Introduction

 

On the 30th of May 2019, African leaders in the African Union (UN) saw the need to facilitate industrialization, economic growth and prosperity in Africa. In order to accelerate this, the African Continental Free Trade Agreement (AfCFTA) entered into force. Estimates from the United Nations Economic Commission for Africa (UNECA, 2020) showed that the AfCFTA can raise intra-African trade by 52.3 per cent by reducing import tariffs, and that the removal of non-tariff barriers could double trade if .Businesses currently pay an average higher tariff of 6.1% when exporting within Africa than when exporting outside Africa. AfCFTA would eventually reduce intra-African trade tariffs, making it easier for African businesses to trade within the continent and cater to the rising African demand.The establishment of the AfCFTA aims to put together all 55 African Union Member States, representing a population of more than 1.2 billion people, with a rising middle class, and a total gross domestic product (GDP) of US$ 2.5 trillion. In view of this, AfCFTA is creating a highly dynamic market with a projected 2.5 billion population by 2050. Merging the continent of Africa into one market hubpaves the way for greater opportunities for trading enterprises to support sustainable developmentgoals in the continent since AfCFTA envisages trade liberalization to actualize its goals.

 

However, to actualize the opportunities of trading enterprises to support sustainable development goals in Africa, there is need for vibrant logistics – transport and products distribution. The degree of growth in Africa logistics services may be a critical element to pave the way foritscountries to trade without many restrictions and at lower prices. An improved logistics services in general may be a significant step in shaping trade within the continent in the long run.The transport and distribution of goods and services makes international trade simpler and plays an important role in the local economy's growth and development. Logistics links the foreign economy to the domestic economy. The interconnectivity of different interdependent sectors of the domestic economy, Oil & gas, agriculture, manufacturing, tourism and mining among others, is strengthened through efficient transport and distribution systems.

 

Businesses in Africa may be concerned about the quality and efficiency of logistics services, as inadequate logistics infrastructures and operational processes can be a major barrier to Africa international trade integration. On the contrary, improved logistics related to trade, combined with a liberalized economic environment as envisaged by the AfCFTA, will increase the amount of trade, economies of scale and scope of distribution and development activities. It is against this background that there is need to make use of E-commerce for quality and efficient logistics servicesthat will facilitate trading between buyers and suppliers when the African Continental Free Trade Area (AfCFTA) agreement starts by January 1, 2020.In addition to enhancing cross-border trade, the business-to-business e-commerce platform can also efficiently provide businesses with quality goods from confirmed African suppliers at reduced average trading costs, based on AfCFTA regulations. Based on the AfCFTA rules, e-commerce would provide a marketplace for buyers and suppliers to be able to exchange and purchase high quality goods from the continent.

 

Digitalization of Natural Gas Trade

According to the US Energy Information Administration (2020), Natural gas derived from natural gas or crude oil wells is referred to as wet natural gas because it usually includes methane, propane, butanes, and pentanes and water vapor along with methane. Non-hydrocarbons such as sulfur, helium, nitrogen, hydrogen sulfide, and carbon dioxide can also be present in Wellhead natural gas, much of which must be separated from natural gas before it is sold to end users. Across industries, consumers expect increased engagement, personalization and speed. To facilitate the transportation and quick transaction of natural gas for free trade barrier as embedded in the AfCFTA policy there is need to also embark on the use of digital platform.

 

Through a vibrant digital payment platform, there is no need for natural gas sellers and buyers to see face to face before transaction is done. Digital technologies eventually allow greater profit margins in natural gas trade, enabling cost savings through intelligent maintenance, automation of workflows, enhanced jobs, and increased standardization and simplification of templates, techniques, and machinery. Digital platform implementation will promote greater sustainability of trade in natural gas and customer interaction by being connected to multiple digital platforms.

 

Protocols of AfCFTA and E-Commerce Market for Natural Gas Distribution

An agreement and three protocols on goods, services and the resolution of disputes form the Treaty establishing the AfCFTA. The protocols are in essence, the tools that outline the priorities, state the guiding principles and set out the modalities for trade liberalization in thematic areas.

 

E-commerce can aid the Article 7 of the AfCFTA protocol on trade in goods that obligates State Parties to progressively eliminate import duties or charges of equivalent effect on natural gas. This can be achieved by establishing a sophisticated digital platforms, as well as natural gas mobility, surveillance, connectivity and storage technologies, coupled with the ability to process and analyse gas data rapidly, enhance agility and support real-time decision making and implementation.  

