WIXLIB

Africa E-Commerce AgendaRoadmap for ActionSeptember 2019

02Summary04Introduction042Challenges toE-CommerceGrowth06DevelopingAn ActionAgenda08ActionAgenda24NextSteps

SUMMARYOnline marketplaces could drive inclusivegrowth across Africa, with e-commercelikely to create as many as 3 million jobs by2025. Benefits will include opening marketsto otherwise isolated rural communities,servicing Africa’s fast-growing consumerclass, and offering women access to newbusiness opportunities. Realizing thispotential presents a major opportunity, butwill require significant annual growth, andmust first overcome a number ofchallenges.Africa’s E-commerce Agenda is a call toaction from e-commerce stakeholderswithin and beyond the continent. Led bythe World Economic Forum and the International Trade Centre (ITC) a community ofbusiness leaders and experts haveidentified eight areas for consideration –ranging from refreshing policies toexpanding connectivity, and upgradinglogistics to managing data. Each areacomes with a goal and recommendedsteps.Now is the time to ensure thatthe jobs and inclusive growthpotential of e-commerce iscaptured for Africa.3

INTRODUCTIONThe potential ofe-commerce4E-commerce in Africa is wellunderway, involving business-tobusiness, business-to-consumer,goods and services. Already,estimates suggest as many as264 e-commerce start-ups areoperational across the continent,active in at least 23 countries. Itbrings significant employmentpotential, with online marketplaces set to generate 3 millionjobs by 2025.With action, e-commerce can become aforce for sustainable development. Oneexample is gender. Women entrepreneursincreasingly use digital tools to drivebusinesses, where previously social normsor family duties may have kept them out ofthe workforce.Just 37% of women in Sub-Saharan Africahave a bank account, compared to 48% ofmen. In some cases, fintech can help bringfinancial services directly to women thatmay otherwise have faced legal or culturalbarriers through more traditional routes.CHALLENGESThese will be direct, as well as insupporting services, such aslogistics and payment serviceproviders; customer relationsmanagement, marketing, analyticsand website services andtechnology vendors. In turn,delivery services will needmechanics, job portals requirerecruiters, while any businessrelies on legal, accounting andoffice space.Yet there are challenges to Africa’se-commerce growth. Too many start-upsare unprofitable. Entrepreneurs battleexceptionally low consumer trust ande-skills, low internet penetration andaffordability, uncompetitive deliveryinfrastructure, fragmented markets andrising barriers to cross-border e-payments.According to some estimates, emergingeconomies stand to gain US 3.7 trillion inGDP by greater use of digital finance, yetonly 34% of African adults made orreceived a digital payment in 2017. Despiteincreased digital visibility in neighbouring

markets, intra-regional and globale-commerce trade remains small.Regulations have not kept pace with digitaldevelopments. According to the UnitedNations, 32 of Africa’s 54 nations have lawsin place to govern “e-transactions” (onlineexchange); 23 have laws on data protectionand privacy; and only 20 address onlineconsumer protection.The region also lags behind others in theUNCTAD B2C E-commerce Index, which iscalculated on a set of four compositeindicators highly relevant to onlineshopping.5

Developing anaction agenda6Generating those 3 millionnew jobs assumes a 25-50%annual revenue growth fromAfrica’s current online marketplaces, according to someresearchers, but realizing thesefigures requires action. Acommunity of businesses andexperts led by the WorldEconomic Forum and theInternational Trade Centre (ITC)have identified eight priorityactions for consideration byAfrica’s policy leaders and theinternational developmentcommunity.An ecosystem approachEach area identifies current hurdles, setsgoals and offers references to help reachthem. The agenda recognizes that for anyindividual e-commerce business to prosper,a wide ecosystem of digital technology andsupporting companies must also flourish,with a mix of local and global action needed if growing cross-border activity is thegoal. Many of the actions listed would havebenefits for both online market places anda wider cohort of digital trade businesses.Leveraging existing negotiationsCritically, this action agenda encouragesAfrica’s policy-makers to pursuee-commerce priorities at multiple levels,given its inherently borderless potential.It calls for firmly anchoring e-commercewithin the negotiations on the AfricanContinental Free Trade Area (AfCFTA) andencourages more African governmentsto join the plurilateral negotiations one-commerce at the World TradeOrganization (WTO).By engaging in international trade talksAfrica can champion the interests ofsmall- and medium-sized enterprises(SMEs) with less resources to tackleregulatory friction and market barriers. Thedonor community must also lean in. Still far

7too little overseas development assistanceis dedicated to new trade drivers; just 1%of all funding under “Aid for Trade” programmes is allocated to “ICT solutions”, letalone e-commerce.Wider digital economyinfrastructureWe recognize that e-commerce andnew trade opportunities sit within a broaderdigital economy context, includinginfrastructure-related, and technologyquestions such as 5G. Policy cooperationon related digital issues – taxation,competition, labour and consumer protection, intellectual property – is critical, too, asnoted by the United Nations SecretaryGeneral s High-Level Panel On DigitalCooperation. These areas will be theguard-rails of e-commerce and the digitaleconomy. It is important to take abottom-up approach when defining policyinterventions, to ensure buy-in from localstakeholders, who need to be satisfied thatthe overall digital ecosystem is beneficial tothem.This action agenda is designed as alaunchpad for e-commerce jobs and development. It is not, however, a deep-dive –other, more detailed sources of informationon the digital economy in Africa, such asthe UNCTAD Nairobi Manifesto, are useful.

