Continental free trade area will not fly without digital transformation
“There is enough evidence that Africa can be digitally transformed but what is holding us back? asked a former Nigerian minister, Dr Ombola Johnson when she addressed the ongoing Conference of Ministers hosted by the UN’s Economic Commission for Africa in Morocco.
Dr Johnson’s contribution was in honour of the memory of Adebayo Adedeji, an early proponent of a single free trade area covering the entire continent.
Discussing the hype and the reality of digital transformation for the continent, Dr Johnson cited various experts arguing that the success of the African Continental Free Trade Area will hugely depend on digital technology. She listed several successes where digital technology was the driver to reach under-serviced communities.
“Affordability is an issue: the internationally agreed target is for 1gb of data to cost no more than two% of the average national monthly income. In Africa this currently stands at 8.76%, compared to 3.5% in Latin America or 1.54% in Asia. And the latest affordability reports show that this has increased over the past year.,” she said.
She noted disturbing tax trends, both on digital infrastructure and utilization, pointing out that these can have unintended consequences adding to the cost of digitisation and not bringing it down. This curbs the transformative impact, she said.
In terms of infrastructure and connectivity, she lamented the fact that most of Africa’s traffic has to run through European hubs, saying “It is the private sector that can solve this issue but they also need to be supported and incentivized.”
“When you recognize these challenges and accept that there is a lack of scale among our start-ups it could be argued that this digital transformation we speak about might be hyped. But the increased ownership of mobile phones and those that have access to it is having a true impact.,” she stated
Many African companies across different sectors are using technology to transform their operation, but according to Dr Johnson, against the wider African background, this is still work in progress.
She urged governments to be more supportive and develop a long-term digital strategy. “We also need to be more innovative in our financing mechanisms to allow Venture Capital to borrow at low rates and help scale up innovators.”