One of the important protocols forming part of the set of agreements within the African continental free trade(AfCFTA) is the digital protocol.
this protocol has the very important task of defining the desired digital environment for digital trade within Africa. And by extent linking the African Continent to the rest of world.
In addition, the protocol aims to establish harmonized rules and common principles to enable and support a digital trade ecosystem across the African continent, but more importantly promoting Intra-African digital trade, through enhancing cooperation on digital matters among the state parties as well as establishing a predictable, secure and trusted digital market.
Some of the key provisions of the protocols include market access, treatment of digital products, facilitating digital trade, data governance and consumer trust.
Further, the digital trade protocol if ratified will certainly guarantees duty free digitally-delivered services known as DDS, especially the provisions of article 7 ensures this but makes the requirement subject to the satisfaction of rules of origin which is generally the case for goods trade in a free trade area.
BUT HOW RWANDA LEVERAGE DIGITAL TRADE?
The digitalization of the Rwandan economy creates both opportunities and challenges. And the fact that one of the emerging sector of Rwanda’s digital economy is the e-commerce. Today, we observe with satisfaction, that the e-commerce is actually taking off thanks to increasing demand for fast-moving consumer goods and entertainment electronics products (computing products and accessories, decoders, home theatres). E- Commerce main actors in Rwanda are mostly made of small and medium enterprises such as Kashia, Hehe, Vuba vuba, and Yego taxi deliver goods and services remotely to many. All of these e-commerce models of business and trade present new opportunities for entrepreneurship, innovation and job creation.
Furthermore, it’s worth to note that e-commerce is particularly well-suited for SMEs. This because the greatest strength of SMEs is their agility, their ability to adapt to circumstances swiftly and efficiently. Small businesses can make the necessary changes to deal with rapid changes in technology and shifting conditions without too much bureaucracy.
However, the vast majority of SMEs in the Rwanda digital economy are struggling and have not yet takes the full advantage of e-commerce opportunities because of various challenges as entrepreneurs cite often unreliable and costly power supply, lack of access to venture finance, limited logistics infrastructure, deficient transport, lack of reliable or costly ICT infrastructure, lack of ability and technical skills to properly use e-commerce, the digital divide and cultural preferences, limited purchasing power, finally insufficient or inconsistent laws and regulations.
In addition, Rwanda has ratified the African continental free trade area with a potential combined population of more than1.2billion and a GDP of more than US$ 2trillion[1]. More importantly, the continental free trade area opens market in regional blocs to which Rwanda does not belong such as the economic community of west African states (ECOWAS), The South African Development Community (SADC) and the Maghreb regions. Therefore, Rwanda participation to the AfCFTA represents an important opportunity to boost the country regional trade and attract greater foreign investment flows; both from within and outside the African continent. In addition, based on a study published by MINICOM[2]; the AfCFTA has the potential to lift 430000 Rwandans and the country aspire to become a middle-income nation by embracing digitalization and smart business transactions through the e-commerce. Amongst the measures the country enacted towards leveraging the benefits of the world’s digital economy as well as the intra-African digital trade. In addition, Rwanda has invested heavily in the establishment of digital infrastructure and ensured that the regulatory environment is conducive to the investment. One of the major achievement was the signing of the of three memorandum of understanding between the Rwandan Government through his Investment arm, the Rwanda development board and the Chinese giant of e-commerce Alibaba Group. Today, Rwandan goods are now available to over 500 million consumers in china, through Alibaba platform known as electronic world trade platform. This platform has indeed boosted Rwandan start-ups trade opportunities, particularly for the SME and this will encourage Rwandan startups to upscale their business operations. Since then the electronic world trade platform has been a game changer as it offered a direct access to the Chinese market, and this mean higher profits for Rwandan businesses.
QUID OF COMPETITION LAW AND CONSUMER PROTECTION POLICY?
In a free market, business should play a competitive game, and consumers should be the ultimate beneficiaries and digital markets are not a level playing field, but a competition between competitors with different backgrounds and capabilities to adapt to market dynamics or changes. In this context competition and consumer protection laws and policies therefore should promote competition, protect consumers’ rights, make the Rwandan digital market to work better, this include the participation of informed consumers.
Competition put businesses under constant pressure to offer the best quality range of goods and services at the best possible price (value for money). Consumer protection consist in providing information and rights awareness to consumers, enforcing rules against unfair and misleading commercial practices. Promoting product safety and integrates consumer’s interests across all the economic spectrum as this helps to harmonize the existing relationship between traders and consumers.
Overall, for Rwandan digital platforms to benefit from the opportunities offered by the AfCFTA digital trade protocol the government and competition authorities should ensure that services providers make the best use of digital market and these benefits are passed on to the consumers (UNCTAD,2019).
And it is important to note that one of the features of the digital economy, such as network effects also foster the concentration of very large companies. Further this creates scope for anti-competitive practices such as predatory pricing, which could hinder the development and growth of domestic start-ups and digital companies. Without safeguards to deal with anti-competitive practices, businesses and dominant foreign companies can abuse their market position. Especially big players such as Alibaba, Amazon and other tech giants, it’s Important to note that the abuse may take different forms, including predatory behaviour through eliminating local competition, price fixing cartels and other market sharing agreements. Such anti-competitive practices as negative effects on customers as it increases prices and reduce choice and deny consumers the benefits of a free market.
CONCLUSION:
In order for Rwanda leveraging the potentials of the Protocol of digital trade under the AfCFTA; Trade authorities needs a clear understanding of entire value chain, especially of players, their business models and therefore the competitiveness of the markets. The rise of the e-commerce and the digital economy will pose many challenges for many African Countries-Rwanda includes, but with the right policies, it could be an opportunity to leap-frog development.
[1] UNCTAD, 2018, see Annex VII
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