Introduction and Background

This report has been prepared by Prachi Agarwal (Overseas Development Institute), Sand Mba Kalu (Africa International Trade & Commerce Research), and Alberto Lemma (Overseas Development Institute). This report examines the impact of the African Continental Free Trade Area (AfCFTA) Protocol on Digital Trade in Nigeria. The study aims to support the AfCFTA Secretariat and the Government of Nigeria in implementing the Protocol to establish a regulatory framework conducive to digital trade within the African continent. The report highlights the transformative potential of digital technologies in driving economic growth and facilitating trade, emphasizing the importance of addressing challenges and seizing opportunities to ensure digital transformation becomes a driver of inclusive and sustainable development across Africa.

Nigeria’s Digital Economy

Nigeria has emerged as one of Africa’s most dynamic and promising destinations for digital investment. The country’s digital economy has grown substantially over the past two decades, primarily due to reforms in the telecommunications and financial sectors. This growth has been marked by a significant increase in internet users, which rose from 97 million in 2017 to 122 million by January 2023. This increase has fostered the growth of digital trade by providing greater access to online platforms and services, boosting investments in digital infrastructure, and creating a vibrant digital entrepreneurship ecosystem.

The digital economy in Nigeria is multifaceted and cross-sectoral, encompassing sectors such as e-commerce, fintech, digital payments, telecommunications, software development, and digital content creation. Major cities like Lagos, Abuja, and Port Harcourt are becoming hubs of innovation, driven by start-ups and tech hubs. Multinational tech giants are also increasingly viewing Nigeria as a strategic market for expansion and investment.

Economic Indicators and Digital Trade Ecosystem

The report highlights the size and importance of Nigeria’s digital trade ecosystem, noting its rapid development and significant economic contributions. The Information and Communication Technology (ICT) sector has become a crucial part of Nigeria’s economy, contributing to GDP growth and productivity. The sector has also seen increased international trade in digitally deliverable services, despite facing several barriers.

Digital Infrastructure and Trade Barriers

Nigeria has made progress in developing its digital infrastructure, but challenges remain. Key barriers to digital trade include inadequate legal and regulatory frameworks, limited interoperability of systems, and insufficient digital literacy among the population. The country has implemented some measures for cross-border paperless trade, such as laws supporting electronic transactions and the electronic exchange of certain certificates. However, gaps remain in areas like the electronic exchange of customs declarations and certificates of origin.

Results from Stakeholder Consultations

The report presents the results from stakeholder consultations, which were conducted to gather insights from various stakeholders in Nigeria. The consultations focused on digital infrastructure, stakeholder mapping of the digital trade ecosystem, drivers of the digital economy, and barriers to digital trade. Key findings include:

• Stakeholders emphasized the need for high-speed internet and reliable infrastructure to support digital trade.
• The study mapped the various stakeholders involved in the digital trade ecosystem, highlighting the importance of inter-ministerial collaboration and regulatory alignment.
• Stakeholders identified fintech, e-commerce, digital services, and the gig economy as key drivers of the digital economy.
• The report highlighted cybersecurity threats, regulatory alignment issues, and digital literacy gaps as significant barriers to digital trade.

Economic Impact of the AfCFTA

The report estimates the potential economic impacts of the AfCFTA Protocol on Nigeria’s economy. Key findings include:

• The study projects that the Protocol could significantly boost Nigeria’s GDP, with estimates suggesting an increase of approximately 11.7% to 12.8% above baseline figures.
• The report forecasts substantial job creation, with potential increases ranging from about 15.4% to a remarkable 40.9%.
• Nigeria’s exports are expected to grow substantially, with estimates suggesting an increase of 16.9% to 59.8% over current levels.

Policy Implications

The report outlines several policy implications for enhancing the implementation of the AfCFTA Protocol in Nigeria. Key recommendations include:

• The study suggests that a collaborative process involving all relevant stakeholders is necessary to develop a comprehensive digital trade policy.
• The report emphasizes the importance of inter-ministerial collaboration to ensure effective implementation of the Protocol.
• The study recommends aligning the domestic regulatory environment with international best practices to enhance trust and data management.
• The report suggests expediting the establishment of relevant national digital laws to enhance the level of internationalization of the Protocol.
• The study recommends creating an environment conducive to innovation and attracting investments in innovative enterprises.
• The report suggests establishing specific regulations on consumer protection in the digital economy.
• The study recommends increasing transparency in the rules and regulations governing e-commerce.
• The report suggests encouraging businesses to use digital platforms for trade through capacity-building and monitoring programs.
• The study recommends prioritizing female empowerment under the AfCFTA Protocol by encouraging the participation of women entrepreneurs in digital trade and providing training.

Conclusion

The report concludes that Nigeria has a unique opportunity to leverage the AfCFTA Protocol on Digital Trade to drive economic growth and development. By addressing existing barriers and implementing the recommended policies, Nigeria can create a more inclusive and resilient digital economy that benefits all stakeholders. The successful implementation of the protocol will require strong government commitment, effective stakeholder participation, and continued investment in digital infrastructure and skills development.

In summary, the AfCFTA Protocol on Digital Trade represents a transformative opportunity for Nigeria. By embracing digital technologies and creating a conducive regulatory environment, Nigeria can enhance its global market presence, foster inclusive growth, and ensure that digital transformation becomes a driver of sustainable development across Africa.

Download the Full Report Here