Chapter 5

E-commerce
in Africa:
issues and
challenges
Charlemagne Igue,
Alastaire Alinsato
and Toussaint Agadjihouédé*
Abstract

This chapter analyses the potential for

e-commerce activities in Africa. The
rapid growth of internet penetration
and the use of mobile telephony, along
with the adoption of mobile innovations
that have greatly boosted financial
inclusion and encouraged reliance on
electronic payment, have established a
strong basis for e-commerce
development on the continent. On the
other hand, still-low banking rates,
fragile laws and regulations governing
the sector, and a lack of cross-country
harmonization of these rules constrain
African e-commerce. Reducing
cybercrime, increasing participation in
the financial sector and strengthening
of the legal framework are key steps to
promote e-commerce activities.

* The contents of this chapter are the sole

responsibility of the authors and are not
meant to represent the position or opinions
of the WTO or its members.
118 CHAPTER 5

Introduction Association (GSMA) identifies 314

technology clusters in 93 cities in 42
Trade improves economic efficiency African countries (Mochiko, 2016).
and contributes to poverty reduction The internet is not only increasingly
(Krueger, 1998; Stiglitz, 1998; available, but also increasingly used by
Zahonogo, 2017). Similarly, information Africans. For example, the proportion
and communications technology (ICT) of the population in Africa using the
can promote economic and social internet rose from 16 per cent in 2013
development (Kauffman and Riggins, to 18 per cent in 2016 and to 25
2012; UNCTAD, 2019). Trade and ICT per cent in 2018 (UNECA, 2014;
therefore have great potential to reduce UNCTAD, 2016; World Bank, 2019).
poverty by improving, among other The continent accounted for 12 per
things, the production and sale of cent of global internet connections in
goods. Currently, there is a growing 2013 compared to 8 per cent in 2010,
use of ICT by traditional players and and the contribution of the internet to
the new, digital firms to confront the the African economy was 5.3 per cent
many challenges facing trade (Ducass of GDP in 2016 compared to 1.1
and Kwadjane, 2015; UNCTAD, 2019). per cent of GDP in 2010 (Berger,
2017; CEA/BSR-AC, 2018). In 2018,
The use of ICT by trading firms has Africa had more than 206 million
boosted productivity and trade in Facebook users, or 17 per cent of
southern countries. Wolf (2001) notes the population (MediaNet, 2018).
particularly that, in the 1990s, the use
of ICT increased the growth of small In addition to the internet, many of the
and medium-sized enterprises (SMEs) building blocks required for the growth
in East Africa. A study of Vietnamese of e-commerce, including the spread
companies shows that the total factor of mobile telephony and mobile money
productivity growth of companies services, increased use of credit cards
marketing their products online is 1.7 and increased access to bank
percentage points higher than that of accounts, have shown remarkable
companies using the internet but not growth in recent years. Nevertheless,
performing any online sales (World Africa continues to account for a small
Bank, 2016, cited by UNCTAD, 2017). share of global e-commerce. The
Wnyoike et al. (2012) back up these limited development of e-commerce
results and show that small businesses despite improvements in supporting
that adopt e-commerce outperform technology and infrastructure
those that do not, because of the underlines the importance of identifying
catalytic effect of e-commerce on the constraints on e-commerce in
business skills. These proficiency Africa. This chapter analyses in a
improvements are driven by the scale descriptive way the context of
and network effects associated e-commerce practices in Africa and
with the use of ICT by companies provides some insight into this issue.
(Corrado et al., 2012).
The rest of the chapter is organized as
Africa has several technological follows. In the next section, we discuss
advantages that can facilitate the growth of mobile telephony and in
e-commerce. In fact, the Global financial sector participation, which
System for Mobile Communications should provide impetus for rapid
CHAPTER 5 119

growth in e-commerce in Africa. to 906 million; it is anticipated that

The following section discusses the the number of subscribers will hit 500
conditions delaying e-commerce in million in 2020 (AfDB, 2012; AFD,
Africa. The last section concludes 2017; Berger, 2017; ECA, 2014).
the chapter. Moreover, over the past few years the
share of 3G and 4G mobile coverage
Conditions for has increased substantially while the
e-commerce in Africa share of 2G has declined, and a rapid
transition from 2G to more sophisticated
Mobile phone penetration technologies is expected over the next
Telecommunications and the mobile five years (Figure 1). For example, the
industry have experienced significant share of mobile connections in Africa
development in Africa in recent years using 4G technology is forecast to
(Ninot and Peyroux, 2018). In 2017, the rise from 5 per cent in 2019 to 21
number of mobile users was 100 times per cent in 2025. These significant
greater than the number of landline improvements in both the number of
users (World Bank, 2019). Africa is mobile users and the quality of the
experiencing exceptional growth in technologies adopted are a major
mobile connections, and now has the asset for e-commerce development in
second-largest number among global Africa (Centre Africain de Politique
regions (GSMA, 2011; GSMA, 2018). Commerciale (CAPC) (2018).
From 2013 to 2015, the mobile phone
coverage rate in Africa rose from High levels of mobile phone use have
63 per cent to 84 per cent, and the had a significant impact on several
number of subscribers from 800 million economic sectors, including agriculture,

Figure 1: Mobile connections per technology in Sub-Saharan Africa

Source: Authors, from GSMA data, 2018.

