[Column] Hans van Linschoten: AfCFTA and what it means for cloud in Africa
After years of waiting, the African Continental Free Trade Area Agreement (AfCFTA) finally came into force. The objective of AfCFTA is to create a single continental market for goods and services, with free movement of business persons and investments.
This good news comes in handy for tech and cloud companies in Africa. I mean, the continent just became the world’s largest free trade area. 55 countries coming together to become a single market of 1.2 billion people with a combined GDP of $2.5 trillion is huge!
According to the African Union (AU), this move is going to expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation and instruments across the RECs and across Africa in general.
The AfCFTA is also expected to enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources.
But what opportunities does AfCFTA present for African tech, especially when it comes to adoption of cloud services? Well, the continent is seeing a huge population growth which has led to the increased consumer spending which has resulted in big demand for 24/7 service.
The much-talked-about leapfrogging effect in areas such as telecommunications has helped the continent develop at a very fast pace, which has led to African companies take advantage of cloud technology to enhance the running of their business hence saving on infrastructure investment. E-commerce, for example, has not only helped jump-start small businesses but also helped large companies enter a market full of energized consumers. Online buying itch is spreading steadily on the continent. In fact, according to a report by Statista, e-commerce in Africa was valued at $16.5 billion in 2017. Another report by the consulting firm McKinsey shows that this value could well go up to $75 billion by 2025 contributing massively to the continents GDP.
Tech hubs across the continent are fostering innovation and are contributing greatly to the growth of Africa’s technology ecosystems. The continent currently has 618 active tech hubs all of which using cloud services.
With AfCFTA now in place, this number will significantly increase, more local cloud services will be exported to different countries without worrying about any trade barriers or even issues like data sovereignty. Local cloud services will give businesses a regulatory advantage through local capacity and presence within the continent. This also means that the African consumer will have a variety of choices for services, it will also open up opportunities for cloud and tech hubs expansion to and/or in different countries. It will improve latency, an answer to the ever-growing latency problem for African companies as a result of centralizing applications into global cloud infrastructures.
As mentioned above, there is significant potential in the now growing African cloud market. With an estimated $2 billion being spent on cloud this year, and with all cloud-related businesses happening in Africa, businesses can highly benefit from taking advantage of this AfCFTA agreement and this is where companies like AfriQloud will come in.
At AfriQloud, we provide our private and public sector customers with an innovative and secure distributed edge cloud service. By taking advantage of this agreement, we will definitely have a wider scope in terms of service expansion and delivery.
AfCFTA is going to bring together partners with complementary interests and strength. This will permit both existing and new companies to harness cloud technology more efficiently, with the expectation of creating higher standards of operations in the different countries they operate in. African tech companies should, therefore, maximize on this new opportunity.
AfCFTA also has the potential to shift Africa from being an outside cloud-dependent continent to becoming an African cloud-dependent continent. African developers and organizations should see this as an opportunity to tap into local cloud solutions to ensure they don’t miss out on the benefits of cloud.
This column a contribution to [Africa CEO Forum] What are the opportunities that AfCFTA brings for business?