Unlocking the Power of the Fourth Industrial Revolution in Intra-African Trade

By Tanatsiwa Dambuza

The fourth industrial revolution (4IR) is transforming economies, industries, and societies. The African continent, which has the youngest population in the world and a rapidly growing middle class, stands to benefit greatly from this revolution with transformation. One area that could see significant improvements is intra-African trade, which has remained low due to several barriers.

The potential of 4IR on intra-African trade paying special attention to its implications on women informal cross-border traders (WICBTs), simplification of customs procedures, logistics, technical barriers to trade, and the relationship with the AfCFTA Protocol on E-commerce and digital trade and the AU digital transformation strategy for Africa (2020 to 2030) requires exploration.

Implications WICBTs play a critical role in intra-African trade. They account for up to 70% of informal trade on the continent. However, their activities are often characterized by challenges such as harassment, corruption, and high transaction costs. The 4IR has the potential to address some of these issues. For instance, digital platforms such as Sokokuu Africa can facilitate cross-border transactions, reducing the need for physical contact. However, there are also risks associated with technology, such as the potential for cybercrime and the digital divide, which could disadvantage women who lack access to digital devices and skills.

Simplification of customs procedures

Customs procedures have been identified as a significant hindrance to intra-African trade. They often involve long and tedious processes that increase the costs and time associated with cross-border transactions. The 4IR can simplify these procedures by introducing digital platforms that automate and streamline customs processes. This would improve efficiency and reduce the opportunities for corruption. However, this would require significant investment in ICT infrastructure and capacity building among customs officials.

Logistics

Logistics is another area where 4IR can revolutionize intra-African trade. The use of digital technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), and Blockchain can improve the tracking and management of goods along the supply chain, reducing delays and losses. Moreover, 4IR can increase efficiency in transportation and warehousing, reducing costs and enhancing the competitiveness of African products.

Technical barriers to trade

Technical barriers to trade such as differences in standards and regulations often pose challenges for African businesses seeking to access new markets. 4IR can facilitate the harmonization of these standards through digital platforms that provide reference materials and guidance on best practices. AI can also analyse existing standards and propose harmonized alternatives.

Relationship with AfCFTA Protocol on E-commerce and digital trade and AU digital transformation strategy for Africa [2020 to 2030]

The AfCFTA Protocol on E-commerce and digital trade and the AU digital transformation strategy for Africa aim to promote digital trade across the continent. By improving areas such as logistics, customs procedures, and payments, 4IR has the potential to accelerate the implementation of these frameworks and catalyze online cross-border trade. However, efforts are needed to ensure that policies facilitate inclusive participation in the digital economy.

Economic Cooperation and intra-continental trade

Further, the fourth industrial revolution (4IR) represents a massive opportunity for Africa to strengthen economic cooperation and bolster intra-continental trade. New technologies like artificial intelligence, blockchain, 3D printing and e-commerce are paving the way for a more seamless and secure digital market. This could accelerate the implementation of key trade agreements such as the African Continental Free Trade Agreement (AfCFTA) and support the African Union’s (AU) digital transformation agenda. The AfCFTA Protocol on E-commerce and digital trade specifically seeks to facilitate online trade in goods and services across the continent. Now more than ever, technology can help realize the Protocol’s objectives on digital trade facilitation, electronic payments, data flows and cybersecurity cooperation. Similarly, the AU’s strategy aims to leverage technology to boost trade, integrate financial systems, develop digital skills and build a unified digital market in Africa by 2030.

The implementation of the Pan African Payment Settlement System (PAPSS) provides a concrete example of how technology can strengthen regional integration. By enabling interoperability of payment systems across Africa, PAPSS facilitates easier flow of funds, reduces costs of remittances and supports informal cross-border trade. This is critical for the millions of traders along Africa’s porous borders that rely on cash transactions and remittances to their families back home.

4IR technologies can also help address many non-tariff barriers to trade such as lack of standards, technical regulations, sanitary and phytosanitary measures as well as restricted movement of people. For instance, expanding e-certification and digital standards can ease compliance requirements while online platforms facilitate remote access to markets. Africa already has the necessary regional frameworks, with 4IR it now has the means to implement them effectively.

The dawn of the fourth industrial revolution promises to radically transform intra-African trade and deepen economic integration across the continent. Technologies like artificial intelligence, blockchain, drones and e-commerce platforms can make cross-border trade faster, cheaper and more efficient in Africa.

Implications for women informal cross-border traders will be profound as they gain access to digital tools and regional markets.  Logistics costs will decline while real-time monitoring improves supply chain security.  Customs will become smarter, faster and less corruptible.  The AfCFTA protocol on e-commerce will finally realize its full potential.

Therefore, Africa must now proactively adopt these technologies to realize the collective benefits of a single market.  The Pan-African Payment and Settlement System (PAPSS) should expand its digital platform to facilitate electronic payments, remittances and trades across borders.

African countries must invest in technological infrastructure, develop digital skills and promote inclusion of informal actors.  With political will and determination, Africa can build the future of borderless trade on the continent, reclaim its voice in global affairs and fulfil the promise of integration for shared growth and prosperity. While impediments remain, the possibilities of 4IR for unified African markets are real. By embracing technologies and interoperable systems, Africa can overcome division and forge a collective identity built on trade, not aid. The future of Africa is borderless.

Tanatsiwa Dambuza is an AfCFTA emerging expert and researcher with a special interest in climate change, 4IR, and women informal cross-border traders. He recently graduated with an MSc in International Trade and Diplomacy.