The digital platform, it said, will enable SMEs to expand their reach and explore growth opportunities in the AfCFTA, while ensuring seamless cross-border trading when the free trade deal takes off in 2021.
“We are exploring various digital-enabled platforms that aim at enhancing market access, trade connectivity of SMEs to new markets across the continent,” Secretary-General of the AfCFTA, Wamkele Mene told a gathering in Accra.
The portal will connect buyers and sellers, as well as service providers such as financial institutions across the free trade zone, thus, serving as an ecosystem of partners for SMEs to meet their financing and business needs in the new digital economy.
“We intend to launch this digital platform for trade for SMEs in time for the start of trading scheduled for January 2021,” Mr. Mene told Business24 in an interview.
SMEs account for about 90 percent of businesses and more than 50 percent of employment in Africa.
SME Development Programme
Digitising the buyer-supplier relationship is key to building robust supply chains, and fundamental to creating a continent-wide trade and investment network.
To achieve that, the AfCFTA Secretariat in collaboration with partners will roll out a vibrant SME Development Programme to help improve Africa’s weak supply chain and promote inclusive trade.
“The benefits of the AfCFTA are not guaranteed and will not happen by chance. The secretariat and the governments will have to ensure that supply-side constraints and other trade barriers are addressed,” Mr. Mene admonished in his remarks.
‘Affordable payment and settlement system’
A major hurdle to intra-African trade has been the high cost of foreign exchange transaction costs which curbs SMEs’ ability to trade across the continent.
The demand by suppliers for SMEs to make payments in USD due to currency volatility, couple with its scarce availability, put small enterprises at a disadvantage.
The World Economic Forum reports that SMEs in Africa pay 200 percent more than largescale companies to clear transactions through formal channels, and an average of 6 percent more in overseas bank transactions. These affect their margins and hinder SME growth and expansion on the continent.
To reduce the transaction cost on SMEs, the AfCFTA Secretariat is collaborating with the African Export-Import Bank for a continent-wide digital payment system to enable payments in local currencies.
“Without an efficient and affordable payment system, SMEs will continue to be constrained in accessing new markets under the AfCFTA. We are therefore working to ensure it is rolled as soon as possible,” Wamkele told Business24.
In 2019, the AfriEximbank unveiled the Pan-African Payment and Settlement System (PAPSS) to domesticate payment and settlement to cut high transaction costs and delays. The new system will save Africa US$5 billion in payment transactions per annum and help formalize a chunk of the estimated US$50 billion of informal intra-African trade.
Analysts say the success of the AfCFTA hinges on domestic solutions that will promote the use of local currencies. The African Union Commission. Read Full Story