In its pursuit of an integrated, prosperous, and peaceful Africa, the African Union’s Agenda 2063 outlines a vision driven by African citizens and emphasizes inclusive and sustainable development. For Africa to meet these development goals, the African Development Bank (AfDB) stresses that the continent must achieve sustained economic growth of at least 7% annually. However, recent figures show that Africa’s economic growth is falling short. In 2023, the continent recorded a 3.1% growth, a decline from 4.1% in 2022, underscoring the need for urgent action.

In response to these challenges, the African Continental Free Trade Area (AfCFTA) has been established as one of the 12 flagship projects under Agenda 2063. Its primary objective is to create a single market that can benefit Africa’s 1.3 billion people and boost the continent’s combined annual GDP of $3.4 trillion. Intra-African trade, a key component of this initiative, holds significant potential for driving growth.

The Role of Intra-African Trade in Economic Growth

The success of other regions, particularly East Asia, highlights the power of regional trade in driving economic development. In 2021, intra-regional trade in East Asia accounted for over 40% of the region’s total trade. In contrast, Africa’s intra-regional trade stood at only 14.5%, a modest improvement from 11% in 2016. Despite this progress, trade within Africa has since declined, falling to 13.7%. The AfCFTA aims to reverse this trend by eliminating trade barriers and facilitating seamless trade between African nations.

According to the World Bank, successful implementation of the AfCFTA could generate an additional $450 billion in revenue by 2035. Much of this growth is expected to be driven by the digital economy, as digital technologies are increasingly recognized as critical enablers of trade. Digital platforms can remove barriers, open new opportunities, and connect businesses across the continent.

Biashara Afrika 2024: Shaping Africa’s Future

Recognizing the transformative role of the private sector, the AfCFTA Secretariat, in partnership with the Government of Rwanda, convened the Biashara Afrika 2024 Forum from 9 to 11 October. Held under the theme “Dare to Invent the Future of the AfCFTA,” the Forum brought together stakeholders from both the public and private sectors to address structural obstacles and policy challenges hindering Africa’s economic integration and development.

The word ‘Biashara,’ which means ‘business’ or ‘trade’ in Swahili, aptly captures the Forum’s focus on leveraging trade and business to achieve Africa’s full economic potential. Key participants included MTN Group, a leading player in Africa’s digital economy, which has played a crucial role in driving connectivity and supporting trade across 17 African markets.

MTN’s Role in Driving Digital Infrastructure

MTN’s Acting Group Chief Sustainability and Corporate Affairs Officer, Thato Motlanthe, and MTN Rwanda CEO, Mapula Bodibe, were among the notable speakers at the Forum. MTN has long been at the forefront of promoting intra-Africa trade and localisation through its vast network of over 280 million subscribers. The company’s digital infrastructure supports small traders, medium-sized enterprises, and large businesses alike, fostering economic growth across the continent.

Motlanthe emphasized MTN’s commitment to reimagining a future where everyone benefits from a connected life. The company’s platform businesses, including MoMo (mobile money), Ayoba (social messaging), and Bayobab (digital infrastructure), have empowered African entrepreneurs and businesses, enabling them to thrive in a digitally connected world. With its extensive reach across the continent, MTN is uniquely positioned to support the integration efforts required by AfCFTA.

Bridging Africa’s Infrastructure Gap

A major challenge facing Africa’s economic integration is the continent’s infrastructure gap. According to the African Development Bank, Africa needs an estimated $100 billion annually to close this gap, which spans sectors such as transportation, energy, and telecommunications. Addressing this issue requires cross-sector collaboration and investment.

At the Biashara Afrika Forum, Motlanthe called for transformative regulatory and investment governance reforms to close the coverage and usage gaps that limit access to digital services. He pointed out that taxes and fees account for 30% of the telecom industry’s revenues, which limits the ability of companies like MTN to invest in expanding their networks. By reforming policy and creating a competitive environment through voluntary infrastructure sharing, national roaming, and other measures, African countries can attract the investment needed to bridge the infrastructure gap.

Motlanthe also highlighted the importance of “soft infrastructure,” such as education and digital skills development. Despite Africa’s growing youth population and the projected 230 million digital jobs that will be created in Sub-Saharan Africa by 2030, the continent faces the world’s largest digital skills gap. MTN has taken steps to address this challenge through the launch of the MTN Skills Academy, which aims to equip Africans with the digital skills needed to succeed in the rapidly evolving digital economy.

Cross-Border Digital Payments and Financial Inclusion

Another critical area of focus at the Forum was the need for seamless, affordable, and secure cross-border digital payments. Cross-border trade is essential for the success of the AfCFTA, particularly for small and medium-sized enterprises (SMEs), which account for 80% of Africa’s businesses according to the World Bank. However, high transaction costs and limited access to reliable payment systems have been major obstacles to intra-African trade.

MTN Group, through its pioneering role in mobile money services, is working to develop digital payment solutions that reduce transaction costs and enable African businesses to expand their reach. Mapula Bodibe emphasized the importance of these systems in unlocking economic potential and advancing financial inclusion. By facilitating secure cross-border transactions, MTN is helping SMEs participate more fully in the continental market, contributing to the goals of the AfCFTA.

Overcoming Regulatory and Policy Barriers

Despite the potential of the digital economy to drive economic growth and integration, regulatory and policy barriers remain significant obstacles. The regulatory environment across many African countries has been constraining, preventing businesses from fully utilizing digital technologies to unlock new opportunities. The success of the AfCFTA depends on creating a conducive environment for businesses to thrive, which requires close collaboration between governments, private companies, and international organizations.

At Biashara Afrika 2024, MTN called for greater public-private partnerships to accelerate the development of digital infrastructure. By working together, stakeholders can address the challenges that hinder Africa’s progress, such as inadequate infrastructure and limited access to digital services, particularly in rural areas.

The Road Ahead: A Shared Responsibility

As Africa continues its journey towards greater economic integration and digital transformation, one thing is clear: the road ahead is a shared responsibility. Governments, businesses, and international partners must work together to create a future where connectivity drives economic progress and inclusive growth.

MTN’s active participation in this transformation demonstrates the company’s commitment to supporting Africa’s digital future. By investing in digital infrastructure, promoting financial inclusion, and fostering innovation, MTN is helping to realize the vision of “The Africa We Want” as outlined in Agenda 2063.

In conclusion, Biashara Afrika 2024 underscored the importance of collaboration in achieving Africa’s economic integration goals. By addressing structural obstacles, investing in infrastructure, and leveraging the digital economy, Africa can unlock its full potential and create a more prosperous and integrated future for all its citizens.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

18th October, 2024