LocationsDigital services are still largely uncodified in international trade law and related policy and administrative systems.
From barricades to bridges: Recalibrating African regulatory systems to enable mobility of African digital services and their providers
February 26, 2025
UNDP WACA
Digitally delivered services are the fastest growing segment of international trade. Multidimensional in character, examples include software delivered digitally (such as payments processing and virtual learning programmes), marketplace services provided by digital platforms, digital content (such as music, videos and games) and professional services (such as medical consultations delivered through digital platforms).
Between 2005 and 2022, global exports of digitally delivered services grew at 8.1 percent annually, in contrast to both goods exports (5.6 percent) and traditional services (4.2 percent). In 2023, global exports of digitally delivered services reached $4.2 trillion, with Africa accounting for $36 billion of exports and $55 billion of imports. Nearly all of the digitally delivered services exported from Africa are traded with other regions, with only 5 percent traded within the continent.
Source: World Trade Organization, Digitally delivered services trade dataset webpage.
Source: World Trade Organization, Digitally delivered services trade dataset webpage..
The flow of digital services and the mobility of their providers is an important ambition articulated in African legal and strategy instruments, especially the Protocol on Digital Trade of the African Continental Free Trade Area (AfCFTA) and the African Union Digital Transformation Strategy (2020-2030). Also, some countries are adopting start-up acts to become hubs for providers of digital services. However, digital services and their providers can still face sturdy challenges of legal ambiguity and conflict of laws at economic borders.
At the point of entering new markets, the challenge of legal ambiguity manifests in the absence of robust definitions of digital services in trade and investment agreements and many national regulatory systems. Digital services are still largely uncodified in international trade law and related policy and administrative systems. This situation persists in part because liberalization of ‘traditional’ services trade is organized into 12 sectors, based on a services sectoral classification list used during the negotiations of the now 30-year-old General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO) that does not explicitly name digital services. This GATS categorization informs the AfCFTA and many other trade agreements.
Under trade agreements, countries state which traditional services may be digitally imported into their national economies. Also, they may indicate conditions and prerequisites for the import of these services, such as licensing in their home countries. However, as digital services are not present within the standard categorizations of services, they may not fully benefit from trade agreements.
While more recent trade agreements include chapters on digital trade, practice is for trade agreements to cover ‘digital products,’ without clarifying their nature and characteristics. This ambiguity is partly caused by the pending question at WTO level of whether digital products are services, or both goods and services.
| Trade Agreement | Definition of Digital Product | State Parties |
| Comprehensive and Progressive Agreement for Trans-Pacific Partnership Article 14(1) | “Digital product” means a computer programme, text, video, image, sound recording or other product that is digitally encoded, produced for commercial sale or distribution, and that can be transmitted electronically.” (Excludes digitized financial instruments/money.) (Includes a statement that this definition doesn't reflect a view on whether digital products are goods or services.) | Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United Kingdom and Vietnam |
Australia – Singapore Digital Economy Agreement Article 14(1)(g) | “Digital product” means a computer programme, text, video, image, sound recording or other product that is digitally encoded, produced for commercial sale or distribution, and that can be transmitted electronically. (Excludes digitized financial instruments/money.) (Includes a statement that this definition doesn't reflect a view on whether digital products are goods or services.) | Australia, Singapore |
AfCFTA Protocol on Digital Trade Article 1(h) | “Digital product” means an electronic programme, text, video, image, sound recording, or any other product that is digitally encoded, that is produced for commercial sale or distribution, and that can be transmitted electronically except for a digitised representation of a financial instrument, including money
(Includes a statement that this definition doesn't reflect a view on whether digital products are goods or services.) | African Union member States |
Source: Author.
