Edson Baraukwa | Africa Guardian
Wamkele Mene, Secretary-General of the African Continental Free Trade Area (AfCFTA), has called for greater access to financing and investments in digital public infrastructure to empower Africa’s vibrant youth and small and medium-sized enterprises (SMEs). Speaking at the World Economic Forum (WEF) on January 22, Mene highlighted the critical role of Africa’s digital economy in fostering intra-continental trade and solving daily challenges, such as payment systems.
During the session themed “Collaboration for the Intelligent Age,” Mene said, “Africa’s digital economy is a vital component of intra-Africa trade. It tackles fundamental issues like payments, which impact all of us.” He also noted the paradox that, while direct flights between African nations have become more accessible, sending money remains a significant challenge due to fragmented payment systems.
The Digital Trade Protocol: A Game-Changer
Mene emphasized that the AfCFTA Protocol on Digital Trade aims to address such challenges by fostering emerging technologies, supporting SMEs, and encouraging investments in digital infrastructure. This comprehensive framework, which spans 11 sections, covers areas including market access, data governance, business and consumer trust, inclusion in digital trade, and transparency in government regulations.
“The largest contributors to Africa’s GDP are SMEs,” Mene explained. “Yet, the cost of trading across borders remains disproportionately high for them. While large corporations can navigate markets with ease, SMEs need affordable trade finance to thrive.”
He called for collaboration with institutions such as the Africa Finance Corporation (AFC), Afreximbank, and the African Development Bank to mobilize resources and reduce financing costs.
A Vision for 2040: Africa’s Digital Infrastructure Needs
Mene underscored the need for investment in Africa’s digital economy, predicting that the continent will require 400 data centers by 2040 to support its growth. This would not only enhance trade but also create significant job opportunities for young Africans.
Samaila Zubairu, CEO of the Africa Finance Corporation, echoed this sentiment, emphasizing the importance of transforming Africa’s primary economies by adding value to raw materials, creating quality jobs, and fostering innovation. “We need to process what we produce locally and create opportunities for youth that ensure quality wages,” Zubairu said.
Addressing Barriers to Investment
However, the high cost of lending in Africa remains a challenge. According to the International Monetary Fund, private lending rates in Africa average 25%, compared to just 9% in Southeast Asia. Leila Fourie, CEO of the Johannesburg Stock Exchange (JSE), pointed out that Africa’s sovereign credit ratings often overestimate risks, discouraging external investment.
“Perceptions of risk and policy uncertainty deter investors, even when the actual default rates are lower than expected,” Fourie said. She emphasized the need for improved sovereign ratings and policy clarity to attract capital and stimulate economic growth.
The Path Ahead
As Africa prepares for the final ratification of the digital trade protocol by heads of state in February, Mene remains optimistic about the continent’s potential. By addressing barriers to trade, investing in digital infrastructure, and supporting SMEs, Africa could unlock its digital trade potential and drive sustainable economic growth.
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