120 CHAPTER 5

fishing, health, and education, and population (PwC, 2013). The factors
mobile phone use is strengthening that explain this low bank rate are
democracy by facilitating electoral manifold, including account opening
monitoring techniques and improving conditions and high transaction costs
participation (PwC, 2013). Mobile (Williamson, 1975). Thus, cash is the
phone use makes the economy more dominant mode of payment on the
efficient and helps to improve people’s continent. However, the advent of the
well-being by reducing both distances mobile telephone and its high
and information cost. Mobile telephony penetration rate have promoted the use
accounted for about 6.5 per cent of of electronic payments through mobile
GDP in 2017, up from 3.5 per cent of money accounts and mobile banking.
GDP in 2010 (GSMA, 2011; GSMA, The growth of mobile money providers
2018). Similarly, the contribution of the in Africa exceeds the global average,
mobile ecosystem to Africa’s economic and Africa has the highest proportion
growth is expected to increase in of adults with a mobile money account
relative and absolute terms (GSMA, of any region (Africa eCommerce
2018). Increased use of mobile phones Week, 2018). Data from Findex shows
also will have a growing impact on that the proportion of the population
e-commerce, as 46 per cent of over the age of 15 with a mobile money
customers prefer to buy clothes, account in Africa rose from 11.03 per
electronics, leisure goods and music cent in 2014 to 22.56 per cent in 2017,
through their mobile phone, compared the largest percentage point increase
to 10 per cent from the computer and and the highest rate among global
44 per cent in shops (PwC, 2012). regions (Figure 2). At the same time,
applications for mobile phones have
Innovations in mobile telephony been developed for marketing,
Access to a bank account is still purchasing and selling via the internet.
difficult for the majority of the African And some banks in Africa promote

Figure 2: The proportion of the adult population with a mobile money account

Source: Authors, based on Global Findex data.

CHAPTER 5 121

Figure 3: Proportion of adults with a bank account or other type of financial

institution account

Source: Authors, based on Global Findex data.

Figure 4: Growth rate of bank account opening or other financial institution

accounts of adults per continent

0.5

Source: Authors, based on Global Findex data.

e-banking with applications that allow Bank, 2014), while greater participation
deposit and withdrawal transactions in the financial sector is an important
via mobile phones. prerequisite for the growth of
e-commerce. Increased penetration
Financial inclusion of mobile telephones combined with
Increased use of ICT is believed to improved access to the internet has
improve financial inclusion (World likely contributed to the rapid growth
122 CHAPTER 5

Figure 5: Correlation between bank account ownership and credit/debit card

ownership, by region

Source: Authors, based on Global Findex data.

of financial inclusion in Africa. While system have been accompanied by

the share of the population with a rapid growth in the use of the internet
financial account in 2017 was lower for purchases or payments. During
in Africa than in other global regions the period 2014–2017, online
(Figure 3), the growth rate of the payments or purchases in Africa
opening of bank accounts from 2011 grew by 240.44 per cent, compared
to 2017 was higher than in other to 97.55 per cent in Asia, 42.20
regions (Figure 4). The number per cent in Europe, and 69.17
of Africans with a bank account per cent in America (Figure 6).
increased from 170 million in 2012 This strong growth in online payments
to 300 million in 2017, and this figure or purchasing reflects a sturdy
is expected to rise to 450 million in increase in e-commerce in Africa
2022 (EcoFin Agency, 2018). (CAPC, 2018). However, Africa’s
share of global e-commerce
The use of credit cards also is making transactions remained at less than
great progress in Africa. In 2016, 3 per 2 per cent in 2017, and the more than
cent of the African population over the 21 million online shoppers in Africa
age of 15 had a credit card, and this made up less than 2 per cent of the
rate has been increasing steadily global total (Ducass and Kwadjane,
(UNCTAD, 2017). Bank account 2015; UNCTAD, 2019). UNCTAD
ownership is highly correlated with estimates that the business-to-
possession of a credit or debit card, consumer (B2C) e-commerce market
the favoured means of payment for in Africa was worth about US$ 5.7
e-transactions or e-commerce (Figure 5). billion in 2017, amounting to less than
0.5 per cent of the continent’s GDP
Increases in e-commerce and below the global average of more
The rise in mobile telephony and than 4 per cent (Africa eCommerce
increased participation in the financial Week, 2018).
CHAPTER 5 123

Figure 6: Evolution of online payments or purchasing per continent

Percentage

Source: Authors, based on Global Findex data.

