Digital trade key to unlocking Africa’s economic potential

Digitalisation brings new opportunities in trade and creates the potential to underpin resilience in times of crisis. The digital transformation of customs and borders in Africa could improve efficiencies in processes and yield trade gains on the continent of $20 billion a year. This is the view of Ope Babalola, managing director of Webb Fontaine in Nigeria.

With digital trade in place, pre-existing bottlenecks in infrastructure can be tackled, efficiencies can be leveraged, and Innovative solutions can be harnessed. However, countries in Africa vary greatly in their readiness for digital trade.

In African countries where economic resilience must be fostered, jobs must be created and entrepreneurship must be facilitated, digital trade must be in full swing.

How digital automation is easing the flow of trade

Thanks to technological advances, importing and exporting goods and services in Nigeria has become easier thanks to the rise of online international trade administration portals. These online portals automate the experience for many stakeholders including customs officials, businesses importing finished goods and raw materials for manufacturing, and those exporting their goods across the globe.

Blockchain technology, Artificial Intelligence (AI), state-of-the-art payment solutions, fraud detection and prevention, and warehouse management solutions, are helping to increase the ease of trade, streamlining border management, and identifying, and potentially overcoming issues that impact timeframes, logistics and transportation.

Using a platform of this type with a wide spectrum of up-to-the-minute information including trade formalities, import and export procedures, latest tariff codes and rates, as well as fee simulation features. Businesses can fill in pre-arrival applications, official documents (such as customs declarations, permits and licenses), applications and manifests, while ensuring all fees and taxes are taken care of through e-payment functionality on the same site.

Acting both as a transactional portal, and data collector, Single Window can cross-check credentials for consistency and traceability, reducing errors and fraud. The status of ongoing document processing can be viewed in the Single Window at any time, including on mobile devices.

Ensuring the flow of trade against any challenge

Trade’s digital automation has proven to be a valuable safeguard under the harshest conditions. During the Covid-19 pandemic, many industry experts predicted a downturn in fortunes for the import and export industry due to the effects of global lockdowns on supply chains. Through the leveraging of import/export platforms such as Single Window, Nigeria was able to weather this storm as operations continued unabated.

While many borders were closed, Nigeria’s ports remained open and thanks to customs operations running through online trade platforms, and the national lockdown had no negative impact on import/export revenue collection.

The Nigerian Customs Service (NCS) recorded a record revenue raise, generating 1.5 trillion Naira – its highest revenue generated in a single year. Not only was this a testament to the positive impact digital transformation and automation have had on NCS operations, it inspired other agencies to seek automation and digitization. It also made it clear to the federal Government that more could be done, setting the NCS a target of 3.01 trillion Naira in revenue collections in 2022.

The flexibility afforded by digital import/export platforms have increased SMEs agility across the continent. The platforms are easy to use, and customs officials and traders are empowered to operate from any location, if they have access to a PC, or mobile phone, and an internet connection.

How digital trade platforms are giving SMEs the advantage

One of the many lessons learned from the pandemic is that SMEs need to embrace digital transformation, not just to weather unplanned challenges, but because it will help them be more competitive and stable. Digital enablement is not just a means of survival, it is a way for SMEs to conduct business more efficiently, which in turn can empower them to expand their operations and earnings further.

Being nimbler than their big business counterparts, SMEs can quickly rethink their marketing strategies and adopt new technologies to enhance their offerings faster. Digital innovation provides extraordinary opportunities for SMEs. It empowers them to implement new market models, have greater line of sight across their business, improve traceability, and meet their customers, service providers, and logistics partners, in many instances, all on the same page.

In the digital trading space, solutions such as import/export platforms, automated cargo-tracking and digital reporting of non-tariff barriers can provide efficient cross-border trade leveling the playing field for SMEs significantly. This in turn is good for both the customers and communities they serve as well as the continent’s economic growth on a wider scale.

This stimulation of growth is crucial as SMEs in Africa are well positioned to resolve some of Africa’s most critical challenges by creating much-needed jobs, products, and services.

Presence in Africa

The success stories of these import/export platforms have led to their increased usage across Africa. Webb Fontaine, for example, has seen them used by customs departments and businesses in Benin, Congo, Cote d’Ivoire, Ethiopia, Ghana, Niger, Nigeria and Guinea. As more countries and enterprises embrace automation, the potential for their growth through trade expands.

The digital automation of trade processes can play a crucial part in levelling the playing field for African nations in international trade. Whether it is moving goods through ports or airports, technology has a proven track record of making operations smoother, and easier to run. It is something all businesses and governments should embrace if countries on the continent are to realise their potential for economic growth as investment hubs.

• Ope Babalola is the managing director of Webb Fontaine.

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