Digital Economy

Globalisation and digitalisation of the economy has radicalised tax administration and commerce in Africa. While there is still significant room for growth, there has been a paradigm shift in Africa’s development policy landscape over the past three decades. Economic liberalisation measures aimed at opening up the continent to global market forces and attracting foreign direct investment have significantly replaced state intervention and public ownership in most African countries.1 There is a race amongst governments in the continent to optimise and harness the vast tax potential of both the digital economy and the emerging digital finance market involving trading in cryptocurrencies, Non-Fungible Tokens (“NFTs”), and other digital assets. They aim to embrace the regulatory complexities of both the digital economy and the emerging digital finance market with a view to making their countries fit for the digital age and to building a future-ready economy that works for the advancement of their people. However, the rise of globalisation and digitalisation of the economy, including the economic liberalisation that followed, has (amongst other factors) allowed tax and commercially related Illicit Financial Flows (“IFFs”) to thrive in Africa. IFFs from Africa are said to have assumed crisis proportions in recent times.3 Global Financial Integrity (2010) reportedly estimates IFFs from Africa between 1970 and 2008 alone at more than U$1 trillion, an amount that dwarfs the combined inflows of developmental assistance and foreign direct investments into the continent over the same period.4 Nigeria is also reported to have led other resource-rich African economies with this enormous outflow, put at US$217.7 billion, or 30.5% of the total IFFs from Africa within the relevant period.5 Africa is currently estimated to be losing more than US$50 billion to US$86.63 billion annually in IFFs.6

April 2, 2025

 

Please join us for this virtual conversation on April 6, 2024.

Registration link here.

Guest Speakers:

Lori Wallach, Director, Rethink Trade Program at the American Economic Liberties Project

Daniel Rangel, Research Director, Rethink Trade Program at the American Economic Liberties Project

This commentary highlights the prospects and challenges of a UN framework tax convention for developing economies and makes recommendations for mitigating risks. It argues that while the proposed UN framework tax convention may provide a broader forum for increased conversations between developed and developing countries on international cooperation in tax matters, it may not be the magic wand of equal participation in global tax policy formulation hoped for by developing countries. Nevertheless, the adoption of the UN tax resolution is indeed a very significant development in the international tax law and policy space that will form the basis of very engaging conversations in the coming years.

Digital solidarity and the sharing economy may seem like natural companions. To be sure, the sharing economy with its melding of community and commerce has the potential to be a key contributor to digital solidarity in developing economies. Both concepts revolve around the idea of collaboration, sharing resources and funds, community-building, the network effect, increasing trust between strangers, and the leveraging of digital technologies for the greater good. In this blog post, we consider how the sharing economy can contribute to digital solidarity in a developing economy; the barriers to the sharing economy doing so; and if unchecked how it can distort an economy. On that basis, we seek to propose a tentative legal policy for developing economies.

The fourth Industrial Revolution (4IR) is marked by an intensive digitalisation process. Within the process, digital data (physical information converted into digital) and digital technologies restructure how things are done and values are created. Various initiatives and strategies from the very recent AU Data Policy Framework to the Africa Digital Transformation Strategy (ADTS), the Smart Africa Manifesto and the E-Commerce Protocol of the African Continental Free Trade Area (AfCFTA), which is still under discussion, are intended to galvanize such processes. The regulatory disparity, coupled with the path-dependent asymmetric relationship between actors shapes the degree of leverage they might have over the operation and outcome of such connectivity.

This Workshop, hosted by the Competence Center for African Research (CCAR), University of St.Gallen jointly with the Afronomicslaw.org, seeks to examine the ongoing effort towards digital transformation, and particularly E-Commerce.

The News and Events published every week include conferences, major developments in the field of International Economic Law in Africa at the national, sub-regional and regional levels as well as relevant case law.

The News and Events published every week include conferences, major developments in the field of International Economic Law in Africa at the national, sub-regional and regional levels as well as relevant case law.

The unrestricted movement of data is a key enabler of the digital economy. However, the development of data protection and data localisation policies is becoming one major area of concern for international trade and investment. Among the mechanisms for protecting individuals is data localisation. This requires that data or a copy thereof (both personal and non-personal) should only be stored and processed locally and should not be exported for processing. The import of this, for instance, is that all data generated within Nigeria must be confined to the boundaries of Nigeria, effectively restricting the flow of data. While localisation of data has significant economic and social benefits, it is also associated with several unintended (negative) consequences, especially from an economic perspective. This is especially true for developing countries like Nigeria that is moving towards greater data localisation with several policies skewed in that direction. This contribution briefly examines the implications of Nigeria’s increasing move towards data localisation on its regional obligations for the promotion of free trade in Africa.

A holistic and collaborative approach to data protection and inclusive economic growth is capable of spurring sustainable development, and reducing new patterns of inequalities occurring within South Africa and between South Africa and other nations in the context of the digital economy.