This month, our blogger Beru Lilako interviewed Alastair Tempest, a digital trade and E-commerce expert who leads the Ecommerce Forum of Africa. He shared his thoughts on the ongoing protocol negotiations, the opportunities and challenges of E-commerce integration, and the lessons that Africa can learn from the European Union in light of the African Union’s Digital Transformation Strategy for Africa (2020-30)

Beru Lilako: Thank you for agreeing to speak with me. Can you introduce yourself?

Alastair Tempest: My name is Alastair Tempest. I am the CEO of the Ecommerce Forum of Africa, and its national chapter, the Ecommerce Forum of South Africa. I have worked on data protection and consumer protection issues for many decades, and spent most of my life in Brussels, Belgium, working around the European Union.  

 Beru Lilako: How are you involved with the African Continental Free Trade Area (AfCFTA)?

Alastair Tempest: One of the major roles of the Ecommerce Forum of Africa (EFA) is to represent the interests of E-commerce to the AU and AfCFTA Secretariats. In 2019, we were asked to write a paper on the challenges that E-commerce faces as it establishes itself in Africa, as well as looking at the cross-border aspects, we also pointed out the stumbling blocks that digital commerce entrepreneurs face throughout Africa. 

E-commerce, or digital commerce, is unique in that it covers a very wide range of issues, and consists of a large number of “moving parts” – from the individual who is selling online, to the largest e-platform. It relies on logistics and delivery services including postal services; internet providers who provide the structure on which E-commerce is based; payment services; warehouses and suppliers; web-designers; marketing agencies, and customer relations experts.

Beru Lilako: The AU’s Digital Transformation Strategy for Africa (2020-2030), points out that E-commerce will be an important driver, yet there seem to be a lot of challenges.

Alastair Tempest: That is true, there are a lot of challenges – in an ideal world, E-commerce needs to have accessible and reasonably priced internet, effective customs for cross-border sales, interoperable payment services, good transport services, a legal basis that guarantees a level playing field, and a strong market presence (which usually means an active middle class). No one would claim that these conditions exist throughout Africa. But demand will slowly drive supply – and the AfCFTA will be a major factor.

The key to the AfCFTA, after all, is the growth of intra-African trade. The E-commerce that needs to be concentrated on is Business-to-Business (B2B), because that’s what trade is all about. There is far too much concentration on Business-to-Consumer (B2C) E-commerce. As some of the most active African E-commerce marketplaces have proved, getting a cross-border online business going selling to consumers on the continent is full of difficulties. B2B E-commerce should be far easier, but it will take training, up-skilling, and investment. Wise Governments should look at the opportunities and take action to assist.

Beru Lilako: Where will the first initiatives come from?

Alastair Tempest: EFA believes that some of the Regional Economic Communities (RECs) are slowly but surely starting the process of online cross-border sales going – look at the East African Community, for example. It is pushing customs to accept digital documentation for pre-clearance, and this has greatly facilitated cross-border trade.

The founders of the AfCFTA recognised this key role of the RECs, and certainly, we have noted that the AfCFTA has put more enthusiasm behind some of the RECs to take action. Look at both the EAC and ECOWAS for example agreeing on their own regional ecommerce strategies.  

Beru Lilako: What is critical to the success of the AfCFTA?

Alastair Tempest: Like all multi-national bodies, the AfCFTA must bring its members along with it. If they don’t buy into its policies then it will quickly lose momentum and get bogged down in the bickering of its member states. The Secretariat has done miracles by pushing the agenda through extremely quickly. We have the trade agreements on goods and on services, the Country of Origin agreement is almost complete, so too are something in the region of 90% of the tariffs; the structure for a dispute resolution system is well advanced, and three protocols – investment, competition and IT – were agreed earlier this year. The Protocol on Youth and Women in Trade and the Protocol on Digital Trade are presently being negotiated. In preparation, there are also a number of frameworks to cover complex issues, such as financial services. 

It will take a lot of political will to keep the train on its tracks.

Beru Lilako: Where do you see the threats to the success of the AfCFTA?

Alastair Tempest: One could see the AfCFTA as an exercise in building trust between the 54 countries that signed the agreement. If that is a success it will be less likely that AfCFTA will be rocked by internal dissension. 

But we must recognise that the threat to disabling the process may come from Africa’s main trading partners. In my view, the EU has become far less sympathetic to outside interests since Brexit. China, Russia, and India are pushing their agendas through the BRICS. Some observers believe BRICS will be great for Africa – there is little proof, so far, to back up that view. The USA is trying to play catch up after the arid years of Trump’s Presidency, but there’s a chance that Trump will be re-elected – and then what?

However, as I mentioned above, the greatest threat to the AfCFTA will be if it runs out of steam and loses its main mission objectives.

Beru Lilako: What could be done to cement the AfCFTA more securely?

Alastair Tempest: One initiative which has been considered, starting with the RECs, is the creation of common currencies. At present, there are 42 national currencies. A number of countries use the Central African Franc. There have been discussions at both ECOWAS and the EAC to create common currencies in their regions. For cross-border trade businesses need to avoid being caught by volatile currency fluctuations – which is why a lot of cross-border business is concluded in US$. A solution could be to create a “trading currency” which would be based on a basket of currencies (commodities can be used instead of currencies – Zimbabwe has already proposed a currency based on the price of gold). This trading currency replaces the US$ and eventually transforms into an African common currency. This was the route taken by the EU, which created the Ecu as a trading currency and then moved on to adopt the Euro as its common currency.    

Beru Lilako: Any parting words?

Alastair Tempest: The weakness of the Protocols is that there is no real mechanism to force recalcitrant member parties to apply the rules. The Protocols speak of harmonization to create a level playing field for business. But if the member parties sign up and then do not standardise their national regulations, barriers to trade will be created and there will be no single market. The agreement to solve disputes is not strong enough – a court system is necessary to avoid future issues.