Africa can grow its e-commerce by removing heavy tariffs on online transactions

A 2020 study was recently published by the Global Trade and Innovation Policy Alliance (GTIPA) which illustrates how the Covid-19 pandemic has made e-commerce an inevitable means of doing business around the world. What this means for African countries is that if there is a better time to fling their borders open and soften regulations on electronic transactions, it is now.

Recently, some members of the World Trade Organization (WTO) proposed that customs duties be imposed on e-transactions across borders. This is bad policy; if implemented, it would not only hamper the increasingly flourishing e-commerce space, it would also destabilize global integration and widen the digital divide between countries. Africa, as well as other developing countries, would be at the suffering end of such policies. 

It is a smart move by one of the five regional parties of the United Nations, Africa Group, to have stood against the WTO proposal with warnings that it poses a great danger for developing countries, especially in Africa. This is because if anything was learned from Covid-19, it is that more businesses have now drastically moved online and the digital space is gradually replacing office buildings and conventional markets. With a mobile phone, individuals can now access products and services from the comfort of their homes, and thanks to Covid-19, this is fast becoming the norm.

According to the UN Conference on Trade and Development (UNCTAD), in 2018, digital markets reached $25.6 trillion globally, up by 8 percent from 2017, most sales dominated by the US, China, and the UK. The digital space contains a lot of opportunities and the least Africa could do to tap into them is to quit imposing heavy charges and tariffs on e-transactions and allow online businesses to flourish. 

The GTIPA study also revealed that among African countries, only South Africa appears to top the free e-trade chart. This is not encouraging. More African countries should hop on the bandwagon and promote e-commerce by making the digital space more accessible, thereby driving growth and development to Africa.

This article was first published on Face2Face Africa