The digital transformation of customs and borders in Africa could improve the efficiency of processes, such as customs and border administration, and generate trade gains on the continent of $20 billion per year. A new report from the World Economic Forum, Growing Intra-African Trade through Digital Transformation of Customs and Borders, launched today at the 2022 Annual Meeting in Davos, offers a pragmatic perspective on non-tariff barriers in services border and customs clearance that can be exponentially improved through digital transformation to increase intra-African trade.
The report, written in collaboration with Deloitte, is launched at the convening of the Forum of Friends of the African Continental Free Trade Area (AfCFTA), a multi-stakeholder group that supports the implementation of the goals set by the AfCFTA by the through public-private collaborations. 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.
The 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 emerge 30 million people from extreme poverty. However, realizing its full potential depends on the implementation of 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 realization depends introducing efficiencies, including improving customs. process. The digital transformation of border posts and customs is therefore a crucial and necessary step in the implementation of the protocol, especially for many landlocked African countries.
Various countries and regional economic communities are striving to build better trade networks through world-class logistics networks that can withstand recent supply chain shocks such as the COVID-19 pandemic and geopolitical tensions.
The report highlights insights from the Logistics Performance Index as well as key insights from case studies demonstrating the quantifiable value of digital reforms in countries including Ghana, Kenya and Uganda. The document is a call to action for more integrated digital reforms that can have higher impact through public-private partnerships that pave the way for Africa’s post-pandemic recovery and growth.
“Even after lowering tariffs and putting in place simplified procedures, the full benefits of AfCFTA will not be realized unless non-tariff barriers to trade are also addressed,” said Chido Munyati, Head of the AfCFTA. Africa at the World Economic Forum. “Policymakers 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 encompasses new practices such as electronic signatures or the use of drones to monitor cargo
– Membership of the various agencies that allow these operations to adopt digital reforms and integrate them into their processes
– Take action based on demand-side interventions that lead to higher adoption of tariffs by all organizations and position intra-African trade as more cost and time competitive
– Develop the skills of service agents who can maximize 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, volumes remain low at just 3% of world trade. The bank says boosting intra-regional trade requires improved physical integration, such as cross-border energy, transport and connectivity infrastructure, enhanced cooperation by harmonizing customs rules and procedures, and facilitation. business integration through regional electronic settlement systems, electronic freight tracking and the relaxation of restrictions on trade in services.