Leveraging the AfCFTA protocol on digital trade- a lifeline for SMEs in Africa

Small to Medium Enterprises(SMEs) bear the burden of inefficiencies that come with a lack of digital infrastructure, a non-inclusive financial sector, cumbersome costly border procedures, and stringent trade restrictive regulatory framework of standards. Regulatory barriers, including excessive bureaucracy, high taxes, and complex legal frameworks, hamper the growth and cross-border expansion of  SMEs. Despite the many challenges faced by the SMEs, they continued to constitute the lion’s share of domestic market players and significant contributors to individual African countries’ fiscus.

It is important to provide an exposé of measures in the AfCFTA Protocol on Digital Trade that hold the potential to advance Africa’s mitigation of the challenges faced by SMEs. This is critical in the context of ensuring the contribution of SMEs to the sustainable economic growth of the continent. The AfCFTA Protocol on digital trade has the potential to provide a framework for the convergence of domestic and regional policies. This may entail reducing cumbersome border procedures on parcel trade and eliminating restrictions on existing and newly tradable digital products and addressing differing regulations among nations that may include those on data flows and their concomitant implication on among others, financial flows. The extent to which the AfCFTA Protocol on Digital Trade addresses, not only the movement of goods, but also how it impacts services in priority sectors such as financial services, transport, telecommunications, information technology, professional services, and tourism will be key to upscaling economic contribution of the SMEs sector.

It is therefore imperative that Governments, the private sector, negotiators and policymakers from Africa take it upon themselves to conscientize their economic players on the practical policy implications behind existing, for example in RECs like the SADC e-commerce strategy and upcoming Protocols on digital trade provisions. These may focus among others, on reducing cumbersome border procedures on parcel trade, or restrictions on newly tradable digital products and addressing differing regulations among nations concerning data flows. Conversations to promote SMEs should respond to the following concerns on:

  • Specific measures of the AfCFTA Protocol on Digital Trade advance SMEs cross border trade
  • Nature of measures from the AfCFTA Protocol on digital trade has a positive bearing on SMEs and may ensure their sustained contribution development agenda of the continent.
  • Lessons can Africa draw from other jurisdictions in the implementation of digital trade disciplines and how can they be harnessed for sustained support of the sector.
  • A case for African countries to consider collective participation in the WTO JSI on e-commerce negotiations in light of developments concerning the AfCFTA Digital Trade Protocol?

Mainstreaming SMEs’ issues of interest into the priority categories in the AfCFTA protocol on digital trade will provide a window of opportunity to upscale SMEs and foster their growth. Consequently, prioritisation of continental digital transformation to ensure reduced costs of engaging in international trade, and facilitate the coordination of global value chains (GVCs) would be key. This would help SMEs by stimulating the diffusion of ideas and technologies and connecting a greater number of smaller businesses and consumers continentally and globally hence ensuring market access. Facilitating Digital Trade through crafting a continental framework for electronic trust services, electronic authentication, trade administration documents, last-mile delivery, electronic invoicing, digital identities, digital payments, electronic transferable records, digital infrastructure, and paperless trading that considers the unique capacity gaps of SMEs. There is, therefore, a need for candid SME-biased submission on Enabling issues that include the provisions that warrant the structural foundation of a digital economy-technology infrastructure, networks, Internet access and related issues of affordability and quality.

Key works: SMEs, Digital trade AfCFTA

Key links

E-Commerce in the SADC Sub-Region  Strategy Framework