Africa’s Digital Trade is Low, but Overall Growth is Good

Trade in digitally delivered services boomed during COVID, with global exports growing by 15% on average in 2020-21. The newly released WTO-OECD Balanced Trade in Services report reveals digitally delivered services traded within Asia reached 43.2% of the region’s total trade in these services in 2021, up from 39.2% in 2019. Telecommunications, computer and information services as well as business, professional and technical services drove this rapid growth. In North America, the share of intra-regional trade in digitally delivered services rose to 18.2%, up from 15.8% in 2019. In contrast, intra-regional trade remained stable in South and Central America and the Caribbean and contracted slightly in Europe. Intra-Africa trade in digitally delivered services declined to 3.3% in 2021. However, the share of Africa’s exports of digitally delivered services to Asia rose from 20.3% in 2019 to 22.0% in 2021. Flows from South and Central America and the Caribbean to North America and to Asia were also on the rise. In 2021, 37.5% of the region’s exports of digitally delivered services went to North American countries, up from 34.5% before the pandemic.

The African Development Bank’s 2023 African Economic Outlook report has found that the continent is set to be the second-fastest growing region in the world after Asia in 2023-24, demonstrating the resilience of its economy despite dealing with multiple global shocks. But the projected growth will depend on global conditions and the continent’s ability to bolster its economic resilience, The report forecasts that Africa will consolidate its post-COVID recovery to 4.3% GDP growth in 2024 from 3.8% in 2022. Some 22 countries are forecast to record growth rates above 5%. The report recommends robust policy actions, including incentivizing green industries and providing guarantees at scale to de-risk private sector investments in managing natural capital across the continent.

Further information on the latest trends in trade in services, including digitally delivered services, is available in the WTO’s Global Trade Outlook and Statistics published earlier this month. As an interesting aside, the UK estimates that by 2026, 60-80% of world trade will be digitally enabled by interoperable legal, standards and rules frameworks. From July 2023, all commercial trade documents operating under English law, including 80% of bills of lading worldwide, can be handled in digital form under the Electronic Trade Documents Act, which will be helpful for African ecommerce exporting to the UK.