Technology remains key to AfCFTA dream realisation
With the challenges Covid has presented to Africa, there are many exciting changes afoot, and few are potentially more impactful than the African Continental Free Trade Agreement (AfCFTA).
AfCFTA is an exciting game changer deal for signatories. Currently, Africa accounts for just two per cent of global trade.
And only 17 per cent of her exports are intra-continental, compared with 59 per cent in Asia and 68 per cent in Europe.
The pact is designed to create the largest free trade area in the world measured by the number of countries participating and connecting 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion.
It will boost regional income by seven per cent or $450 billion, and lift 30 million people out of extreme poverty by 2035. Wages for both skilled and unskilled workers will also be boosted.
While Covid has thrown a harsh spotlight on the vulnerabilities of global supply chains, the putting in place of the AfCFTA deal couldn’t be more timely for Africa.
AfCFTA is a catalyst for new ways of doing business, producing, working and trading within Africa and with the rest of the world.
It highlights the significant and increasing commitment of the AU to reducing poverty.
AfCFTA can play the role of unlocking innovation, growth and productivity across Africa, but significantly, for its SME segment, by translating spending power into economic development.
Cutting red tape and simplifying customs procedures could bring significant income gains for SMEs.
By improving ability to quickly scale up using digital skills, SMEs have the chance to capitalise on the potential trade boom.
This is particularly important when we consider SMEs represent about 90 per cent of businesses and more than 50 per cent of employment worldwide.
Formal SMEs contribute up to 40 per cent of GDP in emerging economies, and the numbers rise significantly if we include informal SMEs.
In emerging markets, most formal jobs are generated by SMEs, creating seven of 10 jobs.
Digital skills are essential for any organisation to grow, thus technology adoption and skills development should be encouraged in every organisation.
Microsoft 4Afrika’s unconventional partnerships with with SMEs and telco’s have proven successful in supporting SMEs on their path to success.
The partnership with FirstBank, Vodacom, MTN and Liquid Telecom has facilitated extending cloud services to SMEs, supporting their growth. To date, 4Afrika has reached 1.7 million SMEs and brought 728,000 online.
Digital platforms and the adoption of mobile technology are making trade easier by promoting digital, financial and social inclusion.
By aggregating demand across Africa, these platforms give small and medium businesses access to new markets and to offer goods and services previously limited by location constraints and marketing costs.
Many SMEs in emerging markets struggle with a lack of access to finance. A joint fintech agenda from World Bank and IMF calls for countries to enable new technologies to enhance financial service provision. This is where platform technology can have a powerful impact.
Digital infrastructure, digital skills, digital financial services and an environment supportive of digital business are crucial elements of the single digital market for Africa that will enable African companies to compete regionally and globally.
Microsoft is committed to supporting digital policy development and implementation across Africa, working with governments in creating sound digital policies that enable people and businesses to participate fully in the global digital economy.
Realising a single digital market in Africa would allow for economies to scale. This in turn, will attract increased investment from both African and external investors, fostering greater growth and job creation.
We must build the foundations of a thriving digital economy throughout the continent for the full benefit of the AfCFTA to be realised. — The writer is Regional Director, Microsoft 4Afrika