BY DENNIS MUNENE
Digital economy is emerging as a key driver of global economic growth.
This is what a recent report unveiled in Nairobi by the China-Africa Economic and Trade Research Institute and the Shenzhen Transsion Holdings Co., Ltd. Big Data and AI Laboratory, in partnership with the Hunan Provincial Department of Commerce found.
Anchored on the theme of development of Africa’s digital economy and China-Africa digital economy cooperation, the African Digital Economy Development Index and China-Africa Digital Economy Cooperation Report (2024) is a tour de force of the China-Africa cooperation in the digital arena.
The release of the report came at a time China and Africa are implementing the outcomes of the Third Belt and Road Forum for International Cooperation, which President William Ruto attended in October 2023 in Beijing.
BRIDGING DIGITAL DIVIDE
China, Kenya, and other developing countries, jointly issued the Beijing Initiative on the Belt and Road International Digital Economy Cooperation whereby the participating countries reached consensus on 20 areas of collaboration. These included “increasing digital connectivity and building digital Silk Road” in terms of infrastructure, industrial transformation, digital capability, cooperation mechanisms and other areas.
Having made remarkable achievements in the development of its digital economy, China has now embarked on a mission to bridge the North-South digital divide and eradicate digital poverty, in Africa.
For China, the unbalanced development of the digital economy, especially in Africa, must not be overlooked. Thus, in creating an opportunities for Africa to achieve inclusive economic growth and digital transition, both civilizations at the eighth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) in Dakar, Senegal, in November 2021, jointly agreed to implement the “Digital Innovation Program”.
China committed to support Africa to undertake 10 digital economy projects, setting up centers for China-Africa cooperation in satellite remote-sensing applications, and supporting the development of China-Africa joint laboratories, partner institutes, and scientific and technological innovation cooperation bases.
Additionally, China is working with African countries to expand Silk Road e-commerce cooperation, hold online shopping festivals featuring quality African products and tourism e-commerce promotion activities, and launch a campaign to market 100 African stores and 1,000 African products on e-commerce platforms. This will be a gamechanger in boosting labor productivity, cultivating new markets and new industrial growth areas for Africa.
PAAPSS
Further, these action plans on enhancing digital innovation will not only transform Africa as a continent but also make it a global digital hub, especially with the implementation of the Africa Continental Free Trade Area- AfCFTA, currently viewed as one of the world’s largest free trade area with a market size of approximately 1.4 billion people.
One area for China-Africa cooperation within the AfCFTA is the implementation of the Pan-African Payment and Settlement System (PAPSS). As one of the five key instruments for the implementation of the AfCFTA, PAPSS aims to simplify payments across the continent.
As the digital economy and innovation continue to grow in Africa, PAPSS was successfully piloted in 2021 in the West Africa Monetary Zone involving Nigeria, Gambia, Guinea, Sierra Leone, and Liberia.
Eleven African central banks have already been incorporated into PAPSS, with Kenya playing host to the headquarters. Kenya being a pivotal country along the BRI and a key participant of PAPSS, will benefit from the Digital Silk Road projects such as fiber optic cable laying, and the establishement of the 5G base stations and data centers.
E-COMMERCE
For instance, in January 2022, China and Kenya signed an MoU on Enhancing Investment Cooperation in the Digital Economy. Additionally, China and Kenya in 2022 signed additional six MoUs and agreements covering infrastructure, trade, and other sectors with a focus on cooperation in big data, ICT, cybersecurity and e-governance.
As China aides Kenyan products to ‘go global’ through e-commerce, the establishment of Kilimall in 2014 as premier e-commerce platform offering e-trading, mobile payments and cross-border logistics has over 1,500 kilishops in Kenya. The platform has offered over 5,000 jobs in Kenya.
This notwithstanding, in 2015, Safaricom and Huawei launched the Huawei’s M-Pesa G2, increasing the user capacity from 15 million to over 20 million, enabling seamless scalability and enhancing the system’s speed and stability. Further, in January 2019, Safaricom and Huawei launched Fuliza, an adaptation of China’s Huabei for M-Pesa, which has attracted many Kenya’s to the platforms.
China is also fast-tracking the expansion of Internet access in remote areas in Kenya and across Africa to connect the last mile of the information network.
In forging a strategic comprehensive cooperation for sustainable development and mutual benefit, therefore, China and Kenya can leverage on their long-standing partnership, and continue strengthening the digital economy and e-commerce cooperation to ensure mutual benefit from each other’s expansive markets.
Dennis Munene is the Executive Director of the China-Africa Center at the Africa Policy Institute.