 

E-commerce can help to actualize Article 3 of the AfCFTA protocol on trade in services states the objectives of liberalisation, which include the fostering of domestic and foreign investment, progressive liberalization of trade in services across the African continent on the basis of equity, balance and mutual benefit, by eliminating barriers to trade in services. This can be accomplished by creating a system of interrelated computing devices, mechanical and digital machines, objects, or people that are provided with unique identifiers and the ability to transfer data over a network without human to-human or human-to-computer interaction.

 

Article 13 protocol on the preferential treatment on goods originating in State Parties that will lead to schedules of tariff concessions from AfCFTA State Parties could be achieved by creating a digital platform that will shield non-state parties from products that are accorded preferential treatment.

 

Potential Threats to E-Commerce Natural Gas Market in Africa

In comparison to the products, services and dispute resolution protocols that combine elements of multilateral and regional agreements, there is no global e-commerce agreement to be used as a benchmark. This serves as a setback to E-Commerce in the Natural Gas Market in Africa.

 

Directly addressing the infrastructural challenges that affect cross-border e-commerce natural gas trade within Africa is beyond the scope of the e-commerce protocol.

 

In addition, there are numerous e-commerce outlets, including social media, marketplaces, software, websites and platforms run by companies or third parties. In the scope of e-commerce in the e-commerce protocol, these different types of channels and exchange would need to be accounted for.

 

Conclusion

In conclusion, the AfCFTA protocol will endorse the formulation of an African stance on e-commerce rules and potentially contribute to the actualization of the e-commerce goals already set out in the AU Digital Transformation Strategy. The AfCFTA e-commerce protocol will serve as an essential instrument for the digital protection of the consolidated African market for natural gas and prevent other structures that could theoretically hinder the agenda for liberalization and E-commerce market integration for natural gas trade in the continent.

Introduction

The Africa vision of the accelerated economic and industrial development was established by the Heads of State and Governments of the African Union in 2015 and is incorporated in the national planning framework of over 30 countries. In this case, faster economic expansion is accompanied by the full achievement of access to electricity and clean cooking, in line with Sustainable Development Goal. It is against this background that leaders in Africa reached an agreement to actualize the Sustainable Development Goal by fostering economic expansion through a stable energy supply in African countries. On 30th May 2019, the Agreement established the African Continental Free Trade Area (AfCFTA). The general objectives of AfCFTA include the creation of a single and liberalized market, free movement of capital goods and people, eliminate tariff and non-tariff barriers and many more. Trading under the AfCFTA Agreement was expected to begin on 1 July 2020, but due to the global pandemic of COVID-19, this date has been postponed till 1 January 2021.

The stated objectives of the AfCFTA will ensure equal resources distribution, both human and natural resources in the continent, especially in the sub-Saharan region where demand is high compared to North Africa. This is so because of the number of countries that made up the region. These countries include Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Central African Republic, Chad, Congo, Cote d'Ivoire, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Somalia, South Africa, United Republic of Tanzania, Togo, Uganda, Zaire, Zambia, Zimbabwe. As evidenced in figure 1 below, the most populous country and the biggest economy in Africa, Nigeria, is located in sub-Saharan Africa. Sub-Saharan Africa will therefore experience an increased demand for electricity and clean energy to meet their basic needs.

The region is endowed with dirty and clean energy; however, as the world is switching to cleaner energy, Natural gas to be specific, there is the need to transport clean energy from the endowed countries to the needy countries within sub-Saharan Africa. This will also help in actualizing the objective of the AfCFTA to foster economic expansion through a stable energy supply in not only in the region but to Africa as a whole. Natural Gas deposits have been discovered in 14 countries Sub-Saharan Africa, with Nigeria’s gas reserves accounting for 68 per cent of proven reserves. Several undeveloped fields in other parts of Africa account for 32 per cent of total gas resources. The gas producing countries are listed in table 1 below in accordance to the World Factbook (2020):

Table 1: Gas Producing Sub-Saharan Africa Countries World Factbook (2020)

Figure 2: Gas Producing Sub-Saharan Africa Countries

Source: World Factbook (2020)

In order to ensure equitable distribution of the gas resources, it is important to develop infrastructure for the importation of natural gas to support local demand in other sub-Saharan countries with no gas reserves. This will require sufficient investment in upstream natural gas infrastructure. With increased demand from household, commercial and industrial users, the lack of infrastructure is becoming a constraint. Extensive pipeline installations from collection, refining and storage facilities to end-user facilities are pivotal to steady market performance.

