Electronic solutions for harnessing the potential of cross-border small-scale trade in Africa

In the latest years, many regional organizations and countries in Africa have realized the potential of cross-border small-scale trade, as it represents a large and growing share of the African economy and employment force, but also a driver of economic growth in terms of job creation and poverty reduction. Accordingly, many initiatives have been launched to facilitate such sector by developing platforms that leverage on technological innovation for making products or services traded by small-scale traders accessible to larger consumer groups or markets. In some cases, such solutions also offer guidance on how to fulfil regulatory and documentary requirements needed to trade across borders, which are often characterized by opaqueness or arbitrary application by border officials. The final objective is to encourage formalization, so to allow governments to collect shares of revenue from this sector that otherwise would go lost in informal transactions not declared to the customs and tax authorities.

At continental level, an e-marketplace solution called Africa Trade Exchange (ATEX) was launched in 2022 by Afreximbank in collaboration with the AfCFTA Secretariat, the African Union Commission and the Economic Commission for Africa of the United Nations (UNECA) to facilitate the matchmaking between suppliers and potential buyers, promoting inter-African trade transactions. COMESA launched at the beginning of March 2021 a similar tool to facilitate sales within the region of a large range of products, such as health protection devices, food items and fuel.

At national level, Namibia developed during the covid pandemics a tool to support informal vendors. An online marketplace called “Tambula” allows informal traders to showcase and sell their products (including handcraft products) online. This is expected to led to an increase and stabilization of their income stream, which in turn should encourage transition of such operators to the formal economy.

A similar platform recently developed in Kenya, hosted on the website of the Kenyan Chamber of Commerce, offers in addition to the possibility to sell and buy online goods, a description of regulation procedures and documents needed for trading goods in the East African Community and in some third countries, similar to the trade information portals that have been developed in many countries and Regional Economic Communities in Africa to increase transparency on procedures applicable to cross-border transactions. But the Isoko portal, a word derived from the Arabic “sūq” that in Swahili means “market”, goes a step further. It also offers information on different taxes that apply to specific business transactions, such as VAT or excises.

Solutions developed by private firms are also not lacking. Sauti Africa, a Kenyan-based firm, offers a tool that supports small-scale traders, especially women, to trade legally and profitably across borders in East Africa by use of mobile-based trade platforms. The technology deployed is anchored on the use of SMS information system offering information on procedures applicable to cross-border trade. Traders have just to dial an Unstructured Supplementary Service Data (USSD) code on their mobile phones (which is a code similar to those used by telcom companies to allow subscribers to top up their mobile phones’ airtime), and specify through a guided procedure the type of product they trade, the value of their shipment and its origin and destination. An SMS will be then sent on their phone describing the applicable border procedure and regulatory requirements. The service, which also guides traders in harnessing the opportunities offered by the EAC Simplified Trade Regime (STR) and in calculating taxes applicable to their transactions, is also available on Whatsapp.