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COMESA leaps into digital integrated regional economy

THE global trading environment is undergoing rapid transformation as a result of the adoption of digital technologies, whose disruptive impact across the spectrum is seen as a source of opportunity for African businesses.

While acknowledging the polarised debate on the benefits and negative impact of the digital revolution, which has been enabled by technological changes in computing, communications and information processing, empirical findings testify the inevitable merits of embracing these technologies.

The Common Market for Eastern and Southern Africa (Comesa), a key trading bloc in Africa, has become a champion in its bold adoption of the digital trading model as a critical pillar towards achieving meaningful economic integration in Africa.

In its 20th Heads of State and Governments’ Summit held in Lusaka, Zambia, in July this year, member states strongly recommended that collective regional efforts be directed to developing a digital regional trading economy as the panacea to long-term economic growth and efficient productivity.

Since then, the bloc has been rallying member states towards full adoption of digital technologies to tackle developmental disparities and enhancing efficiencies within the regional economic ecosystem.

Experts strongly believe the adoption of digital technologies not only breaks conventional barriers to trade but offers incentives, enhances ease of doing business and trims costs while improving efficiencies in trade facilitation, transit and customs cooperation.

Citing the rapid changes in the international trade arena, Comesa Secretary General, Ms Chileshe Kapwepwe, who succeeded Mr Sindiso Ngwenya this year to lead the 21-member trading bloc, stressed the need to scale up this drive and keeping pace with global trends by moving faster to effectively implement agreed trade policy reforms and programmes, particularly digital trading as a matter of urgency.

“Digitisation and disruptive technologies are coming up more frequent than ever. Our programmes therefore must aim at improvement in efficient and effective delivery of Comesa goals and aspirations in order to consolidate our position in the global village,” Ms Kapwepwe said recently.

She said the use of technology will underpin the trading block’s commitment to finding innovative ways of facilitating trade.

“This can be done through use of e-commerce, e-logistics and e-legislation. It is time to ensure that Comesa becomes the regional hub in developing and implementing of innovative ways of trade facilitation and maximise the use of the digital technology in regional integration,” said Ms Kapwepwe.

This drive towards digital economic integration in the Comesa bloc was mooted in November 2017 during a Council of Ministers meeting in Zambia, where delegates stressed the need to embrace digital technologies in the implementation of regional integration programmes.

At that time Zambian Deputy President, Inonge Mutukwa Wina, acknowledged that globally, countries are increasingly trading with each other through electronic platforms. She said Comesa states therefore had no option but to embrace information communication technologies (ICT) in all regional integration programmes.

These realities have compelled the regional bloc to adopt digitisation to entrench ICT in trade facilitation programmes.

Already a number of trade facilitation applications are being developed, in that regard, to help in trade facilitation.

These include the Comesa virtual trade facilitation system, an online platform for trade facilitation instruments and a regional customs bond and a regional customs guarantee scheme.

An electronic certificate of origin (of goods for export) and a digital free trade area application that will incorporate e-commerce, e-legislation and e-logistics are also being developed.

Comesa has also developed a new mobile application to be used by cross border traders in the region, which will be linked to the Comesa Centre.

Once implemented, the mobile app will assist the cross border traders to get information on the various trade related activities in the region as well as use of the App to make payments.

Cameroonian think-tank, Professor Jean-Emmanuel Pondi, in an academic paper published in May 2018 titled: Digital Economy and Sub-Regional Integration with focus on Central Africa, argues that the use of digital economy tools would greatly enhance the quality of life of Africans and ensure sustainable development.

To him the digital economy is a huge asset towards strengthening regional and sub-regional integration.

The strength of such a framework is that it is punctuated by intense competition and major changes with digitisation of many products and services as anchor of many economic services, he explains.

This is a path that Comesa has taken. Research findings presented at the 5th Comesa Annual Research Forum in Nairobi in August this year, buttress this focus with projections that the Comesa region would annually gain US$17,5 billion in intra-regional exports if all the member states within the bloc fully implemented the digital trade facilitation reforms that involves the use of paperless trade facilitation measures.

The study noted that only five countries have the greatest intra-Comesa export trade potential for the region. These are Eritrea, Egypt, Sudan, Libya and Ethiopia.

This shows the wider scope for increased earnings if members adopt digital technologies.

No doubt such a task calls for policy change by countries with low to medium baseline scores to scale up implementation of e-trade facilitation to realise the demonstrated potential benefits for the region.

Such a focus is not unique to Comesa, as the United Nations Conference on Trade and Development (2018) notes, that growing digitisation has raised the anxiety of the entire developing world, which stems from lagging digital capacities and weak supportive digital infrastructure.

“Building data economy and digital infrastructure in the region can give rise to unique opportunities within the region, which will promote regional integration as well as boost intra-regional trade and help in fostering regional value chains,” says the global body.

Similarly, the World Trade Organisation (2018) Trade Report reinforces the above outlook by stating that digital technologies are fast transforming global commerce in the manner they impact on international trade with huge consequences for future economic integration and cooperation.

This explains why “the future of global trade is digital”, and no doubt countries and regional bodies that embrace this model stand to benefit immensely.

By mainstreaming digital trading in its operations, Comesa has, thus, laid a solid footing towards meaningful regional economic integration.

International logistics firm, DHL has also projected in one of its reports this year that Africa was set to generate up to US$900 billion through cross-border retail trading by 2020, spurred by robust growth in digital or electronic (e)-commerce volumes in the continent.

It noted the continent’s cross-border retail volumes would increase at an annual average rate of above 20 percent in the five-year period to 2020, as more businesses embrace e-commerce, which continues to provide significant growth opportunities for retailers and manufacturers with an international online product offering.

DHL Express Sub-Saharan Africa’s deputy head of sales, Steve Burd, has said the above projections highlight a “boundless opportunity” for African businesses looking to take a piece of the cross-border e-commerce pie, for instance.

In that regard, regional trade experts have called on African governments to urgently incorporate informal cross border trading (ICBT) issues within the implementation framework of the Comesa digital economic integration drive and the AfCFTA agreement.

This is because informal economic activity continues to pose a challenge to regulators yet it has recently become a major employer across the continent in general.

Benefits of e-commerce have been well exhibited in the Association of South East Asian Nations (ASEAN), which have achieved more success in cooperation over issues of digital trade facilitation, infrastructure gaps, access to payment solutions, and online security through a coordinating committee on E-Commerce.

Similarly, the EU has prioritised the creation of a “Digital Single Market” to harmonise policies for a more effective digital market place.

Experts are convinced that in Africa, Comesa and the much-hyped African Continental Free Trade Area (AfCFTA), signed in March this year, could serve as a basis for a digitally integrated economy.

Research insight has further increased policy maker’s focus towards realisation that small and fragmented domestic markets continue to impede long-term economic integration.

This realisation should give Comesa member states sufficient impetus to fully embrace digital technologies and seriously invest in developing their own e-commerce enterprises, a model that should be buttressed by further development of digital trade instruments at sub-regional levels like Sadc and EAC and ultimately at Comesa and entire continental level where formidable capacities could be built for attainment of wider benefits in terms of Africa’s intra-trade and trade relations with the rest of the world.