ICT and export performance activities but has no effect on

of African SMEs collaboration and search for marketing
The use of ICT provides many strategic information. In addition, they find that
and operational benefits to SMEs. innovation collaboration, and marketing
These include development of closer research activities positively and
relationships with customers and significantly affect exports, while
business partners, intense integration monitoring activities negatively
of internal and external processes, influence exports. For a sample of
better access to external resources, 43 Sub-Saharan African countries,
and improved access to information. Wamboye, Adekola and Sergi (2016)
These benefits are likely to improve conclude that the adoption of ICT
decision-making, strengthen trade by companies is associated with
relations and, in turn, improve productivity growth through an
e-commerce development and the increase in output, confirming the
international visibility of SMEs existence of a network effect.
(Brynjolfsson and Smith, 1999;
St-Pierre, Monnoyer and Boutary, To develop e-commerce and increase
2017; UNCTAD, 2018; UNCTAD, 2019). export capacity, an increasing
number of African SMEs are working
Empirical evidence on the effect of to establish their own digital identity
ICT on SME exports is scarce, by creating websites and having their
however, due to the lack of data on own e-mail addresses (Coste, 2017;
SMEs (St-Pierre, Monnoyer and Dupont, 2018). In Benin, for example,
Boutary, 2017; UNCTAD, 2019). the share of SMEs who owned a
St-Pierre, Monnoyer and Boutary website rose by 5 percentage points
(2017) find that for 294 Canadian from 2009 and 2016, and the share
manufacturing SMEs, the use of ICT with an e-mail address increased by
stimulates innovation and monitoring 13 percentage points. In Burundi
124 CHAPTER 5

Table 1: ICT, e-commerce and export performance of SMEs per country

Possession of e-mail
Country Year Website ownership (%)
address (%)

2009 28.00 67.00

Benin
2016 41.00 72.00

2013 45.43 53.16

Burundi
2016 60.42 67.48

2007 8.91 33.00

Ghana
2013 33.33 64.44

2007 16.13 57.08

Kenya
2013 52.11 81.05

Source: Authors, based on Data from Enterprise Survey, 2019.

from 2013 to 2016, the share of rising on the continent. This is a good
SMEs with e-mail rose by over base for e-commerce development
14 percentage points and the share in Africa.
with a website by 15 percentage
points. In Ghana, the share of SMEs Conditions restricting
using e-mail rose by more than 31 e-commerce in Africa
percentage points, and the share We have shown that e-commerce
with a website by more than 24 has significant potential for growth in
percentage points from 2007 to 2013. Africa. However, substantial barriers
Finally, in Kenya, the share of SMEs to e-commerce development on the
with e-mail rose by 24 percentage continent remain, the most important
points and the share with a website being cybercrime, a poor legal
by 36 percentage points. For Africa framework to support e-commerce,
as a whole, the e-retailers’ profile and inadequate consumer protection.
study conducted by Oxatis shows
that 28 per cent of e-retailers are Cybersecurity
SMEs, and that 29 per cent of physical Transaction security is a major
shops also have an online shop; the concern for e-commerce participants
number of SMEs selling goods retail (UNCTAD, 2018; PayPal, 2013),
increased by 30 per cent in 2016 and cybercrime is a major obstacle
(Coste, 2017). to the use of ICT and thus to
e-commerce development (Gaidosch,
In Africa, an increasing number 2018; McAfee, 2018; OECD
of SMEs have their own e-commerce and WHO, 2017). Cybercrime
sites and e-mail addresses. As is hard to control, given difficulties
shown in Table 1, the proportion in identifying cybercriminals (their
of SMEs who use e-mail addresses profile is significantly different from
in their communication or own their that of conventional criminals) and
websites is generally and constantly a lack of data or a strong policy
CHAPTER 5 125

