Between the 17^th and 19^th of September 2019, the 7^th annual International Conference on Single Window of the African Alliance for Electronic Commerce (AACE) was held in Yaoundé, the capital of Cameroon. Present were leading players in logistics and supply chains, and over 40 delegations for foreign countries including 18 African countries. 

The idea behind a single-window system is to improve the efficiency of international trade, in this case particularly the concept of intra-African trade across the region. In order to work properly, this would require a single entity or location where companies would submit all their documents such as customs declarations or permits for import and export. So, if a company in Kenya wished to export its goods to 12 other African countries, rather than going through 12 separate sets of regulations and multiple submission of documents, they would instead do it all through one single entity. 

A single market with a billion consumers

Africa has seen a lot of rapid economic development in recent years, much of that down to cooperation across the continent. Recent developments have included the African Continental Free Trade Area Agreement (AfCFTA) in March of 2018, which has committed to removing intra-regional tariffs on some 90% of goods. If this agreement is successful it will create a single market with in excess of a billion consumers and a total GDP of over US$3 trillion. It was an agreement that the continent needed badly; in 2017, African intra-region trade only accounted for 17% of exports. When compared to Asia (59%) and Europe (69%), it is clear that as a potential trade bloc, Africa was lagging behind and missing out on the many benefits that come with such high rates of ‘local’ trade. 

The September conference focused on two main aims; the growing potential of e-commerce across the continent, and optimizing the supply chains of landlocked countries with no port access. The latter of these is something that will need massive investment in infrastructure, particularly railways and roads. And we are seeing that investment already happening across Africa.

450 million African mobile users and 300 million more expected

But it is the e-commerce factor which is perhaps the most exciting as it needs a lot less in terms of total investment. In some ways, Africa has been able to leapfrog many developed nations in terms of developing e-commerce. With lower rates of banking and credit card use, there has been a need to develop innovative payment methods such as e-wallets which people can top up at local agents, giving them a balance on their mobile with which to purchase goods. And with generally widespread internet penetration across much of Africa, there are large numbers of new consumers coming online. With around 450 million mobile users currently and another 300 million expected to have access in the next 3 years or so, companies are recognizing the potential of this reservoir of consumers with disposable income. 

The concept of the single window is a natural step in the development of AfCFTA. These annual conferences aim to develop the single window concept following the guidelines already established by the World Trade Organisation (WTO) and the World Customs Organisation (WCO). While a continent-wide single window may be some years off, The African Alliance for e-Commerce hopes to establish national and regional ones as a stepping stone to a continental one. Many African countries are already cooperating on cross border trade already, with several trade zones already in operation. Of particular note is the East African Community (EAC) which comprises Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. It has shown the best progress as far as moving towards a common trade area is concerned and could serve as a template for the continent as a whole. 

A single window to reduce tax and to optimize the African potential

Developing single window systems will reduce tax and tariff burdens and make the movement of goods across borders far easier than the present. But there are still many barriers to successful implementation. The continuing conflict in some areas, low-level corruption at borders and customs points, and even the motives of individual countries may hamper a quick solution. But with the massive potential for businesses, there will be a continued push to establish an Africa-wide single window in the near future.

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With Africa being one of the fastest growing markets for consumer goods worldwide, global brands have increasingly focused their efforts on the continent’s vibrant economies. Two major factors are worth noting here; Household consumption in Africa has outpaced GDP growth, and GDP growth across Africa is consistently outperforming global averages.

Consumer expenditure in Africa has been growing at a compound rate of 3.9% since 2010, reaching a total of $1.4 trillion in 2015, with that figure expected to reach $2.5 trillion by 2030. (1)

The planned Continental Free Trade Area (CFTA) is also due to be implemented by 2030, and if successful, will offer a single continental market for consumer goods and services as well as free movement of investments and businesspeople. This opens the doors to a potential 1.7 billion customers (based on projected population by 2030). 

African consumers tend to be loyal

With such ambitious plans and rapid growth, cementing a place as a major brand across the continent is a priority, not only for global corporations but also for African brands. 

Research has shown (2) that African consumers tend to be loyal to their chosen brands but also discerning in their choice of brand. While currently most consumer activity in Africa tends to still happen in informal market settings, there is, and will continue to be, a shift towards more modern shopping settings, including shopping malls and e-commerce, two sectors which will offer good growth potential at several levels. 

African brands have been declining year on year

However, the latest Brand Africa 100 ratings in May – published every year by African Business Magazine – show a continuing worrying trend, at least as far as African businesses are concerned. From a high of 25% of the list in 2013/14, African brands have been declining year on year and are now at a low of 14% from 17% in 2017/18. Asian brands have also suffered, falling 10% from the previous year. US brands saw the largest growth, up 17% to 28%, while the dominant European brands rose 2.5% to 41%. 

As you would perhaps expect, the leading brands are global household names, with Nike, Adidas, Samsung, and Coca Cola all retaining positions in the top 4 from 2017/18. The highest ranked African business is South Africa’s MTN Telecoms at 8^th (down 2 positions from last year). The company operate in 21 African countries so far with more expansion planned, so their top 10 position should not only be safe but may improve again in future lists. 

Anbessa Shoe Share Company: the most impressive African performer

Ethiopia’s Anbessa Shoe Share Company, originally founded in the 1930s by an Italian expat, was the most impressive African performer. In the 2019 chart, it moved up 11 places to #12. As well as having around 65-70% of the Ethiopian shoe market, the company also exports to USA, EU, Middle East, Asia, and Africa.

There were only two new African names on this year’s list, South African retailer, Pick n Pay, who re-entered at #84, and Africa’s largest e-commerce firm. Jumia, who debuted at 74 after a successful launch on the New York Stock Market in April. 

With continued economic growth forecast as far ahead as 2030, African companies must now look at how they can compete with the global giants. 

(1) https://www.brookings.edu/wp-content/uploads/2018/12/Africas-consumer-market-potential.pdf

(2) Spivey L. et al. (2013) “Ten Things to Know About African Consumers: Capturing the Emerging Consumer Class,” Bcg.perspectives.

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