African Ministers of Finance have said that deeper smartphone penetration on the continent will facilitate the engagement of the private sector in manufacturing, retail applications and service development. This was according to a statement released to the media at the end of the two-day Ministerial Segment of the UN Economic Commission for Africa’s (ECA) flagship Conference of Ministers, in Marrakech, Morocco. The ministers noted that smartphone penetration rose from 37 per cent in 2017 to 44 per cent in 2018 and is projected to increase to 51 percent in 2019. The Ministerial Segment of the ECA flagship Conference of Ministers, the most important gathering of policy makers and experts, started Monday, with the digital transformation of the continent high on the agenda. The theme for this year’s Conference of Ministers was: “Fiscal policy, trade and the private sector in the digital era: a strategy for Africa.” Earlier, last week, experts had at length covered various pertinent issues. The ECA Executive Secretary, Vera Songwe, noted that Africa was actually taking advantage of the digital era “but we are not taking advantage at the scale at which we would really like to take advantage.” African youth, she said, could be the most innovative on the planet today “and we need to ensure that we give them the space to be able to be more creative and create more value for the entire continent.” Discussions throughout the March 20-26 conference, it is hoped, will assist the continent to deliver on the goals of Agenda 2063 and meet the deadline for the United Nations 2030 Agenda. The conference, among others, saw the launch of the 2019 Economic Report on Africa which provides updates on social and economic development trends on the continent. In Marrakech, discussions on Fintech and digitilisation were also prominent all the week. Meanwhile, at the end, the ministers further acknowledged that while digitisation provides numerous new opportunities for streamlining and improving relations with taxpayers and harnessing efficiency gains, it has also given rise to a number of emerging threats and challenges. They admitted that limited internet access in Africa continues to impede the development of digitisation in economic and social sectors. Affected sectors, they elaborated, include e-commerce, e-health and e-governance, which are constrained by high transaction costs, and limited access to international markets, among others. The ministers noted that governments need to design and improve innovative digital mechanisms that facilitate revenue collection and increase the efficiency of tax administration. This can be done by; it is noted, promoting the use of online platforms for self-reporting by tax payers. Another approach is the use of digital mechanisms to record relevant data on transactions and the identity of tax payers. The digital economy was estimated by the World Bank to be worth $11 trillion in 2016, equivalent to 15.5 per cent of global GDP. The latest economic report on Africa indicates that between June 2014, and September 2017, more thann 200 foreign entities producing digital services registered in South Africa and paid taxes of about US$140 million. A chapter on tax administration says African countries have made extensive efforts to improve the effectiveness and efficiency of tax administration. “These efforts need to be sustained and strengthened, especially in promoting tax compliance.” So far, 18 African countries have introduced electronic tax filing and payment systems. Rwanda, as reported, was able to boost tax revenue by 6 per cent through such measures, suggesting the large scope for revenue gains in countries that have not yet done so. The digital economy is expected to account for 25 per cent of global GDP in less than a decade. Senegal set a target of generating 10 per cent of its GDP from the digital economy by 2025. Digital trade in Africa is reportedly growing at an estimated annual rate of 40 per cent. It is expected to grow to more than $300 billion per year by 2025. Globally, digital trade is worth over $11.5 trillion, and is set to rise to more than $23 trillion by 2025. editorial@newtimesrwanda.com