agenda (Aggarwal, 2009; Alinsato, The analysis of the legal framework

2012; Giannangeli, 2008; Sutherland, on cybersecurity shows wide
2008; UNCTAD, 2018; UNCTAD, inequalities. Only a few African
2019). Becker (1968) argues that countries, such as Morocco,
tough laws are essential to fight Senegal and Tunisia, have achieved
cybercrime, and over the past advances in e-commerce in general
15 years, there have been at least and in cybersecurity in particular
246 laws or drafts of laws on (Ducass and Kwadjane, 2015).
cybersecurity (UNCTAD, 2018). These countries have promulgated
laws on the protection of personal
Cybercrime continues to have a data and electronic communications,
major impact on Africa (African while others are struggling to
Cybercrime Forum, 2018; CFAO, enact laws in these fields (UNCTAD,
2018; Symantec Corporation, 2013). 2015). Thus, the constraint on
McAfee (2018) estimates the cost e-commerce due to cybercrime
of cybercrime to Africa at 0.20 seems to be easing in these countries
per cent of its GDP annually. About compared to other countries on
80 per cent of Africa’s personal the continent.
computers are believed to be
affected by viruses and other Aware of the importance of cybercrime
malware (CFAO, 2018; Gacy, and of the inadequacy of sub-regional
2010). Nigeria, Ghana cooperation (Bekrou,
and South Africa are 2015; Hamel and
ranked in the top ten in Triclin, 2017), the
cybercrime worldwide
“Reducing African Union adopted
(IC3, 2010). The cybercrime, the “African Union
vulnerability rate of increasing Convention on Cyber
digital infrastructure1 participation Security and Personal
in Africa is 83 per cent in the financial Data Protection” at the
above that of other 23rd Ordinary Session
continents (James, 2019).
sector, and in Malabo (African
strengthening Union, 2014) on 27
The high probability of the legal June 2014 to promote
of being a victim of framework the harmonization and
cybercrime severely are key steps development of
constrains e-commerce cybercrime regulations.
in Africa (African
to promote Paragraph 1 states
Cybercrime Forum, e-commerce that: “States Parties
2018; Alinsato, 2012; activities.” are committed to
CFAO, 2018; UNCTAD, ensuring that the
2018; UNCTAD, 2019). legislative and/or
The African agenda of laws and regulatory measures adopted to
texts ignores important aspects of combat cybercrime strengthen the
cybercrime, such as the illegal use possibility of regional harmonisation
of services and the electronic of these measures and respect the
payments (CAPC, 2018; Ducass principle of double jeopardy”. The
and Kwadjane, 2015), which are creation of the Continental Free Trade
holding back online businesses. Zone (CFTZ) by the African Union will
126 CHAPTER 5

Table 2: Estimated impact of tax cuts over a 5-year period (2019–2023) for Guinea

Additional Increased
Price of Total of Number
investment GDP tax
the mobile new of jobs
in the growth revenues
services subscribers created
economy up to 2023

Elimination
of excise duty
on call
bonuses -4.4% + US$ 14 M + 663,000 + US$ 57 M + 4,156 + US$ 13 M
(telephone
consumption
tax (TCT))
Removing
the US $0.12 -42.3%
per minute (price of
surcharge entering + US$ 24 M + 927,000 + US$ 89 M + 13,193 + US$ 8 M
on incoming international
international calls)
calls (SIIC)

80%
reduction in
annual fee -4.4% + US$ 9 M ++ 220,00 + US$ 22 M + 3,798 + US$ 2 M
on wireless
beams

Source: Authors, based on data from Enterprise Survey, 2019.

also support the control of cybercrime. Legislation in the

Among the specific objectives of the e-commerce field
CFTZ are the implementation of trade Most African countries lack many
facilitation measures and the of the basic requirements of a legal
establishment of a dispute resolution framework for e-commerce. For
mechanism (Article 3 of the CFTZ example, apart from Algeria, no
Agreement). The CFTZ is an country has laws providing for the
opportunity to fight cybercrime, as it acceptance of electronic signatures
will bring countries to harmonize their (UNCTAD, 2015). A few countries,
various policies, including their including Algeria, Côte d’Ivoire,
electronic payment security policy, Ethiopia, Morocco, Senegal and
and should promote e-commerce Tunisia, have made progress in
development (UNCTAD, 2019). establishing a legal framework for
The Executive Council’s President, e-commerce (UNCTAD, 2015), while
of the African Union, calls on the the others still lag behind. There also
countries to promote digital identity is a lack of harmonization of the
and the implementation of digital legal frameworks of African
identification systems across the countries (CAPC, 2018; Ducass
continent (African Union, 2018). and Kwadjane, 2015).
In short, the CFTZ will facilitate the
development of a digital economy GSMA (2012) identifies major
in African countries (African obstacles to the development of
Union, 2018). the mobile industry and, in turn,
CHAPTER 5 127