ACTION AGENDARefreshpolicies8AspirationActionSupport the creation ofnational or regional e-commercemultistakeholder associations tochampion policies; develop theAfrican Digital Trade and DigitalEconomy Strategy as mandatedfor the African Union Assembly inFebruary 2020; agree anapproach for incorporatinge-commerce into the AfCFTA –whether as a stand-alone chapter,protocol or building on existingAfrican Union instruments;intra-regional regulatoryinteroperability; and representthese interests globally.African governments lead multi-stakeholderpolicy debates nationally, exploreco-regulation options, take forwarde-commerce in operationalising the AfCFTAand engage in negotiations at the WTO.International donors provide legal andtechnical capacity building as needed.ImportancePolicies shape the business environment,affecting everything from payment optionsto internet prices and IP protection.Trade cooperation, integration instrumentsand rules based on common standardscan boost exports by reducing businessuncertainty and compliance costs.ChallengeAlthough some e-commerce strategiesand policies are at play, Africa falls behindon adopting key regulations, and legaluncertainty exists on multi-jurisdictionalissues (e-transactions, privacy, consumerprotection, digital identity). There is aneed to support an inclusive pan-Africanperspective for e-commerce and the digitaleconomy.

9PERSPECTIVEThe “Rapid eTrade ReadinessAssessment” programme, championedby the United Nations Conference onTrade and Development (UNCTAD),analyses the e-commerce situation in anumber of countries. The assessmentsoffer a fast-track mapping of challengesand opportunities and identifies policyrecommendations.

ACTION AGENDAExpandconnectivity10AspirationActionAchieve the “missed” SustainableDevelopment Goal 9c – provideuniversal and affordable internetaccess to least developedcountries by 2020 – in Africaby 2030.Take steps to encourage competitivemarkets aimed at the unconnected,including through clear spectrummanagement, transparency on licensing,and investment into new business models.ImportanceUsers are key for kick-starting domestice-commerce growth and entrepreneursneed connectivity. Affordable internetaccess is the backbone of an inclusivedigital economy.ChallengeOnly a quarter of Africa’s populationregularly uses the internet. Costs are high.On average, 1GB of data is 9% of monthlyincome. A broader infrastructure deficit –particularly on energy – exacerbates thesituation for service providers and users.Digital literacy is also low.

11PERSPECTIVEThe World Bank Digital Moonshot forAfrica initiative will invest 25 billion inAfrica’s digital transformation throughto 2030 and mobilize 25 billion inpartnership with the private sector.

ACTION AGENDAUpgradelogisitics12AspirationActionUpgrade customs clearancetechnology and processes forthe majority of African countries.Adapt competitive logisticsservice offerings to e-commerceand make them more widelyavailable. Increase awarenessof e-commerce postal services.Advance implementation of the WTO TradeFacilitation Agreement (TFA) – includingelements on import/export transparency,expedited release and single window entrypoints for document clearing that could beparticularly helpful for e-commerce.Establish public-private partnerships totarget small business logistics needs andexplore new technologies.ImportanceE-commerce requires reliable delivery andreturn options, including a choice betweenpostal and express. Small package tradeneeds efficient infrastructure and services,as well as low-hassle border clearance.ChallengeInefficient logistics and high last miledelivery costs compared to other regionseat into thin e-commerce profit margins.Africa is also home to many landlockeddeveloping countries, where logistics costsdepend as much on the efficiency of theirneighbours’ transport services and borderprocesses as their own.

13PERSPECTIVEITC, through its Digital Transformationfor Good approach, is working withthe Government of Rwanda andpartners such as DHL to supportSMEs to break into local andinternational e-commerce channelsand to have access to improvedlogistics services.

ACTION AGENDAEnablee-payments14AspirationActionImprove interoperabilitybetween international paymentservice providers, local banksand regional paymentecosystems. Leverage Africa’sposition as a global leader inmobile payments with digitalpayment innovation as a firstpoint of contact for universalfinancial services access.Drive open dialogue among regulators,policy-makers and payment ecosystemparticipants to identify common challengesto the growth of e-payments. Implementpolicies that promote competition and alevel playing field across the paymentecosystem.ImportanceE-payments are fundamental toe-commerce to mitigate the security risksand costs of handling cash. The abilityto accept e-payments from consumersabroad also gives SMEs access to moremarkets.ChallengeWith the majority of Africa’s citizens stillunbanked, cash on delivery remainspopular, used in just under half of alle-transactions by value. Also, policies areoften not adapted to complex paymentsupply chains and do not account for therole of global networks in increasingsecurity, reducing cyber risk,expanding financial inclusion, andsupporting cross-border exports.

15PERSPECTIVESafaricom has partnered with Paypalto enable qualifying Kenyan customersto transfer money between the onlinepayments system and thetelecommunication operator’s M-Pesamobile wallet. The move would enableM-Pesa’s Kenyan subscribers totransact online, via mobile or an appwith PayPal’s 286 million active usersin up to 25 international currencies.