Nigeria: Leading Africa’s digital trade revolution, by Jumoke Oduwole
Introduction
Africa’s digital trade and trade in services landscape has witnessed significant growth in recent years. Digital trade is transforming the continent’s economic landscape, creating new opportunities for economic growth, productive job creation, and poverty reduction. The African Continental Free Trade Area (AfCFTA) Agreement and its Protocols have played a crucial role in increasing intra-African trade, driving economic growth across the continent. The AfCFTA Protocol on Digital Trade and the Protocol on Trade in Services are critical game-changers at this pivotal moment in the continent’s journey.
Digital Trade and Trade in Services: Opportunities for Africa
The AfCFTA is expected to increase intra-African trade from 18% in 2022 to 50% by 2030 (AfDB, 2022). Digital trade is a key part of this, with the internet economy projected to contribute 5.2% of Africa’s GDP by 2025 (Google and IFC, 2022). Africa’s digital economy is projected to reach $180 billion by 2025, up from $115 billion in 2020.
The World Bank estimates that digital technologies can create over 10 million new jobs in Africa by 2025, primarily in the services sector. The AfCFTA is expected to catalyze job creation across various sectors through regional trade expansion, fostering a single market of 1.4 billion people. Fintech is one of Africa’s strongest industries, with the market projected to reach $3.3 billion by 2025 (Statista, 2024). Companies like Chipper Cash, OPay, and Flutterwave are leading this growth.
The creative economy and e-commerce are also growing rapidly. Africa’s music industry is expected to generate $1.3 billion in revenue by 2025 (PwC, 2024), while e-commerce is projected to reach $75 billion by 2025 (McKinsey, 2024). Companies like Jumia, Konga.com, and PayPorte are tapping into this growth. Digital finance, e-health, and e-learning are also expanding rapidly with companies like Andela and Esusu leading the way. African unicorns such as Interswitch, Wave, and MNT-Halan demonstrate the continent’s potential in services-driven industries.
Challenges remain, including regulatory fragmentation, limited access to financing, connectivity deficits, and a digital skills gap. Initiatives like Afreximbank’s Pan-African Payment and Settlement System and the African Union’s Cybersecurity Convention are working to address these issues.
Nigeria as Africa’s Digital Trade Champion: From Potential to Leadership
Nigeria is working towards ratifying the Protocol on Digital Trade under the AfCFTA Agreement. The country is strengthening policy harmonization, enhancing trade facilitation, and expanding digital infrastructure. With over 109 million internet users and a thriving mobile economy, Nigeria has the foundation to lead Africa’s digital commerce evolution.
The country has made progress in liberalizing sectors like agribusiness, pharmaceuticals, transport, and automotives. In September 2023, President Bola Ahmed Tinubu launched the Presidential Compressed Natural Gas Initiative (PCNGI) to promote clean energy in the automotive industry. Nigeria’s fintech sector, home to five of Africa’s nine unicorns, and its creative economy highlight its strengths in digital platforms and cultural exports.
Nigeria’s IT outsourcing firms are expanding, supported by initiatives like the National Talent Export Program (NATEP), the Outsource to Nigeria Initiative (OTNI), and the Three Million Technology Talents Program (3MTT). Professional services, e-health, and e-learning further underscore the country’s role in providing technology-driven services.
Reforms in digital public infrastructure, such as the Nigeria Immigration Service’s Contactless Passport Application System (CONPAS), are enhancing trade facilitation and streamlining processes.
A Roadmap for Implementation: From Vision to Digitally Enabled Trade and Trade in Services
The AfCFTA Protocols on Digital Trade and Trade in Services present an opportunity to drive accelerated trade across Africa. Three key pillars are critical for implementation:
- National Regulatory Framework: African states need to prioritize ratifying and domesticating the Protocol on Digital Trade. Alignment of national and regional strategies is essential.
- Multi-Stakeholder Collaboration: Strategic partnerships with the private sector, AfCFTA Secretariat, regional organizations, and development partners will help mobilize resources and enhance e-commerce platforms.
- Capacity Building: Training negotiators and regulatory bodies, creating awareness among businesses, and scaling digital skills programs are essential for leveraging digital trade opportunities.
Conclusion and Call to Action: Coordinated Multi-stakeholder Collaboration
The Protocol on Digital Trade is the first-ever continental digital framework, covering data protection, cross-border digital connectivity, and new economic opportunities. Capital-intensive investments in digital infrastructure and skills development are essential for success.
The African Union should establish a coordinated framework to champion digital trade under the AfCFTA. Designating a Continental Champion for the Protocol on Digital Trade will help advocate for increased support for African states and the private sector. President Bola Ahmed Tinubu has expressed his willingness to take on this responsibility.
The AfCFTA Secretariat should provide support through awareness creation and regulatory alignment. Development partners’ technical assistance and capacity building are critical to expanding digital trade. The private sector, particularly Africa’s talented youth, will play a key role in realizing the enormous possibilities under the AfCFTA’s digital trade framework.