e-commerce in Africa due to the non-compliant goods, assign

absence, or poor quality, of legislation. responsibility for problems and identify
These include the high the relevant jurisdiction
cost of licences, the (Ndiaye, 1999).
heavy taxation of mobile “Africa has
phone imports, the lack several Conclusion
of clarity on tax and
regulatory requirements,
technological This study analyses
and the need for better advantages that the challenges
harmonization of the can facilitate facing e-commerce
spectrum for mobile e-commerce.” in Africa. Mobile
telephony throughout phone penetration,
the region. GSMA innovations in mobile
(2018) argues that a reduction in telephony, financial inclusion, the
taxes in the technology sector would CFTZ and the use of ICT by
lower prices and spur investment. In African SMEs that improve their
Guinea, for example, eliminating the export performance are key factors
excise duty on call bonuses would in the development of e-commerce.
reduce the price of services by Lack of control of cybercrime,
4.4 per cent and would boost the defects in the legal framework
number of mobile subscribers by and inadequate consumer protection
663,000, leading to an additional are key obstacles to e-commerce
US$ 14 million in investment in the development. These issues should
economy and a rise of US$ 57 million be addressed by harmonizing the
in GDP (Table 2). All this would lead legal agendas of the different
to the creation of more than 4,000 countries on the continent, on
new jobs and an increase in tax the one hand, and by inaugurating
revenues of more than US$ 13 new laws on cybersecurity,
million. Similar effects result from consumer protection, and the
removing the US$ 0.12 per minute development of e-commerce, on the
surcharge on incoming international other hand. In addition, enforcement
calls and reducing the annual fee on should be strengthened and efforts
wireless beams by 80 per cent. made to inform citizens of the legal
framework and the opportunities
Consumer protection involved in e-commerce. Countries
Strong consumer protection is crucial such as Algeria, Morocco, Senegal
in the development of e-commerce. and Tunisia can serve as models for
It gives confidence and encourages e-commerce development in Africa,
consumers to buy online. Many because of their efforts to improve
countries in Africa lack any legislation their legal agendas in favour
governing consumer protection, and of e-commerce.
some of the legislation in this area is
of poor quality. For example, the laws Endnote
governing consumer protection in
some African countries take into 1
The vulnerability rate includes a country’s
account only the subsidiary aspects resilience to natural disasters and
of the consumers’ rights and neglect cyberattacks, and its ability to recover
aspects such as the inability to return in the aftermath.
128 CHAPTER 5

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132 CHAPTER 5: COMMENTS

Comments

PIERRE SAUVÉ*

Major technological advances over (first reached in 1996 and revised (and
the past two decades have led to the expanded) in 2015) has proven key to
development of new business models, eliminating tariff barriers on a wide range
an increase in the complexity of of information and communications
production systems and a sharp technology (ICT) products.
rise in the volume of cross-border
transactions conducted over digital Provisions dealing more specifically
networks. Digitization presents a with e-commerce have become an
number of novel regulatory challenges increasingly common feature of
for trade rule-makers. These stem in contemporary trade governance in
no small measure from the increasingly recent decades. Launched in 1998
blurred distinction between goods and with the aim of building consensus over
services and the resulting uncertainty the key parameters of global digital
as to the applicable trade rules. governance, the WTO Work Programme
on Electronic Commerce has, however,
World Trade Organization (WTO) rules produced little by way of tangible
on goods and services and the trade progress over the past two decades.
body’s jurisprudence have long Growing frustration over the glacial pace
confirmed that digital trade is subject to and inconclusive nature of discussions
trade law disciplines. At the multilateral held under the 1998 Work Programme
level, the 1994 General Agreement on prompted a group of 70 like-minded
Trade in Services (GATS) and its WTO members to issue a Joint
annexes (particularly that on basic Statement on Electronic Commerce
telecommunication services agreed aimed to “initiate exploratory work
in 1997) are of primary importance toward future WTO negotiations on
for enabling services that underpin trade-related aspects of electronic
the digital world and digitally enabled commerce” at the Eleventh Ministerial
services. In the case of digitally enabled Conference of the WTO (MC11) in
trade in goods, the General Agreement December 2017.1 Following a year of
on Tariffs and Trade 1994 (GATT 1994), exploratory talks, 76 WTO members
including the Trade Facilitation accounting for 90 per cent of global
Agreement concluded in 2013, provides trade agreed, on the margins of the
important measures while the WTO’s January 2019 edition of the World
Information Technology Agreement Economic Forum in Davos, on a

*
The author is a Senior Trade Specialist within the Macroeconomics, Trade and Investment
Global Practice of the World Bank Group. The views expressed in this note are those of the
author and should not be ascribed to the World Bank Group or its member countries. The
contents of this commentary are the sole responsibility of the author and are not meant to
represent the position or opinions of the WTO or its members.
CHAPTER 5: COMMENTS 133