Legal ambiguity can impede the expansion of digital services and their providers within Africa. To illustrate, an African financial technology (FinTech) firm expanding into a new country may rely on the commitment made by AfCFTA State Parties within the AfCFTA Protocol on Digital Trade not to discriminate against digital products originating in other African countries. However, as this Protocol does not define digital services, the FinTech will likely rely on market entry rules derived from the AfCFTA Protocol on Trade in Services. Since services liberalization under the AfCFTA focuses on ‘traditional’ services categories derived from the global GATS benchmark, a FinTech firm might be categorized under the ‘other services’ category by its home and destination countries. At the point of market entry, individual countries will look to their regulatory systems to determine access terms and treatment. As a result, the FinTech could be categorized as a payments service provider in one country and a bank in another country, with different requirements to be fulfilled for either category. In a third country without a regulatory framework for FinTechs, market entry rules might not exist.
A related challenge is that conflicts of laws between regional commitments and national regulation can obfuscate market entry terms for digital services and their providers. For example, as part of its commitments under the AfCFTA, a country might indicate that certain services can be digitally traded. However, the country’s sector-specific regulation might require providers of digital services to maintain economic presence in the form of a registered and licensed corporate entity and satisfy specific regulatory obligations. Countries may rely on the ‘Right to Regulate’ enshrined within the AfCFTA Protocol on Services to assert their national rules are superior to the broad commitments made at regional level. In such situations in which regulatory systems are contradictory, or when rules are applied in an inconsistent manner, providers of digital services may find their operations labelled as illegal despite operating in good faith.
There is an urgent need to classify or categorize digital services operating in Africa and then articulate the corresponding preferential treatment available under AfCFTA.
Addressing these frictions requires concerted national level action and regional regulatory cooperation. There is an urgent need to classify or categorize digital services operating in Africa and then articulate the corresponding preferential treatment available under the AfCFTA. Collaboration among providers of digital services, technology hubs, accelerators, investors and governments is required to articulate the various types of operational digital services. Essentially, catalogues and categorization of digital services should emerge at national and regional levels. Thereafter, the catalogues will enable the integration of digital services into national business registration systems and sector-specific regulatory architecture.
Countries will also need to undertake deliberate mechanisms to include digital services in the liberalization of their services sectors under AfCFTA. Twenty-four countries have already made regional commitments that remove the barriers to African service providers in the five AfCFTA priority sectors of business services, communication services, financial services, transport and tourism. These countries may choose to update their regional commitments with clear and specific market access terms for digital services. Other countries still in the process of finalizing regional commitments could consider the inclusion of digital services. While the principle of ‘technology neutrality' is not explicitly mentioned in the AfCFTA Protocols on Services and Digital Trade, adopting this approach in negotiations for the additional seven services sectors would enable trade liberalization and regulatory measures to equally benefit both traditional and digital providers of services.
In addition, the scope of ongoing national regulatory audits could be expanded to consider the barriers to the trade of digital services and the mobility of their providers. This will incorporate digital services into the ambit of regulatory reforms ongoing for implementation of the AfCFTA. More broadly, digital services will benefit from being integrated as a standalone category in measurements of intra-African trade and investment.
Beyond the AfCFTA, bilateral and regional mechanisms for mutual recognition of licenses and passporting can enable the trade and mobility of digital services. Ghana and Rwanda recently announced efforts towards a passporting scheme for FinTechs. Governments and industry groups can advance similar arrangements for different sectors and countries. Regional blocs also have an opportunity to consolidate more countries into such mutual recognition schemes.
Finally, addressing regulatory measures is important to enable the regional and international mobility of African providers of digital services. There is an opportunity for the African continent to explore and negotiate access for digital services to global markets through the anticipated negotiations for digital trade at the multilateral (WTO) and plurilateral levels (Joint Statement Initiative). Importantly, the AfCFTA Protocol on Digital Trade provides the continent with the legal basis to engage the rest of the world in a coordinated manner. However, for this Protocol to serve Africa’s interests, countries will need to make it legally actionable through speedy ratification. In addition, they will need to take concrete action to map and articulate their specific interests and ambitions for digital services. Regional commitments and national regulation need to align to position African digital services for scale through seamless systems for trade and mobility.
Author: Ify Ogo is a Regional Specialist on the African Continental Free Trade Area (AfCFTA) at the United Nations Development Programme (UNDP) Regional Service Centre for Africa (RSCA). For more information, contact: Ify.ogo@undp.org.