AfCFTA: Infrastructure hurdle for Nigeria’s quest to lead Africa’s digital trade
27 February 2025 |
3:48 am
Digital trade comprises the cross-border exchange of goods and services digitally ordered and delivered. This includes e-commerce and online services, which fall under the digital economy. This form of trade has the capacity to generate countless employment opportunities, especially for youths
Digital trade or e-commerce, which falls under the digital economy, holds great opportunities for Nigeria and Africa through the provision of employment, income for individuals, and billions in taxes for the government in the next 25 years through the African Continental Free Trade Area (AfCFTA) agreement. Realising this potential, Nigeria has expressed the desire to champion the trade. JOHNSON ENYIANGO writes on likely challenges that infrastructural deficit and others may pose to Nigeria in actualising this ambition.
Digital trade comprises the cross-border exchange of goods and services digitally ordered and delivered. This includes e-commerce and online services, which fall under the digital economy. This form of trade has the capacity to generate countless employment opportunities, especially for youths, and also for revenue generation in foreign exchange for countries through taxes considering that almost all products and services are currently available through digital trade.
The International Finance Corporation (IFC) and Google in 2020, estimated that Africa’s digital economy could reach $180 billion by 2025, or 5.2 per cent of the continent’s Gross Domestic Product (GDP).
It was also projected that the potential contribution of the digital economy in the continent could reach $712 billion dollars or 8.5 per cent of its GDP by 2050 and that if African Internet penetration rates are increased, the digital economy could add 140 million jobs and over $2,200 billion to the continent’s GDP.
The continent is projected to be a major exporter of digital services by 2075 as one-third of the global population and workers will be Africans. However, this is only attainable if the digital gap is bridged through capacity building for the youth.
On its part, the Global System for Mobile Communications Association (GSMA), a global advocate for telecommunications policy reforms estimated that “increased digitalisation in agriculture, manufacturing, transport, trade, and the government will increase GDP by around two percent by 2028.” This is also expected to create nearly 2 million jobs and raise an additional N1.6 trillion in tax revenue.”
The Nigerian Bureau of Statistics (NBS) recent reports held that the Information and Communications Technology (ICT) sector contributed about 20 per cent growth to Nigeria’s GDP in the second quarter of 2024.
For a long time, crude oil has been the major source of income for Nigeria. Unfortunately, crude oil is facing the challenge of volatile prices in the international market. Hence, there is an urgent need to devout greater attention to other sectors of the economy, including technology, agriculture, and manufacturing for income generation and poverty reduction.
Nigeria has seen opportunities in digital trade or e-commerce, which can create millions of jobs, and has expressed the desire to lead the continent using the platform of the Africa Continental Free Trade Area (AfCFTA) agreement to take advantage of her over 200 million people, mostly youths. This desire has been expressed at different times by President Bola Ahmed Tinubu.
At the 17th Annual Chartered Institute of Bankers of Nigeria (CIBN) conference held last September in Abuja, the president announced that three million youths would be trained in digital skills required to engage in digital trade as part of his administration’s efforts to create jobs, generate income and boost the economy.
Earlier in July when he received a delegation from Meta Platforms Incorporated, led by former UK Deputy Prime Minister and Meta’s President of Global Affairs, Sir Nick Clegg, Tinubu disclosed the government’s move to achieve 70 per cent digital literacy by 2027. This he, believed, would accelerate efforts toward job creation, increase productivity, and expand access to financial services.
He added that his administration will sustain investments in digital technology to enhance the sustainability of small businesses, expand opportunities across sectors, and propel Nigeria to become the lodestar of information and communications technology in Africa. “Nigeria cannot afford to be left behind in this age of technological advancements”, he insisted.
While unveiling a comprehensive strategy to lead Africa’s digital trade revolution within the framework of AfCFTA agreement in July 2024, the Federal Government said it would harness digital trade as a catalyst for economic growth.
For Dr. Dolapo Michael Oyeddokun of the School of Communication Studies, Ohio University, USA, Nigeria has already made landmark progress in digital commerce, services, trade, and innovation, which has positioned her as the continent’s digital trade hub.
He expressed the belief that with the country’s fintech companies such as Opay, Kuda, and Flutterwave, leading in digital banking and payment gateways; e-commerce platforms such as Jumia and Konga dominating online shopping, as well as, industrial giants such as Dangote Group of Companies, it can produce everyday goods that sustains livelihood.
“This feat already aligns with regional trade integration efforts and promotes digital transformation and inclusion. Nigeria is well-placed to capitalise on the growing demand for digital services in Africa,” he added.
