Promoting e-commerce in Africa

Project description

Title: Pan-African e-Commerce Initiative – Boosting African Digital Trade
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Kenya, Rwanda, East African Community
Lead executing agency: Ministry of Industrialization, Trade and Enterprise Development (MoITED) in Kenya, Ministry of Trade and Industry (MINICOM) in Rwanda, East African Community Secretariat
Overall term: 2020 to 2022

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Context

Electronic commerce, also known as e-commerce, is an increasingly important procurement and sales channel in emerging African economies. However, the prerequisites that would enable African companies to participate in cross-border e-commerce are not yet in place. These include the availability of electronic payment systems, consumers’ and companies’ trust in e-commerce, and supportive regulatory frameworks. The coronavirus pandemic has strengthened the global significance of digital trade and, at the same time, increased the pressure on governments to improve the conditions for this.

To date, African producers and traders are barely represented in e-commerce for business customers (business-to-business, B2B). As there is very little integration with regional and international value chains, the potential for scaling up is limited. However, this is essential for making African products more competitive at both national and international level. Cross-border payment systems are currently almost exclusively available via the traditional banking system or international money transfer services. Small and medium-sized enterprises struggle not only with the high costs of these channels, but also with exchange restrictions. Logistics and transport are further challenges that are manifested in inadequate address systems, for instance. Although the legal basis for e-commerce is in place in many African countries, it needs to be further concretised and implemented more effectively. Barriers to women’s participation in e-commerce include their greater difficulty in accessing the internet and poorer digital skills. Moreover, consumers have little trust in e-commerce. They have doubts regarding the quality of the goods, misuse of customer data and a lack of functioning complaints mechanisms.

Objective

The preconditions for companies in selected African countries to participate in cross-border e-commerce have improved.

Approach

The project will first improve the framework conditions for e-commerce. To this end, it is advising the East African Community on developing a comprehensive e-commerce strategy. In close cooperation with the United Nations Conference on Trade and Development (UNCTAD), the project is also supporting the Communications Authority of Kenya in developing a national e-commerce strategy. The Smart Africa Secretariat is receiving advice on creating an implementation strategy (blueprint) for improving electronic payment systems for digital trade, which will then be piloted in African countries.

In a next step, the project will strengthen the capacity of small and medium-sized enterprises to participate in e-commerce. To achieve this, it is forming partnerships with the private sector. Together, they are holding practice-oriented training courses in Ghana, Kenya and Rwanda – with a particular focus on companies run by women. In cooperation with relevant associations, the project is supporting the development of a regional B2B platform for electronic trade in leather goods in Eastern Africa. In Rwanda, the project is advising the Rwanda ICT Chamber on establishing a quality seal for e-commerce, with the aim of increasing consumers’ and retailers’ trust in electronic business. The project is also supporting e-commerce associations and promoting their integration into pan-African networks and structures.

Last update: January 2021