Africa’s trade ambitions hinge on digital infrastructure

PHILLIMON MHLANGA IN CAPE TOWN, SOUTH AFRICA

Africa’s push to build a single market will remain constrained unless the continent invests in the digital infrastructure needed to turn trade agreements into actual transactions, Zimbabwe’s Foreign Affairs and International Trade Minister Professor Amon Murwira has warned.

Speaking to chief executives attending the ongoing CEO Africa Roundtable in Cape Town on Wednesday, Professor Murwira said digital trade infrastructure was becoming the backbone of African commerce, arguing that diplomatic agreements and tariff reforms would have little impact unless businesses could move money, goods and data seamlessly across borders.

“Digital trade infrastructure is the backbone of African trade. There is no foreign affairs without trade,” Professor Murwira said.

His remarks underscore a growing concern across the continent that Africa’s ambition to deepen regional integration through the African Continental Free Trade Area (AfCFTA) is running ahead of the infrastructure required to make it work.

“Protocols in paper agreements do not clear funds in bank accounts,” Professor Murwira said.

“How do we turn policy into daily commerce? We must build operational machinery to make sure that this happens.”

The AfCFTA, which seeks to create a single market of more than 1.4bn people, is designed to dismantle barriers to intra-African trade and accelerate industrialisation. But its success will depend increasingly on whether businesses can transact across borders as easily and cheaply as they can within national markets.

That means interoperable payment systems, digital identities, data centres, cloud computing, broadband networks and reliable electricity must develop alongside the legal and regulatory architecture governing continental trade.

AfCFTA secretary-general Wamkele Mene backed Murwira’s assessment, saying digital infrastructure was fundamental to translating the agreement’s ambitions into higher volumes of intra-African commerce.

“African economies must focus on digital trade infrastructure as we implement AfCFTA, as digital infrastructure is the backbone of trade in Africa,” Mene said.

The AfCFTA’s digital trade protocol provides a framework for harmonising rules, improving interoperability and creating a trusted digital environment for businesses. But Mene said regulation alone could not create digital commerce.

“Rules alone cannot create digital trade,” he said.

“Such rules require infrastructure, such as data centres, cloud infrastructure, digital identity, broadband networks, digital platforms and interoperable payment systems.”

The scale of the investment challenge is substantial. Mene said Africa could require as many as 700 new data centres to support high-quality cross-border digital operations, alongside resilient telecommunications networks, affordable broadband, continental connectivity and reliable power.

“Digital infrastructure is just as important as physical infrastructure in facilitating intra-Africa trade,” he said.

The investment gap also presents an opportunity for African governments, development finance institutions and private capital to work together on infrastructure capable of supporting the continent’s next phase of economic integration.

Mene said partnerships with institutions including the African Development Bank and Afreximbank, would be important in mobilising capital for the digital infrastructure required to underpin the AfCFTA.

“This means that the continent of Africa is facing a formidable challenge. It will require collaboration between the private sector, development finance institutions and the public sector to mobilise this significant capital injection that is required to address Africa’s infrastructure deficits,” he said.

For Zimbabwe, Professor Murwira said deeper African integration was central to the country’s economic strategy, arguing that trade was the practical mechanism through which the country could realise its Pan-African ambitions.

“Foreign affairs is trade,” he said.

“You can only integrate through trade.”

Professor Murwira said Zimbabwe would use its forthcoming chairmanship of the Common Market for Eastern and Southern Africa (Comesa) to push for greater market openness, arguing that protectionist tariffs risked undermining the very industries they were intended to shield.

“Markets must open. Zimbabwe is open for business,” he said.

“Sometimes people think that tariffs protect industry. No, tariffs kill industry. That’s why we think it is very important to open Zimbabwe to the Southern African economy, to the African economy.”

Zimbabwe is due to assume the Comesa chairmanship within weeks, giving Harare an opportunity to promote its argument for more open regional markets while seeking to position itself as a gateway into the wider African economy.

The debate comes as African economies confront a more fragmented global trading environment, rising geopolitical tensions and growing pressure to build resilient regional supply chains.

Mene said the AfCFTA offered the continent an opportunity not only to increase intra-African trade, but also to accelerate industrialisation, digital innovation and inclusive economic growth.

“Amid the global economic and geopolitical tensions, the African continent continues to pursue deeper regional integration and economic transformation,” he said.

“The AfCFTA remains one of the most significant milestones that presents a very unique opportunity to accelerate intra-Africa trade, industrialisation, digital innovation and inclusive economic growth.”

For Africa’s CEOs, however, the test will be less about the ambition contained in agreements and more about whether the continent can build the infrastructure that allows companies to trade at scale.

Mene said Africa now had an opportunity to mobilise development finance and private-sector capital on commercially viable terms to implement the digital trade protocol and create investable digital infrastructure projects.

“Building a digital trade infrastructure will require investment models that enable both public and private sectors to participate,” he said.

“My message is clear. We must focus, as we implement the AfCFTA, on investment in digital infrastructure.”

The ultimate objective, Mene said, should be to move beyond fragmented national digital markets towards a single continental digital marketplace.

“We must accelerate our efforts to create a single African digital market,” he said.