Ministerial Declaration setting out relating to digital trade based on their

their intention to launch plurilateral content and scope of application
negotiations on electronic commerce (Herman, 2010; Monteiro and Teh, 2017;
open to all WTO members.2 Weber, 2015). A range of studies have
addressed all disciplines and obligations
The experimental role of impacting digital trade, beyond
preferential trade e-commerce (Meltzer, 2015; Mishra,
agreements 2016; Wu, 2017). In overall terms,
In the absence of globally agreed norms disciplines deemed of direct relevance
on digital trade, preferential trade to digital trade include provisions on
agreements (PTAs) have served as data and consumer protection; rules on
laboratories in which to experiment with paperless trade, electronic authentication,
– and adopt – elements of a nascent and digital signatures; provisions
regulatory regime governing electronic governing cross-border data flows
transactions and digital trade (Wu, and measures relating to data
2017). While extensive attention has localization; rules calling for the
been devoted to the political economy (temporary or permanent) prohibition
forces underpinning the recent sharp of custom duties levied on electronic
rise in PTAs and their transactions; provisions
growing influence in on regulatory cooperation;
norm-setting, research and treaty language
devoted to analysing the
“Digitization defining e-commerce
digital trade-related presents a and digital products. The
provisions found in number of novel very fine contribution of
PTAs and the factors regulatory colleagues from the
influencing their inclusion challenges WTO Chair in Cotonou
and substantive remit devoted in this volume to
for trade
remains largely incipient. the African e-commerce
This can be explained in rule-makers.” landscape recalls how
part by the fact that any comprehensive
digital technology for policy response to
commercial purposes is itself a relatively e-commerce must of essence tackle a
recent phenomenon, dating back to the wider range of measures extending
mid- to late 1990s, as can be seen by beyond trade law to areas such as
the scant explicit attention paid to financial inclusion, payments systems’
electronic transactions in the relevant regulation and battling cybercriminality.
legal texts establishing the WTO in
1994. It can further be inferred from the The studies cited above usefully track
fact that the first PTA featuring specific the evolving scope and depth of
provisions on e-commerce – on disciplines governing electronic
paperless trading – was that entered commerce in PTAs. Monteiro and Teh
into by New Zealand and Singapore a (2017, note 3), for instance, found that
mere two decades ago, in 2000. almost 30 per cent of the 275 PTAs that
had been notified to the WTO by May
Studies devoted to the treatment of 2017 featured e-commerce provisions.
e-commerce in trade agreements have Their work also documented the marked
allowed for a finer understanding of recent rise in the number of PTAs
how to identify and classify provisions featuring disciplines on e-commerce,
134 CHAPTER 5: COMMENTS

a conclusion shared by Hofmann, WTO+ provisions found in its PTAs

Osnago and Ruta (2017). served the commercial interests of its
leading exporting firms and were more
Wu (2017, note 4) corroborates the likely to be enforceable.
above findings, noting that the scope
of e-commerce provisions found in Wunsch-Vincent (2006) and Ferracane
PTAs has progressively expanded to and Lee-Makiyama (2017), both of
encompass an ever whose work explored the
broader range of issues. conceptual framework
Echoing much recent “Provisions underpinning the
literature devoted to the dealing more negotiation of digital
study of the comparative trade disciplines,
specifically with
remit of PTAs and the showed that the
WTO (Roy, 2014; Roy, e-commerce European Union and the
2019; Roy, Marchetti and have become United States tended to
Lim, 2006), Wu (2017) an increasingly rely on differing
finds that PTAs featuring common feature negotiating parameters,
an advanced economy though a closer look at
of contemporary
trading partner, such as the latest generation of
the United States or the trade governance PTAs entered into by
European Union, tend to in recent both parties suggests
address a significantly decades.” that the “normative
broader and deeper distance” between them
range of digital trade has been reduced on
issues than do PTAs conducted along some key negotiating issues such as
South-South lines. data localization while remaining
significant on other key negotiating items
Much attention has also been devoted in such as the regulation of cross-border
the academic literature to uncovering the data flows and data privacy. In the
underlying political economy of PTAs case of China, arguably the world’s third
and the forces influencing a country’s major player endowed with norm-making
recourse to bilateral or regional trade influence, Ferracane and Lee-Makiyama
agreements to advance its digital trade (2017) find that the country’s more
policy agenda (Van Grasstek, 2011). An restrictive stance towards information
important strand of such literature has and communications technology and,
concerned itself with the study of the consequently, its negotiation of
role that various economic and disciplines on digital trade are strongly
geopolitical factors play in shaping the influenced by a set of non-trade
content of specific disciplines found in considerations, including national
PTAs. For instance, in assessing the security and public order concerns,
provisions of the PTAs entered into by as well as by the predominance of
the European Union and the United state-owned enterprises.
States, Horn, Mavroidis and Sapir
(2009) determined that the European Overall, while contemporary PTAs
Union showed an early tendency to use feature a broad set of digital provisions,
trade policy as a vehicle for “declaratory there remains wide variance across
diplomacy”, whereas the United States agreements in terms of the depth and
tended to ensure that any so-called breadth of issues covered, with many
CHAPTER 5: COMMENTS 135

Figure 1: Parties to PTAs developing countries, while only

with e-commerce chapters 6 per cent were conducted among
developed economies (see Figure 1).

