Since the days of old, the growth of commerce has always been determined by outreach. The wider the outreach, the greater the economic development. Up until the twentieth century, this outreach required physically going to meet consumers.

But with the growth of the internet and globalisation in the twenty-first century, there has been a monumental shift from traditional business methods to non-traditional methods such as electronic commerce (e-Commerce) and financial technology (FinTech), which don’t require a physical presence in order for business to be conducted.

Although the introduction of e-Commerce and Fintech has come with glad tidings, they have their own peculiar challenges.

Regional organizations have come up with instruments, referred to as Regional Trade Agreements (RTAs) aimed at trade facilitation and removing technical barriers to trade. These instruments in principle, are more like gentlemen agreements creating a uniform market within the regions, aimed at reducing (and in the long run removing) trade barriers and encouraging zero marginalization against goods and services amongst state parties.

Recently, the African Union (“AU”) formally introduced the Agreement establishing the African Continental Free Trade Area (“AfCFTA”) on March 21, 2018. In recognition of the jet age, most RTAs include a chapter on e-Commerce in the Agreements but the AfCFTA is bereft of such provision. This increasing number of RTAs with e-Commerce provisions is in line with the growing discourse on the role of e-Commerce and the digital economy in the policy agenda of many regional and multilateral forums and organisations.

We will consider the opportunities and challenges the AfCFTA presents for the e-Commerce/Fintech Ecosystem.

Opportunities for the e-Commerce and Fintech Ecosystem under the AfCFTA

Ifeanyi is a well-known textile dealer in Aba and across Abia state. His customer base spans across the eastern and western states of Nigeria. His reputation for dealing in good quality textile reached Nana Akufo in Ghana who contacted him and placed his order. Ifeanyi will have to engage a courier company like DHL to transport the goods.

DHL will factor in customs duties and other tariffs payable on the goods and this would definitely affect the price of the goods which will ultimately be borne by Nana. Also, Ifeanyi may not receive payment for his goods in time as the Ghanaian authorities may have restrictions on international money transfers.

E-Commerce affords Ifeanyi the opportunity to create his own digital market either through his website or by displaying his goods on Konga online. With this, he can access a wider market round the clock.

To eliminate the stress of visiting a banking hall, Nana can make payment on Ifeanyi’s payment platform powered by Paystack. Alternatively, Nana can do a direct transfer to Ifeanyi from his mobile phone using the Pagatech app.

Unfortunately, as exciting and beneficial as e-Commerce and Fintech are, they are not exempt from the challenges faced by traditional business models. Given the form of the goods, they have to physically cross borders and by implication, tariffs may be imposed and paid on them.

There might even be restrictions on the international transfer of money thereby delaying the receipt of money by the seller of the goods, which can be very frustrating and discouraging.

This is why Africans should be excited at the introduction of the AfCFTA. Thanks to this instrument, Africa will become a single market with zero duties.

The introduction of the AfCFTA will ensure that member states benefit from one another by exploiting the African population as a ready market with the operation of a single market for the free movement of people, goods and services.

With the concept of a single market, the AfCFTA can progressively multiply the growing successes recorded in e-Commerce in individual African countries. This would mean that the number of online demand and sale of goods and services would multiply exponentially, as the sellers would no longer have difficulties in the delivery of goods across Africa.

The AfCFTA makes provision for trade in goods and trade in services. From the language of the Agreement, we can deduce that trade in goods refers to trade in physical goods and expressly omits digital products. Thus, e-Commerce involving the movement of goods can take advantage of the benefits of the AfCFTA but it is not practicable for digital products.

Under the AfCFTA, the efforts towards facilitating trade are classified into the elimination of tariffs and non- tariff barriers.

Elimination of Tariff Barriers

For a digital Ifeanyi, his goods will move freely across the borders of member states; he can process Nana’s order from Aba; dispatch Nana’s goods to Ghana and they will not be subject to any tariffs at the borders of Benin, Togo or Ghana. This reduces the price of the goods ordered with the only other cost being courier charges.

