This is the 43rd post in a blog series to be published in 2021 by the Secretariat on behalf of the AU High-Level Panel on Emerging Technologies (APET) and the Calestous Juma Executive Dialogues (CJED)

Cross-border trade between African countries has soared since the 1990s because of enabling socio-economic trade policies, population growth, and urbanisation. Notably, informal cross-border trade (ICBT) has provided a source of income to approximately 43% of the African population. Unfortunately, even though ICBT is a source of livelihood for numerous Africans, this trade has remained marginalised because it is still regarded as illegal commercialisation of cross-border activities.[1] ICBT encourages entrepreneurial activity and regional trade integration between African countries and is also creating a substantial income for numerous African citizens, more especially African women and girls.[2]

Markedly, the growth of ICBT is attributable to the deepening regional integration and expanding socio-economic activities across the African continent. Furthermore, this trade is providing employment opportunities for many Africans, expanding market access, and enabling product diversification. This is because ICBT is expanding outlets for goods produced and manufactured within and outside the African continent.[3]

Regional integration is pivotal in the African Union's (AU) Agenda 2063 because it can potentially enhance intra-continental and intercontinental trade across the African continent. This can further expand through the newly launched African Continental Free Trade Area (AfCFTA). Intrinsically, AfCFTA is a continental trade and market framework that provides augmented free movement of goods and services across the African continent. As such, AfCFTA enables Africa's 1.3 billion population and 55 African countries to trade between and among themselves. This is because the AU realised and acknowledged that the appropriate implementation of AfCFTA can potentially create jobs and wealth for approximately 30 million Africans across the continent.

It has been reported that Africa's cross-border trading is predominately among African women. For example, the United Nation's Food and Agriculture Organisation (FAO) has reported that approximately 70% of informal traders in the Southern African Development Community (SADC) region are women.[4] Furthermore, informal cross-border trade among women represents over 60% in West and Central Africa. Outstandingly, this particular trade generates between 40% to 60% of the Gross Domestic Product (GDP) for these African countries.[5]

Unfortunately, Africa's cross-border women encounter substantial obstacles that are essentially hindering their entrepreneurial development and growth opportunities. These obstacles include inadequate border facilities and infrastructure, inefficient and inconvenient customs processes, inadequate trade governance, and the payment of excessive customs charges. In some cases, the traders face tremendous harassment, sometimes being subjected to bribery and corruption. In addition, most of these women encounter supply barriers such as misinformation pertaining to border customs procedures and regulations, limited access to capital investments and assets, and limited entrepreneurial skills. The COVID-19 pandemic lockdown restrictions have also exacerbated these challenges, further deterring and reducing their trade activities.

Figure 1 African Informal Cross Border Trade Systems SOURCE: https://ecdpm.org/wp-content/uploads/System-Not-Error-Informal-Cross-Border-Trade-West-Africa-ECDPM-Discussion-Paper-300-2021.pdf

Therefore, there is a need for African countries to address these challenges so that African women can substantially realise the benefits of cross-border trade across the African continent. This can be accomplished if African countries can effectively exploit the intra-continental and inter-continental opportunities afforded by cross-border trade, such as the AfCFTA. Such efforts can also embolden Africa's women entrepreneurial trade. To this end, the African Union Panel on Emerging Technologies (APET) urges African countries to adopt emerging technologies to address these challenges as they are negatively confronting and impacting Africa's cross-border trading activities.

APET advises African countries to formalise this informal ICBT business by enhancing access to financial instruments and banking services. This can not only help ICBT entrepreneurs, but all African entrepreneurs, augment their cross-border trading efforts across the African continent. Furthermore, APET acknowledges that approximately 1.3 billion women across the globe have been excluded from the official banking services. Regrettably, 70% of these marginalised women are Africans.[6] Therefore, adopting and adapting innovative technologies such as smartphone-enabled solutions can substantially expand access to basic financial services for numerous marginalised women. For example, mobile money technology has enabled women to digitally execute transactions without the need for a bank account. Fundamentally, mobile money offers informal traders substantial control over their financial transactions and management systems.

Furthermore, mobile money enables enhanced financial privacy and safety against the risk of physically transporting cash. Essentially, APET is noting that mobile money transactions are also mitigating currency exchange challenges associated with differing currencies between African countries. In addition, mobile money and similar digital technologies are enhancing sufficient access to formal credit alternative solutions for numerous Africans.

APET acknowledges that the COVID -19 pandemic has substantially disrupted cross-border trade processes. Due to social distancing mandates and limited crossing across borders, customs processing has become difficult and cumbersome. Thus, APET encourages customs and other border agencies to speedily adopt digital technologies that enable electronic trade-related documentation and data storage and sharing solutions instead of submitting physical copies of trade documents. Notably, digital documentation and processing can significantly bolster customs procedural efficiency while sufficiently helping traders maintain the appropriate social distancing protocols.