In terms of geographical representation,

not all regions are represented equally.
Among developing economies,
economies in South-East Asia and
Latin America countries have been
far more active in this area, with a
recent trend showing South-South
agreements involving parties from both
regions. On the other hand, African
countries are still largely absent. In
Share PTA configuration Africa, only Morocco is party to a
64% North - South PTA with an e-commerce chapter
(Developed-Developing) (with the United States). The European
30% South - South Union’s Economic Partnership
(Developing-Developing)
Agreements (EPAs) with Côte d’Ivoire
6% North - North
(Developed-Developed)
and Ghana only contain an
understanding that the parties will
Source: WTO (2018).
cooperate to facilitate the conclusion
of an agreement in trade in services
and electronic commerce, as well as
provisions framed as “best endeavours” other areas.
or soft law disciplines not subject to
dispute settlement (Meltzer, 2015). The above considerations hold
The regulatory precaution on display is important implications for African
perhaps less than fully surprising given nations as they contemplate the
the extent to which technology tends to normative contours of continent-wide
outpace regulation in cyberspace. disciplines on e-commerce called
for under the recently established
A closer look at membership in PTAs African Continental Free Trade Area
featuring e-commerce provisions (AfCFTA). As relative latecomers to
reveals a striking diversity of digital governance, African governments
participating countries. While can consider the different regulatory
e-commerce provisions were long models on offer globally within latest-
found mainly in PTAs involving generation PTAs and adopt those
developed economies (concluded provisions best tailored to the
either with developing or other continent’s needs, capacities and
developed economies), provisions policy priorities.
dealing with digital trade are today
increasingly found in agreements Digital trade governance:
reached among developing countries. African challenges and
In an examination of a sample of 63 perspectives
recently notified PTAs featuring The potential for digital trade to drive
e-commerce provisions, the WTO found economic development and
that 30 per cent were concluded among transformation in Africa remains largely
136 CHAPTER 5: COMMENTS

unexplored. While there is still a long As noted above, in coming late to

way to go to bridge the continent’s the dance, African governments retain
digital divides, important recent gains considerable policy space within which
in connectivity have helped improve to develop a continent-wide governance
lives in many parts of the African regime for digital transactions. African
continent. Of all regions of the world, countries can in effect learn from the
Africa registered the strongest doing of others and reap the late-mover
growth in internet use, with the benefits deriving from the normative
percentage of people using the experimentation of other countries
internet increasing from 2.1 per cent and regional groupings in the digital
in 2005 to 24.4 per cent in 2018, sphere. By drawing on selected aspects
according to ITU data (ITU, 2019). of an evolving mosaic of PTA-embedded
rules on e-commerce and digital trade,
While e-commerce is thriving in the AfCFTA’s built-in agenda can help
several individual African countries, governments adopt digital rules that
has spawned far-reaching gains are best aligned to the continent’s
in inclusiveness, and led to significant diverse development, infrastructure,
innovation, notably regulation and digital
regarding electronic literacy landscapes.
payments, all too often “Building a
advances have been Digital trade and its
robust African
confined to domestic benefits for development
markets and inadequately
digital economy can essentially be
scaled for regional or will require harnessed in two ways.
continental uptake. deepened First, through the growth
Moreover, in many parts regional of e-commerce and its
of the continent, digital cooperation use of digital platforms to
trade proceeds within facilitate trade in goods
embryonic regulatory
and the pooling and services capable of
ecosystems still in of resources both physical and digital
the process of and information delivery. Expanded
being established. sharing on opportunities for African
emerging best economies can materialize
The AfCFTA, which through the increased
came into effect on 30
practices across connectivity of both local
May 2019 and features several key and foreign markets that
a built-in negotiating areas.” AfCFTA-led integration
agenda on e-commerce will help promote on a
and digital trade, continental scale.
provides African countries with a Growing internet use in Africa has been
ready-made setting in which to design instrumental in providing new sources of
a Pan-African digital strategy and market access for the continent’s micro,
action plan aimed at accelerating the small and medium-sized enterprises
development and regulatory (MSMEs) and entrepreneurs long
sophistication of the continent’s shackled by weak cross-border
digital ecosystem and enhancing the connectivity, punitively high trade
volume of digitally enhanced cross- costs and a host of asymmetries in
border transactions. market information.
CHAPTER 5: COMMENTS 137