At a roundtable organised by the Federal Ministry of Industry, Trade, and Investment to showcase talents in digital trade earlier this year, the Secretary-General of Africa Continental Free Trade Area (AfCFTA), Mr. Wamkele Mene, called for the implementation of the AfCFTA Protocol on Digital Trade, which was adopted in February 2024.
One of the key objectives of the protocol was the promotion of intra-African digital trade and fostering a transparent, secure, and trusted digital trade ecosystem to facilitate and enhance digital trade among AfCFTA member states, leveraging digital technologies to boost economic growth and integration.
Mene expressed confidence that huge revenue in foreign exchange could be generated with the implementation of the protocol.The Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, used the occasion to reiterate President Tinubu’s pledge that women and youths would be productively engaged with digital trade.
She noted that e-commerce would create remote jobs in legal services, accounting, engineering, agri-business, and health consulting, among numerous others, especially as Nigerian youths are tech-savvy. “We are digital trade champions,” she boasted.
According to the Minister, Nigeria currently records over 50 per cent GDP in services through digital trade even as she assured of a strategic focus on the export of services to earn foreign exchange.
She also disclosed plans to scale up digital infrastructure in both public and private sectors to give support to start-ups. Already, three million youths have been trained under the Federal Ministry of Communications, Innovation and Digital Economy’s 3 Million Technology Talents (3MTT) initiative. The Minister, Dr. Bosun Tijani, announced this when he visited his counterpart in the Industry, Trade and Industry earlier in January.
However, he was silent on plans to train more youths as well as efforts to achieve 70 per cent digital literacy by 2027 as projected by the government. He said: “There is a global shortage of digital talent population; this is where Nigeria has a comparative advantage over developed nations. We believe that Nigeria can be a net exporter of talent with her huge youth population.”
According to him, the training of three million youths in technology talents is to ensure gainful employment.
However, Oyeddokun had expressed worries regarding infrastructural deficits, stressing that limited access to financing for start-ups, the digital divide, inaccessibility of Internet access in the hinterlands and a lack of stable electricity, pose significant challenges to Nigeria’s quest to lead digital trade in Africa under the AfCFTA agreement.
He also feared that the country’s thirst for digital development could bring about a drastic rise in cybercrime. “These deficits could hinder the ability to fully leverage the benefits of digital trade, which include increased economic growth, job creation, and digital inclusion.”
However, an optimistic Oyeddokun noted that despite these challenges, Nigeria is in a good position to lead digital trade development in Africa.
“With the AfCFTA agreement providing a framework and with funding for harmonising regulations and standards across the continent, Nigeria can work to address its infrastructural deficits and capitalise on its strengths to drive digital trade growth. This leadership role will not only benefit Nigeria but also the entire African continent. It will also restore and reinstate Nigeria’s position as the giant of Africa,” he submitted.
Still on threats to Nigeria’s aspiration to lead digital trade in the continent, the Director of the Federal Produce Inspection Service, Federal Ministry of Industry, Trade and Investment, Mr. Dafang Sule, identified three major challenges to include Internet connectivity or penetration, absence of streamlined process and a lack of policy direction for the trade.
Sule, however, believed that with the government’s support, Nigeria has abundant talent to lead e-commerce in Africa. “We have computer scientists; we have people that are specially gifted in e-commerce and they are already thriving in their own little ways,” he said.
Other challenges Nigeria may face in her desire to lead digital trade include the absence of a sound regulatory environment. The country’s data privacy regulations as outlined in the Nigeria Data Protection Regulation (NDPR) remain unclear, making it difficult for companies to comply.
While NDPR does not strictly require data localisation, it encourages local data hosting, particularly for government and critical national data. Also, foreign companies face challenges entering the Nigerian market due to difficulties in finding local partners and navigating the regulatory environment.
Corruption and lack of transparency in public sector procurement processes have also been identified to discourage foreign companies from participating.
Meanwhile, “Japa syndrome,” which has resulted in large numbers of youths leaving the country to seek greener pastures abroad, constitutes a major threat to Nigeria’s quest to lead the digital trade. This
mass exodus of people within productive age deprives the nation of valuable human capital.
It is equally doubtful if some of the three million youths will not leave the country after training if they fail to secure a meaningful source of livelihood.
Meanwhile, the African Union (AU) has officially endorsed Nigeria as the continent’s Digital Trade Champion under the AfCFTA Digital Trade Protocol. The endorsement was announced at the 38th Ordinary Session of the AU Assembly of Heads of State and Government, which was held recently in Addis Ababa, Ethiopia. The session applauded Nigeria’s proactive role in driving the implementation of AfCFTA Digital Trade Protocol.
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