 

Some regional economic communities have done a great deal to liberalize trade with their neighbours, by permitting the free movement of people and building cross-border infrastructural links. An example of such regional initiatives/projects is the West African Gas Pipeline (WAGP). Nigeria, Benin, Togo and Ghana built the first regional pipeline in 1982 known as the WAGP. It is a natural gas pipeline to supply gas from Nigeria's Escravos region of Niger Delta area to Benin, Togo and Ghana.

The Trans- Saharan Gas pipeline initiative to run from Nigeria through Niger Republic to Algeria and Europe was the second attempt to build a regional gas pipeline infrastructure. However, this project was marred by Niger Delta Militant activities and high cost that was involved. While Africa's network of gas transportation infrastructure and services is still disjointed, the gas sector is showing signs of greater integration, particularly in the less endowed sub-Saharan Africa countries. The AfCFTA policy and framework should serve as a tool to establish a gas pipeline in the sub-Saharan region because of the potential benefits it holds.

 

Potential Benefit of Pipeline Infrastructure to Economic Development in Sub Saharan Africa

A well-structured gas pipeline network will ensure fast and reliable transportation of gas from the endowed countries to the needy countries. This will give quick access to clean energy for lighting, and power industrial machines for mass production of goods and services. Investors and entrepreneurs will grab the opportunity to increase their capacity to produce more quality goods and services, thereby leading to economic development in sub-Saharan Africa. Below are some of the potential benefits of pipeline infrastructure:

 

Increasing Economic Efficiency

There is a greater awareness of the role of pipeline infrastructure in socio-economic development. If countries endowed with natural gas in sub-Saharan Africa exploit it at daily maximum capacity and supply to other countries that are not endowed with natural gas, this will improve the Africa per capita income. The transition from traditional means of transport to modern gas pipeline infrastructure carries the greatest hope for millions of people in the sub-Saharan Africa countries for quick access at a lower cost.

 

Macro productivity

A sub-Saharan Africa-led approach to gas pipeline infrastructure development will help leverage private investment through expanded market size, allowing investors to reduce road transportation risks. In the longer-term, the interconnections of gas pipeline infrastructure will lower supply costs by replacing the traditional means of transporting gas in the region. This has a very important implication for the debt burden of many Africa economies that have been trading electricity across borders.

 

Increased Demand

Demand for natural gas in the region is expected to grow as the population increases every year. According to the Africa Energy Outlook (2019), Africa’s population is among the fastest-growing and youngest in the world. One-in-two people added to the world population between today and 2040 are set to be African, and the continent becomes the world’s most populous region by 2023, overtaking China and India. A regional approach to meeting the demand makes economic sense if this approach to gas pipeline construction to convey gas throughout the region is adopted.

 

Cost Efficiency

Sub-Saharan gas pipeline infrastructure cooperation and integration offer one of the most promising and cost-efficient options for the countries. Building gas pipeline infrastructure will keep the environment safety as well as social and economic benefits from more efficient use of resources.

 

Security of the Gas

Security of the gas supplied will be ensured with gas pipeline facilities in the region and gas flaring will be minimal and this will also enhance environmental quality.

It is the negative environmental “externalities” associated with energy supply and use but not energy itself that can lead to economic failures.

Conclusion

The vision and commitment of African leaders to the objectives and principles of economic cooperation led them to create the African Continental Free Trade Area (AfCFTA) as an instrument for fostering African economic development. This commitment aims to ensure barrier-free trade in relation to gas and pipeline facilities which envisages the need to establish gas pipeline infrastructure for quick-access and easy transportation of gas from the well-endowed countries to the needy countries in the sub-Saharan African countries. This increased demand will create a better job market as suppliers will need to build up their workforce. Increased income then results in additional demand of consumer goods and services, thus persuading a complete round of economic stimulus. This establishment can be achieved if the principles embodied in the AfCFTA are fully implemented. African leaders are therefore implored to fully implement the AfCFTA policies for speedy economic emancipation and growth in the Sub-Saharan region.