Second, and perhaps of even greater all of which are critical building blocks
importance for Africa’s longer-term for an effective digital economy.
growth prospects, digital uptake can
speed up the adoption and diffusion of Regulatory frameworks also need to be
innovative technologies, leading to supported by efficient ICT infrastructures,
economy-wide gains in efficiency and which provide the critical backbone of
productivity and boosting the the digital economy. As the note by the
competitiveness of the continent’s WTO Chair in Cotonou documents well,
agricultural and manufacturing sectors.3 Africa needs to close its digital gap with
Increased digitization in both sectors the rest of the world if more of the
will also fuel demand for ICT and continent’s consumers and businesses
business services, enhancing the are to operate online and for levels of
performance of tertiary production internet connectivity, digital literacy and
and exchange in the process. access to latest-generation ICT
infrastructure and broadband are to
Many WTO members from Africa have converge with global norms.
expressed reservations about ongoing
negotiations on e-commerce at the Plurilateral negotiations on e-commerce
WTO, arguing that considerable at the WTO have offered the somewhat
uncertainty continues to surround the disquieting spectacle of non-
regulation of digital trade domestically engagement by a majority of African
and how it should be governed across members who have chosen to stay on
borders. For many, engagement in the side lines and effectively leave to
negotiations at the global level appears others the task of developing agreed
premature in light of prevailing digital norms of digital governance. In so doing,
and technological divides and they forego the significant learning
inadequate or incomplete domestic externalities embedded in a multilateral
regulatory frameworks. The AfCFTA negotiating journey characterized
is seen by most players as offering a by considerable normative discovery
more attractive setting in which to pool and to which, as sovereign nations,
regional efforts to strengthen capabilities none need be bound by at the end
and progressively scale-up digital of the process. Care will therefore
economies. There is much to learn need to be taken to ensure that the
from and draw on from recent PTA AfCFTA’s potential for strengthening
experiments in doing so. the continent’s digital capabilities is
harnessed in full and constitutes a key
A sophisticated legal and regulatory building block for heightened regional
framework that enables digital and global connectivity.
transactions is vital for fuller participation
in digital trade, be it regionally or While there is still time to hop on the
globally. To date, only a few African digital train and to do so first at the
countries have put in place the continental level, Africa does not have
regulatory toolkit required for secure the luxury of acting slowly. Absent faster
cross-border transfers of data, the digital transformation, African nations
protection of personal data and will likely not generate the huge number
consumer rights on digital platforms, of new jobs needed to match their
the policing of cybercrime, and the population growth. Moreover, as noted
recognition of electronic transactions, above, trade rules alone will not suffice.
138 CHAPTER 5: COMMENTS

Building a robust African digital World Bank Group. [Link]

economy will require deepened regional org/dataset/hofmann-claudia-alberto-
cooperation and the pooling of osnago-and-michele-ruta-2017-horizontal-
resources and information sharing on depth-new-database-content
emerging best practices across several
key areas, including digital infrastructure, Herman, L. (2010), “Multilateralising
digital literacy and skills, digital financial Regionalism: The Case of E-commerce”,
services, digital platforms and digital OECD Trade Policy Papers No. 99.
entrepreneurship and innovation.
Horn, H., Mavroidis, P. and Sapir, A. (2009),
Endnotes “Beyond the WTO? An anatomy of EU and
US preferential trade agreements”, Bruegel
1
Joint Statement on Electronic Commerce, Blueprint Series 7.
WT/MIN(17)/60, Eleventh Ministerial
Conference, World Trade Organization, International Telecommunication Union (ITU)
13 December 2017. (2019), “Boosting Africa’s digital economy:
How tech is transforming Africa”, ITU News,
2
See [Link] 27 March 2019, Geneva: ITU. [Link]
spra_e/spra300_e.htm. [Link]/boosting-africas-digital-economy-how-
tech-is-transforming-africa/
3
For instance, the combination of the
Internet of Things, big data and cloud Meltzer, J. P. (2015), “A New Digital Trade
computing for precision agriculture results Agenda”, E15 Initiative. [Link]
in more accurate crop and weather org/publications/a-new-digital-trade-agenda/
monitoring. For a fuller discussion of
sources of innovation in agriculture, see Mishra, N. (2016), “Data Localization Laws
WIPO (2017). See also Fuglie, Gautam, in a Digital World: Data Protection or Data
Goyal and Maloney (2020). Protectionism?”, The Public Sphere.

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