At its 2022 Annual Meeting in Davos, Switzerland, the World Economic Forum has highlighted how digital transformation of customs and borders would support the growth of intra-Africa trade. Among the many other global concerns under discussion, the WEF launched a new report titled: Growing Intra-Africa Trade through Digital Transformation of customs and borders.
The report indicates how digital transformation in border and customs services could boost continental trade.
The report provides a pragmatic perspective on the non-tariff barriers in border and customs services that can be exponentially improved through digital transformation to increase trade across the continent. It suggests that the digital transformation of customs and borders in Africa could improve administrative and process efficiencies and yield trade gains on the continent of $20 billion a year.
The report, written in collaboration with Deloitte, was launched at the convening of the Forum Friends of the Africa Continental Free Trade Area (AfCFTA), a multi-stakeholder group that supports implementation of the goals set out by the AfCFTA through public-private collaboration. The group includes Paul Kagame, President of Rwanda; Wamkele Mene, Secretary-General of the African Continental Free Trade Area Secretariat; Patrice Motsepe, Founder and Executive Chairman, African Rainbow Minerals; and Jim Ovia, Chairman, Zenith Bank, among others.
Implementation of the AfCFTA, which started in January 2021, has the potential to increase intra-African trade from its current 18% of total trade to 50% by 2030. It also has the potential to lift 30 million people out of extreme poverty. However, achieving its full potential depends on putting in place significant policy reforms and trade facilitation measures.
Kavitha Prag, Africa Lead, Enterprise Technology and Performance at Deloitte Africa, said: “The African Free Trade Area agreement can be a great catalyst for Africa’s growth and development, but its full realisation hinges on the introduction of efficiencies, including the improvement of customs processes. Digital transformation of border posts and customs is a crucial and necessary step in the implementation of the protocol, especially for many of Africa’s landlocked countries.”
Various countries and the regional economic communities are making efforts to build better trade networks enabled by world-class logistics systems that can withstand supply chain shocks, such as the Covid-19 pandemic and geopolitical tensions.
The report highlights insights from the Logistic Performance Index as well as from case studies demonstrating the quantifiable value of digital reforms in countries such as Ghana, Kenya and Uganda. It signals a call to action for more integrated digital reforms that can drive higher impact through public-private partnerships, setting the course for the continent’s post-pandemic recovery and growth.
“Even after tariffs are lowered and procedures simplified, non-tariff barriers to trade also need to be addressed for the full benefits of the AfCFTA to be realised,” said Chido Munyati, Head for Africa at the World Economic Forum. “Policy-makers can make a difference by implementing digital solutions.”
The report calls for the following policy support to enable digital transformation:
- Legislative support and acceptance that embraces new practices such as e-signatures or the use of drones to monitor cargo
- Buy-in from the various agencies that enable these operations to embrace digital reforms and embed them in their processes
- Action based on demand-driven interventions that lead to higher adoption rates by all organisations and position intra-Africa trade as more cost- and time-competitive
- Developing skills of services agents to maximise the potential of digital solutions
- Better coordination among AfCFTA members to establish Single Customs Territories.
The World Bank notes that while African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just three per cent of global trade. The bank says boosting intra-regional trade requires improvements in physical integration, such as cross-border energy, transport and connectivity infrastructure, strengthening cooperation by harmonising customs rules and procedures, and facilitating business integration through regional electronic settlement systems, an electronic cargo-tracking system, and easing restrictions on services trade.
For more information visit: www.weforum.org