How E-Commerce, Trade and Culture Will Power Africa's Digital Economy

Africa has long been a large international exporter of important goods, but there remain two relatively untapped markets that could be beneficial both to African retailers and the countries they trade with: e-commerce and culture.

E-commerce represents just 1% of Africa’s retail markets with most of its retail traffic within domestic markets. This leaves a large opportunity for new ideas to be shared in the global marketplace and for African retailers to expand cross-border trade. Africa’s film industry has incredible growth potential as well, generating an estimated $5 billion annually in GDP.

The creative and e-commerce industries both have incredible potential and they can both be leveraged with the cooperation of international players. Here’s how global nations can help support the growing digital economy in Africa, with insights from the U.S. Chamber of Commerce's recent Private Sector AGOA Forum.

Strong Global Policies Will Help Create an Enabling Environment for E-Commerce in Africa

Scott Eisner, U.S. Chamber of Commerce SVP, opened the discussion with a reference to the Chamber of Commerce’s 110-year history and how that history will change under the Biden administration as the organization adapts to changing markets around the world, focusing specifically on Africa.

“If the United States is going to be serious about being the partner of choice on the continent and serious about competing with the likes of the EU, China, and Japan and others, we need to take bold and concrete steps to ensure that American companies are aware of the opportunity to invest in and partner with African businesses,” Eisner said.

“The digital economy is one of our key priority sectors around the world, especially in Africa,” added Acting Undersecretary of U.S. International Trade and Commerce, Hon. Diane Farrell.

Farrell also noted that her department is devoting its resources to learning more about this emerging sector and how the International Trade and Commerce department can “positively impact this process of change.”

Cross-Border Trade Will Accelerate E-Commerce and AGOA’s Overall Potential

Cross-border trade is a topic that is rife with regulatory rigamarole and commercial complexity. Fortunately, the growing e-commerce sector has made some positive changes in this area across Africa, especially following the adoption of the African Growth and Opportunity Act (AGOA) two decades ago.

“I strongly believe that traditional retailers that adopt e-commerce strategies play a unique and wider, valuable role in enabling the broader digital transformation of the entire economy and sectors of the economy,” said Kuseni Dlamini, chairman of Massmart. “By adopting digital tools, traditional retailers can leverage their network of customers and suppliers.”

Financial technology (fintech) will also play a large role in helping retailers sell online and accept digital payments.

“Fintechs [are] coming to solve a specific pain point in the ecosystem,” said Bohani Hlungwane, managing director, group head of sales, trade, and working capital at Absa. “They bring the flexibility that the big players generally just don't have in our space. We're exploring various partnerships, around issues, such as digitization of documents, ... speed of payments … across multiple currencies, protection of data, use of data ... in terms of decision-making, and tipping into markets that ordinarily would not have had access to ... banks for one reason or the other.”

The Creative Economy Is Playing a Growing Role in Africa’s Cultural Exports

From the rise of "Nollywood" in Nigeria to the expansion of prominent record labels like Don Jazzy, Africa’s creative industry “has seen a huge explosion over the years across the continent,” said Eisner.

“It's important to recognize just how influential the African continent and the diaspora has been just in the formation of creativity, but also in the creative industries from the very beginning,” Dr. Uzodinma Iweala, CEO of The Africa Center, explained. “Whether we're talking about music, whether we're talking about literature, whether we're talking about film, from the time that the continent has been interacting with the wider world, we have had a profound influence on the way we push culture out into the world and the way that people use culture to represent who we are … in this world.”