The transaction between Nana and Ifeanyi from the ease of delivering the goods to Ghana to the transfer of payment to a Nigerian domiciled account gives so much hope to Africa as it will promote economic integration across member states.

Summarily, the benefits for e-Commerce trade under the AfCFTA include:

• Transactions round the clock;
• Free movement of goods across member states;
• Reduced operating costs;
• Improved welfare for member states
• Lower costs of importation¹;

Elimination of Non-Tariff Barriers

The benefits here are administrative or regulatory in Nigeria. For Ifeanyi, the AfCFTA offers the following benefits: -

• He can import or export his goods from/to sister states without restrictions on quantity²;
• His goods will move through the borders seamlessly with the cooperation and assistance of the customs authorities en route to the different member states³;
• His goods will be accorded preferential treatment across the member states⁴;
• The textile he sells will not be discriminated against because it originates from Nigeria;
• He can collaborate with textile manufacturers in Burundi and can make unrestricted transfers for transactions across the member states for specific commitments⁵;

Other benefits are:

• Certification or qualifications obtained either from Nigeria or other member states will be mutually recognized especially where a harmonization arrangement exists between the countries⁶. In other words, Ifeanyi’s certification as a weaver from a technical Institute in Nigeria will be recognized by other member states;
• Elimination of anti-competitive business practices⁷;

Effect of Free Trade on e-Commerce and Fintech Space Post AfCFTA

With the focus on the positive impact the AfCFTA will have on trade facilitation across Africa, not all countries have been quick to sign, including Nigeria. The Nigerian government has explained that its hesitation is premised on the need to protect growing businesses and prevent a situation where Nigeria becomes a dumping ground. Although the AfCFTA has strict provisions against anti-dumping, the concern is the enforceability of these provisions.

One important thing to note is that the AfCFTA recognises an exclusive/monopoly service supplier. However, such exclusivity must be exercised in a manner that is not inconsistent with the member Countries’ commitment amongst one another.

Again, there is the challenge of how this can be enforced. This is indeed a tough call as it will not be easy for a country to allow foreign companies to dominate its commercial activities without a price under the guise of being a party to a free trade agreement

For the e-Commerce and the Fintech space, the free movement of goods will result in a highly competitive market. This cannot be overemphasized. This will require local companies to become more efficient as they prepare for increased rivalry.

Conclusion and Recommendations

While the removal of trade barriers is a step in the right direction, more needs to be done to adequately promote the e-Commerce and Fintech platforms in view of the opportunities they present.

Even though we may extrapolate a few benefits from the non-traditional models, this is not enough. These modern models can contribute significantly towards regional trade across Africa and also achieve the primary “single market” objective of African economic development. It is hoped that the Agreement will get the 22 ratifications by member states required for it to enter into force so that start-ups and established e-Commerce/FinTech companies can benefit from the largesse in the AfCFTA given its primary objective.

The emerging trend is the inclusion of e-Commerce in RTAs. According to a report by the World Trade Organization (WTO), about 75 notified RTAs explicitly address e-Commerce and 61 out of this number have dedicated chapters on e-Commerce while others simply have sections of the Agreement that address e-Commerce.

This goes to show the increasing drive by developed countries to regulate the activities of the digital marketing space and also to provide a platform where digital commerce can thrive beyond borders.

These e-Commerce provisions have extensive provisions covering the objectives of the e-Commerce chapter: nature of electronic transmissions, promotion of e-Commerce (via removal of custom duties, barriers to trade and non-discrimination), technological neutrality, electronic authentication, cross-border transfer of information by electronic means, consumer protection, personal information protection, paperless trading, liability of intermediary service providers, transparency, cooperation and institutional arrangements.

It would be a clear case of denial to ignore the fact that Africa is not in urgent need of a holistic approach to address e-Commerce and related services, given the fact that the sector is growing by the day and is speedily changing the global economic landscape.

The just concluded African Union e-Commerce Conference held in Kenya to understand the current state of e-Commerce in Africa is a step in the right direction. This has led to increased speculation that there would be an amendment or perhaps a supplement to the Agreement with specific provisions on cross border e-Commerce and FinTech. And that is an Agreement which many digital entrepreneurs will be excited about.