In a significant milestone for African trade, the African trade community has recently welcomed yet another digital innovation, marking a major development in its free intra-continental market of goods and services. Zenpay Limited, a wholly owned subsidiary of Zenith Bank Plc, a big financial service provider in Nigeria and Anglophone West Africa, headquartered in Lagos, signed an agreement with the African Continental Free Trade Area (AfCFTA) Secretariat to develop and deploy the Smart AfCFTA Portal, a cutting-edge platform to facilitate trade within Africa. This agreement reflects a significant stride forward in the move for enhanced economic integration and growth across Africa.
Reached through the Chairman of Zenpay Limited, Dr Ebenezer Onyeagwu, and the Secretary-General of the AfCFTA Secretariat, Wamkele Mene, at Zenith Bank Headquarters in Lagos. The agreement is a follow-up to the Memorandum of Understanding (MoU) that both institutions signed at the 8th Annual Edition of the Bank’s International Trade Seminar on Non-Oil Export, held in August 2023.
AfCFTA Policy and African Trade System
Over time, intra-African trade has grown from an applaudable US$98 billion in 2013 to US$102 billion in 2022. However, as applaudable as it is, intra-Africa trade as a share of Africa’s global trade has since remained static and is exhibiting a downward trend. The current trend of intra-African trade peaks at 15% after having peaked at 21% between 2015 and 2016. Also, while Africa is home to about 12% of the world’s population, a 2019 study revealed that it still accounts for less than 1% of the global air service market.
Upon discovering this shocking realization, close to fifty African leaders in 2018 gathered at the 10th Extraordinary Summit of the AU Assembly of Heads of State and Government held in Kigali, Republic of Rwanda, to sign the African Continental Free Trade Area (AfCFTA), the Kigali Declaration, and the Free Movement Protocol by order of interest. A majority of the African countries signed all three legal instruments, while a few signed two, and some others signed one of the three instruments. Very few countries have not signed the AfCFTA Agreement.
As part of its mandate, the AfCFTA is to raise the shocking figures and performance in African trade by eliminating trade barriers such as weak regional integration, low economic diversification, low quantity and quality of value-added products and services, poor infrastructure and high transportation costs, cumbersome customs procedures and clearance processes, limited information exchange, corruption at borders and customs,
In particular, it is to advance trade in value-added production across all service sectors of the African economy and contribute to establishing regional value chains in Africa’s investments. The practical implementation of the AfCFTA has the potential to foster industrialization, job creation, and investment, thus enhancing the competitiveness of Africa in the medium to long term. This, in fact, justifies the need for a unified continental trade policy.
“The AfCFTA is a game changer. With the AfCFTA, we are creating a tariff-free continent that can boost intra-African trade and investment, grow local businesses, rev up industrialization, and create jobs for the bulging youth population,” said Mr. Mene during an investment partnership forum in New York in September 2023.
According to United Nations Conference on Trade and Development (UNCTAD) forecasts, the AfCFTA policy has the potential to boost the poor status of intra-African trade by about 33% and cut the continent’s trade deficit by 51%.
The Smart AfCFTA Agreement
Smart AfCFTA is a digital non-profit platform designed to empower SMEs and young entrepreneurs in Africa, facilitate their inclusion in trade, and boost intra-African trade. This digital platform will function as a repository for crucial trade data and offer insights on rules of origin and market intelligence. Thus pivotal in implementing the AfCFTA agreement.
Funded with a million dollars earmarked by the Zenith Bank, the idea of the platform was earlier discussed and envisioned in 2020 with the advent of the COVID-19 pandemic, when the African Union Commission, like most intergovernmental organizations around the world, sought to shift most of its activities online, including the AfCFTA Initiative, while at the same time trying to meet its operationalization timeline. It was in this context that deliberations were generated and issues were streamlined to innovate Smart AfCFTA in order to maintain trade efficiency and infrastructural reliability.
However, in 2021 again, the African continent experienced price shocks and disruptions in the supply chain of these commodities a few weeks into the Russo-Ukrainian crisis. According to the International Food Policy and Research Institute, there is no way the continent could have escaped the supply crisis because they relied heavily on both countries’ importation of food to meet domestic demands. As a result, a move to deepen African trade to avert similar future occurrences through the Smart AfCFTA was further strengthened by African leaders. And for them, the initiative is a good way of kicking against importation and reducing the already-triggered risk in the global financial market and supply chain system.
As the Smart AfCFTA agreement reached a landmark point on May 3, 2024, the digital platform, which is aimed at empowering SMEs and young entrepreneurs in Africa, facilitating their inclusion in trade, and boosting intra-African trade, will also serve as a repository for crucial trade data, offering insights on rules of origin and market intelligence, thus being pivotal in implementing the AfCFTA agreement.
As a non-profit platform, it aims to freely support the African Continental Free Trade Area, as its primary goal is to create a unified African market, enhance economic integration, and standardize customs and practices. The portal is to be developed into a straight portal and will showcase African products and services as well as the locations where they can be found.
“You can see it in every part of Africa and identify whatever products and services you require that are in Africa,” the Secretary-General of the AfCFTA Secretariat, Wamkele Mene, explained.
According to Mene, the Smart AfCFTA is also expected to streamline and unlock vast opportunities for African trade by providing information like trade indicators, market trends, customs tariffs, trade agreements, rules of origin, market access requirements of relevant jurisdictions, export potentials, export diversification indicators, contact details of business partners in target markets, and other trade-related information about Africa.
