AfCFTA’s Mene roots for SME support to drive Africa’s digital trade

Young Africans’ cutting-edge spirit of innovation and the ability to create entrepreneurship through Africa’s digital economy should be empowered through access to finance and investment in digital public infrastructure, the Secretary General of African Continental Free Trade Area (AfCFTA), Wamkele Mene, said on Wednesday, January 22. Speaking at the World Economic Forum themed “Collaboration for the Intelligent Age,” he said: “Africa’s digital economy, we believe, is a very important aspect of overall intra-Africa trade. It addresses day-to-day challenges that all of us battle with, the issue of payment.” The 2025 Annual Meeting of the World Economic Forum (WEF), arguably the largest gathering of most influential political and business leaders from across the globe, kicked off on January 20, in Davos, Switzerland. Mene said that it is now easier to take a direct flight from one nation to another than sending money directly. He noted that there should be a seamless interoperable payment system that addresses the issue of unemployment, stating the AfCFTA Protocol on Digital Trade will harness the adoption of emerging technologies and inclusion of SMEs and attract investment in digital pubic infrastructure. The protocol on digital trade, a comprehensive framework designed to facilitate digital trade across Africa, contains 11 sections covering broad areas such as market access, facilitating digital trade, data governance, business and consumer trust, digital trade inclusion, emerging technologies, transparency on government regulation, and capacity building. “The largest contributors to Africa’s GDP are SMEs, yet, the cost of money to trade across borders is disproportionately high. The large corporations, big companies are okay, they can access markets overnight but the SMEs need support of trade finance.” He added that this is the gap that can be bridged by institutions like the Africa Finance Corporation, AfreximBank and African Development Bank to mobilize resources and improve the availability and affordability of trade finance. “We have to work together with development finance institutions and commercial banks to mobilize resources and reduce the cost of money for trade in Africa,” he said. Mene noted that by 2040, Africa will need about 400 data centres to drive the continent’s digital economy, an investment that means job creation for young people. ALSO READ: Digital technologies could unlock Africa's trade potential, says Ngirente The last instrument of the protocol on digital trade is set to be ratified by Heads of State in February. Samaila Zubairu, the CEO of Africa Finance Corporation, said that mobilizing capital for SMEs and young entrepreneurs is a chain of being intentional about transforming African primary economies to creating value addition for products and hence, creating jobs that will ultimately feed into the economy through savings and investments that would in return be managed to mobilize venture capital for SMEs. The Africa Finance Corporation is a pan-African Multilateral Development Financial Institution established in 2007 by sovereign African states to provide practical solutions to Africa's infrastructure deficit and challenging operating environment. He said: “We need to be intentional about stopping the export of raw materials, process whatever we have, create quality jobs that would provide quality wages for youth, providing them with opportunities for innovation.” He said that this can be coupled with capitalizing commercial banks by giving them a high bar of investment avenues, “if you don’t have domestic resources, there cannot be development.” According to International Monetary Fund’s data collected in 19 African countries, the average private lending rate is 25 percent, whereas in South East Asia it is around nine percent. Leila Fourie, the Group CEO of Johannesburg Stock Exchange (JSE) –the largest stock exchange in Africa, emphasized that the major contributor to the issue is the sovereign rating that tends to overestimate the risks relative to the actual default rate. “External investors' perception of a country will determine whether they invest in that country or not. Many times, if there is over indexing of the risks, lack of policy certainty, the investors won’t provide capital to grow the economy,” she added.

News

AfCFTA’s Mene roots for SME support to drive Africa’s digital trade