This blog post centres on the Roundtable co-organised by the University of Aberdeen’s Centre for Commercial Law and Global South Law Research Network to critically discuss cutting-edge complexities in Africa's evolving digital economy vis-à-vis contemporary developments such as the African Continental Free Trade Area (AfCFTA). The Roundtable held at the University of Aberdeen on 30 October 2024. The speakers were Dr Ify Ogo (Regional Specialist on the AfCFTA at the United Nations Development Programme UNDP) and Mr Davidson Oturu (Managing Partner of Nubia Capital and author, ‘FinTech Law and Practice in Nigeria’). The Roundtable was moderated by Dr Titilayo Adebola (Senior Lecturer in Law, Co-Convener Global South Law Research Network, University of Aberdeen) and Dr Eddy Wifa (Senior Lecturer in Law, Co-Convener Global South Law Research Network, University of Aberdeen).
Dr Ify Ogo presented on ‘Positioning Africa’s Digital Products to Benefit from Trade Liberalisation’. In the course of her presentation, she assessed how digital trade and products fit under goods and services in the AfCFTA. She started by stating that international trade - including the AfCFTA, is rule based, hence recourse is had to the provisions of the AfCFTA agreement and its protocols, or other trade rules established by the World Trade Organisation (WTO) in attempting to answer the question on digital trade’s product categorisation. Under the WTO’s 1998 Work Programme on E-commerce, electronic commerce was defined narrowly as “the production, distribution, marketing, sale or delivery of goods and services by electronic means.” However, in 2023, the Organisation for Economic Co-operation and Development (OECD) under its Handbook on Measuring Digital Trade defined digital trade as all international trade that is digitally ordered and/or digitally delivered. This definition embraces all forms of digital products that are either ordered or traded internationally. Similarly, Article 1(h) of the AfCFTA Agreement defines digital trade as “an electronic programme, text, video, image, sound recording, or any other product that is digitally encoded, produced for commercial sale or distribution, and that can be transmitted electronically except for a digitised representation of a financial instrument, including money.”
To be a “good”, the digital product should either add to or subtract from the stock of material resources of a country or territory by entering (imports) or leaving (exports) the country’s economic territory. Therefore, the good categorisation requires some degree of physical ingress and outgress of a commodity from one country to another, which does not fit into the essential feature of a digital product being intangible in its form and therefore invisible when crossing the borders to another company without a supplier. However, as pointed out by Dr Ify Ogo, it could be argued that the delivering of the digital product through electronic transmission or the presence of a service supplier from a foreign country can amount to an importation into the country.
For commercial services, the WTO creates a closed list of 12 sectors and 160 sub-sectors that fall within the category. This is important because the classification of all digital trade as services would have been easier had it been open-ended. Even for financial services listed, their trade is compounded by sector specific regulations that require financial technology companies to comply with licensing requirements, KYC regulations, including the high financial thresholds to procure these licenses. As a result, digital service providers would prefer to describe their services as a good but would again be faced with the hurdle of proofing there was an actual entering of the product into the country’s territory. It is therefore important for there to be a clear definition of digital products’ classification as without it the path for digital products to enter other markets may be obfuscated and missing in trade statistics. The lack of definition could contribute to higher costs of digital products and may exclude them from regional and continental regulatory initiatives for regulatory cooperation and market access.
Mr Davidson Oturu presented on ‘Fintech and Digital Markets in Africa: Shaping the Future’ based on his book ‘FinTech Law and Policy in Nigeria’. He defines fintech to mean “the integration of technology into offerings by financial services companies to improve their use of financial services.” These financial services include, payment services, lending platforms, wealth management, and digital banking, amongst others. He explains the critical role of fintechs as drivers of innovation, invariably causing a disruption to traditional financial services. In addition, fintechs increase accessibility to financial services, improving customer experience, enhancing efficiency, and promoting transparency in the financial sector with the adoption of technologies like the blockchian. The role of fintechs in Africa is particularly important because of the pressing need for financial inclusion and capital. In terms of African trends, the continent has witnessed increased investment in recent years – from 2020. In 2022, this went up to $6.5 billion, although there was a drop in 2023. The growth of fintechs have also been propelled by successful partnerships and collaborations, as witnessed in the case of Paystack that was acquired by Stripe for $200 million.
Mr Oturu highlighted some of the major challenges impeding the progress of fintechs in Africa, amongst which include the fragmentation and inconsistency of the legislative framework in some African countries. Hence, there is a need for clear regulatory frameworks, as ineffective regulatory frameworks could potentially hinder investment and slowdown the growth of fintechs as they navigate compliance with varying regulations. Blockchain technology, to Mr Oturu, is the future of fintech in Africa. By offering a decentralised solution, it will enhance security, transparency, and trust in financial transactions. Bitpesa is one of the fintechs in Africa currently using blockchain to deliver its financial services, which enables faster and cheaper cross-border transactions.
The Roundtable ended with a Q&A session moderated by Dr Eddy Wifa and a Conversation with Mr Oturu on his career trajectory.