Notably, African countries such as South Africa has significantly decreased the required physical commercial documents but instead has begun allowing electronic documentation subject to rules and regulations whenever necessary.[7] Thus, by encouraging such digital tools, African countries can sufficiently leverage digital technologies such as the single window for trade when doing business and trade. Notably, the electronic single trade window essentially hastens contactless cross-border procedural customs documentation and processing. Consequently, such digital tools are enabling automatic and seamless trade declaration processing through blockchain technological systems.[8] For example, these technologies are enabling electronic certification of goods and services crossing the country's border of origin to the destination country.[9]

Figure 2: An illustration of the Single Window for Trade which is electronic in countries like Rwanda and South Africa to ease trade

African countries should also utilise video conferencing and electronic data for the inspection of goods by customs officers. For instance, Brazil has begun using video conferencing and electronic transmission data for goods.[10] The most common video conferencing technologies are Zoom and WhatsApp video calls.[11] Notably, the Brazilian government has recently integrated the country's import-export procedures through an online platform. This online platform process is efficiently enabling the country's customs processing so to enhance their socio-economic activities. This is accomplished through the "unified export system" known as Brazil's Single Window project.[12] Therefore, APET notes that when such technological considerations for trade activities are considered within the African continent, Member States can effectively integrate border agencies to accomplish efficient trade flows.[13] Consequently, African can enable enhanced coordination and improved cross-border controls while simplifying data reporting systems for traders.[14]

 

Finally, to realise these digital solutions for the continent's trade systems, APET is encouraging African countries to adopt these new technologies so to improve the livelihood of women. APET believes that this can be accomplished by addressing the digital divide that exists within African countries. Furthermore, African countries should expand their financial inclusion systems, more especially to marginalised groups such as women and people living with disabilities. This can be accomplished through a technologically savvy workforce and accompanying infrastructure of the border agencies and systems. Therefore, African governments should provide a conducive environment such as low data tariffs and proper infrastructure for digital technology development and implementation. Through these measures, APET is of the opinion that African Member States can leverage digital trade facilitation and empower cross border trade among African traders, more especially African women. Most particularly, such efforts can effectively sustain and manage trade flows during and beyond the pandemic.

Featured Bloggers – APET Secretariat

Justina Dugbazah

Barbara Glover

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[1] https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Economic%20Brief%20-%20Informal%20Cross%20Border%20Trade%20in%20Africa%20Implications%20and%20Policy%20Recommendations%20-%20Volume%203.pdf.

[2] https://unctad.org/news/leveraging-digital-solutions-seize-potential-informal-cross-border-trade

[3] https://www.researchgate.net/publication/279742852_Gender_Dimensions_of_Informal_Cross_Border_Trade_in_West-African_Sub-Region_ECOWAS_Borders/link/5d3dbe2ba6fdcc370a67d53c/download.

[4] Women in informal economy. https://www.unwomen.org/en/news/in-focus/csw61/women-in-informal-economy.

[5] https://blogs.afdb.org/investing-gender/women-informal-cross-border-trade-sub-saharan-africa-untapped-potential-feed.

[6] https://www.issuelab.org/resources/21889/21889.pdf.

[7] https://www.gov.za/sites/default/files/gcis_document/201409/electroniccommerce1.pdf.

[8] Blockchain for supply chains and international trade. https://www.europarl.europa.eu/RegData/etudes/STUD/2020/641544/EPRS_STU(2020)641544_EN.pdf.

[9] https://www.tradeexperettes.org/blog/articles/how-technology-can-help-beat-covid-19s-cross-border-trade-disruptions.

[10] OECD Policy Responses to Coronavirus (COVID-19), Productivity gains from teleworking in the post COVID-19 era: How can public policies make it happen? https://www.oecd.org/coronavirus/policy-responses/productivity-gains-from-teleworking-in-the-post-covid-19-era-a5d52e99/.

[11] https://mag.wcoomd.org/magazine/wco-news-87/brazils-unique-export-declaration-modernization-inspired-by-international-standards/.

[12] https://mag.wcoomd.org/uploads/2018/10/WCO_News_87.pdf.

[13] https://www.apec.org/docs/default-source/publications/2018/8/study-on-single-windows-systems/218psustudy-on-single-windows-systems.pdf?sfvrsn=d3347f05_1.

[14] Improving Border Efficiency in sub-Saharan Africa: The Need to Look at ‘Beyond the Border’ Operations. https://www.tralac.org/blog/article/15328-improving-border-efficiency-in-sub-saharan-africa-the-need-to-look-at-beyond-the-border-operations.html.