The G20 partnership with Africa on issues of e-commerce and the digital economy should be designed in a way that is informed by lessons from the past.

World Bank/CC BY-NC-ND 2.0

E-commerce can be a powerful driver of economic growth, inclusive trade, and job creation across Africa. Research shows a strong correlation between the increased use of digital technologies and greater productivity, and a resultant impact on competitiveness and economic growth. Information and Communication Technology (ICT) is now seen as a tool for socio-economic transformation in less-developed countries (LDCs). It has the potential to catalyse growth — allowing LDCs to leapfrog the industrial revolution phase of development altogether — granting them the opportunity to catch up quickly with the Western world.

ICTs — particularly mobile phone technology — have already had a considerable impact on the African economy. Mobile technologies and services generated 6.7% of Africa’s GDP in 2015 and supported the creation of 3.8 million jobs. Increased ICT uptake also allowed for the delivery of key government services to remote rural communities. Despite the rapid proliferation of ICTs, however, the continent is facing a potential digital divide. Access to the internet and related digital services is low, with internet penetration levels hovering at a meagre 20%. The G20 must, therefore, take a holistic and systematic approach to help African countries cross the digital divide and fully realise digital dividends. Specifically, this would involve providing political and financial support to African initiatives aimed at:

Developing and where appropriate harmonising laws and regulations in e-commerce (including, for example, support to the negotiation of regional trade agreements that incorporate aspects of the digital economy). Specific attention will need to be given to developing policies and laws that serve to promote inclusion and access to the digital economy for African consumers and producers, without undermining legitimate domestic security and local development interests. The impact of taxation, on trade in digital products, is of particular concern, as is the manner in which e-commerce can be harnessed to contribute to ongoing sustainable development initiatives.

Strengthening supporting infrastructure, including sufficient and competitive access to data through undersea cables, but also through the improvement of warehousing, postal and communication facilities. This may require consideration of a specialist financing facility, though extant institutional architectures — like that of the Africa 50 — could be leveraged for this purpose. The Africa50 was established by the African Development Bank (AfDB) as a new investment vehicle to help catalyse greater private sector investment in African infrastructure. Notably, its investment mandate includes “high impact regional and national projects in the energy, transport, ICT, and water sectors”. The G20 could provide both political and economic support to the Africa50 to help it attract big-ticket investments from foreign investors.

Addressing the intersect between education and development, specifically those tailored to provide early exposure to the digital economy. The SMART Africa scholarship fund could be one such benefactor. The fund was established under the SMART Africa Alliance — an initiative that commits to using ICTs for socio-economic development. The fund is to be used to facilitate the high quality training of African professionals in the ICT sector through dedicated African centers of excellence in ICT. Additionally, the G20 could help with the establishment of new cooperation mechanisms between regional and international institutions or workgroups to advocate for increased education around digitisation and provide additional investment in the up-skilling and re-skilling of entrepreneurs and workers across Africa.

India, for its part, has carried out a number of successful capacity building initiatives in Africa both at the bilateral (Indian Technical and Economic Cooperation Program (ITEC), Special Commonwealth Assistance for Africa Program (SCAAP)) and the pan-African level (Pan-African E-network project). India should continue building on the success of these programmes and facilitate capacity building projects that cater to the skilling needs of the new economy. In this context, a focus on a digital skillset along with a framework to coordinate the interaction with the silver collar worker are essential, but so is the understanding that these will continue to evolve. Further, India should setup a knowledge-sharing programme with African governments, allowing the latter to learn from India’s experience with digitalisation and the ensuing policy challenges and opportunities it creates for developing countries. India can also establish a common framework with African states for research to understand dynamics and projections of labour markets across all geographies, social strata, as well as industries. Specifically, this could include the development of data analytics solutions that cater for the complex labour market dynamics imposed by globalisation, digitisation and financialising, and their interdependencies.

The G20 partnership with Africa on issues of e-commerce and the digital economy should be designed in a way that is informed by lessons from the past. An assessment of previous approaches such as the African Partnership Forum reveals that a dynamic of this sort can only work if the partnership is African-owned and includes all strategic partners in Africa. This means that the agenda of systematic dialogue between the G20 and Africa must largely be dictated by the African side. A good starting point would be to develop an informed framework for engagement, which accurately reflects the regulatory, infrastructure, and education priorities and interventions of African countries. This would then leave behind the traditional discord between North-South cooperation and South-South cooperation, and ameliorate addressing key policy fields for cooperation. It would also ensure policy coherence between the different work strands of the G20 and guarantee that cooperation would not be confined to bilateral initiatives between individual African and G20 countries. A measured and coordinated approach will, thus, ensure long term success for the Africa-G20 partnership and the development of a robust digital economy within Africa.

Read the paper.

This commentary originally appeared in NDTV.

The views expressed above belong to the author(s).

 

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