Innovation in Trade

“The global economy is a source of growth that African economies cannot afford to ignore. While African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just 3 percent of global trade. The time is ripe for policymakers to expand their thinking beyond traditional approaches and traditional markets if they want to play an active role in international trade in the 21st?century,”?said?Ousmane Diagana,?World Bank Vice President for Western and Central Africa

“Deepening regional integration to scale up supply capacity and build regional value chains is essential to the continent’s economic transformation. The establishment of the African Continental Free Trade Area (AfCFTA) presents major opportunities to boost intra-African trade, strengthen the complementarities of production and exports, create employment, and limit the impact of commodity price volatility on the participants,” said?Hafez Ghanem, World Bank Vice President for Eastern and Southern Africa.?

"African countries need to undertake bold domestic structural reforms to scale up the supply capacity of the region. This can be achieved?by improving digital and physical connectivity,?maintaining smart macroeconomic management with stable and competitive exchange rates and low inflation, and increasing the efficiency of regulatory, legal and judiciary institutions,"?said?Albert Zeufack, World Bank Chief Economist for Africa.

Going forward, the book highlights that the approach to strengthening integration for a successful AfCFTA should focus on:

• improving physical integration – such as cross-border energy and transport infrastructure and connective infrastructure,
• strengthening political cooperation – such as harmonizing customs rules and procedures and sacrificing some level of sovereignty in rule making and implementation in favor of regional frameworks and,
• facilitating business integration – such as regional electronic settlement system, electronic cargo tracking system, one-stop shops and easing restrictions on services trade. The costs of distance and fragmentation can be reduced through intensive investment in these areas.

If we really examine the initiatives that are being proposed, the challenges and the framework should be considered, this is an opinion and that is what drives the way of thinking to create a stronger trade imprint:

Digitization can significantly increase the competitive value of the above by providing a more efficient and effective way of implementing and managing the necessary systems and processes for trade integration within the AfCFTA.

For example, the use of digital technologies such as electronic cargo tracking systems, one-stop shops, and regional electronic settlement systems can streamline trade processes and reduce the costs and time required for cross-border transactions. This can enhance the competitiveness of businesses by making it easier for them to participate in regional trade and expand their markets.

In addition, digital technologies can also enable greater transparency and accountability in trade-related activities, such as customs procedures and the movement of goods across borders. This can help to reduce the risk of corruption and increase trust in the trade system, which in turn can encourage more businesses to participate in cross-border trade.

Moreover, digital technologies can provide real-time data on trade flows, enabling policymakers and businesses to make informed decisions and identify opportunities for growth and investment. This can help to foster a more dynamic and responsive trade ecosystem, where businesses can adapt quickly to changing market conditions and take advantage of emerging opportunities.

Therefore, the use of digital technologies can play a crucial role in increasing the competitive value of the AfCFTA by promoting trade facilitation, reducing trade costs, improving transparency and accountability, and fostering innovation and competitiveness among businesses.

Over the next few posts we will highlight some of the key areas included in this and expand on strategy and innovation

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