet access is perhaps the most important barrier we need to overcome,” he added.
With regular and consistent high-speed Internet access, communication can be uninterrupted and allow individuals and companies to conduct business more quickly and regularly.
However, sustainable development is needed to achieve world-class broadband penetration in Africa.
“To achieve universal broadband internet access in Africa – which could help the continent overcome infrastructure constraints in many sectors, just as mobile phones did with landlines 20 years ago – an estimated 100 is needed millions of dollars in investments over the next decade, with a third of that happening in infrastructure,” said the Foresight Africa 2021 Report.
Unified postal address system
Reliable postal address systems in Africa do not exist in most countries. However, having an addressing system in Africa can ensure easier trade between countries, according to Taha Elraaid, the CEO of Lamah Technologies, a company that is working on a digital addressing system that can support trade in goods. physicists.
“When it comes to postal addresses, deliveries and other forms of communication, we need to be able to contact each other physically, not just digitally. Regions that lack a consistent and reliable approach and postal services must look to the success of others and find out what data or technology can improve that,” he said.
He also added that for commercial purposes, companies need to know where their target customers live, in addition to the choices they are making. With this information, companies can build more effective infrastructure and services. Having an address ensures that you reach your entire target audience, which can lead to larger, more sustainable commerce.
