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Ghana ranks 5th among top ten African economies in UNCTAD E-commerce Index 2020

February 27, 2021
Stephen M.Cby Stephen M.C
in Economy, Sub Top Stories, Sub Top Stories2
0
Ghana is fast becoming a regional hub for e-commerce and digital services as evidenced by the country’s position (5th) among the top ten African economies, and above its West African peers Nigeria and Senegal in the 2020 UNCTAD e-commerce index. Although this expansion would have otherwise been gradual, the spread of the COVID-19 virus across the country and the associated containment measures such as lockdowns and other restrictions accelerated this process. This would cause many businesses to digitize or risk collapsing as well as force consumers to explore purchases online. Furthermore, demand for digital services including online shopping, digital applications for remote work and on-line entertainment, inter alia, surged during the imposition of stay-at-home orders. And these changes have synced with people’s notion of a new normal environment for the next couple of years. Digital has come to stay! With majority of Ghanaian businesses within the category of Micro, Medium and Small Scale Enterprises (MSMEs), a rapid expansion of Ghana’s digital economy can improve the economic viability of these businesses. An increased use of digital technologies can enable MSMEs reduce costs and market goods and services to a broader range of potential buyers. Besides, e-commerce platforms serves to help businesses find potential business regardless of physical location. Still, compared with traditional retail, information and communication costs may be less expensive for MSMEs using digital technologies. All the economic benefits in a digital economy notwithstanding, there are yet some challenges that need to be addressed to avert a waning acceptance of this growing paradigm in the future. Digital illiteracy Digital illiteracy remains one of the fundamental problems that restricts the potential in achieving rapid digitalization. As advanced as technologies get, the more complex their uses become. For Ghana’s digital economy to thrive, there should be an intentional focus to train, educate, and invest in providing digital literacy. There should be greater efforts by the government to build an educational system which is directed towards scientific and technical learning. Again, the educational system should be modeled in such a way so as to link courses taught in the schools with the trend in digital technologies. Commitment to bridging the digital divide: Carrying rural folks along Digitalization is much less of a rural phenomenon than it is urban- urban bias. Although, there has been significant improvement in the last couple of years, there is still a great many people who are not captured in the digital economy who are predominantly in the rural areas. Available data suggests that the number of people who have access to the internet in the urban and peri-urban areas still far outweigh those in the rural areas. Therefore, there is need for more commitment to carry rural communities along in this digital economy. Without increasing commitment to bridge this divide, it has the tendency of worsening the gap of inequality in income between urban dwellers and rural dwellers. Data protection, cyber-attacks and fraud Alongside these challenges, data protection, cyber-attacks and fraud remains a threat to Ghana’s digital economy. There have been scores of incidences of cyber fraud and attacks on the financial sector which has contributed to several loss of funds. Mobile money fraud, for example was a worrying trend during the lockdown period and restrictions. There should be a coordinated response to building a more robust security system to protect data of users on e-commerce platforms and other digital platforms.

Digital Economy

Ghana is fast becoming a regional hub for e-commerce and digital services as evidenced by the country’s position (5th) among the top ten African economies, and above its West African peers, Nigeria and Senegal, in the 2020 UNCTAD e-commerce index.

Although this expansion would have otherwise been gradual, but for the spread of the COVID-19 virus across the country and the associated containment measures such as lockdowns and other restrictions accelerated this process. This has caused many businesses to digitize or risk collapsing as well as force consumers to explore purchases online.

Furthermore, demand for digital services including online shopping, digital applications for remote work and on-line entertainment, inter alia, surged during the imposition of stay-at-home orders. And these changes have synced with people’s notion of a new normal environment for the next couple of years. Digital has come to stay!

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IMF Flags Ghana as High Risk for Debt Distress Despite Debt Being “Sustainable”

IMANI Flags Transparency Gaps in $360 Million World Bank Loan

With majority of Ghanaian businesses within the category of Micro, Small and Medium and Scale Enterprises (MSMEs), a rapid expansion of Ghana’s digital economy can improve the economic viability of these businesses.An increased use of digital technologies can enable MSMEs reduce costs and market goods and services to a broader range of potential buyers.

Considering its benefits, e-commerce platforms serve to help businesses find potential customers regardless of physical location. Still, compared with traditional retail, information and communication costs may be less expensive for MSMEs using digital technologies.

itu

All the economic benefits in a digital economy notwithstanding, there are yet some challenges that need to be addressed to avert a waning acceptance of this growing paradigm in the future.

Digital illiteracy

Digital illiteracy remains one of the fundamental problems that restricts the potential in achieving rapid digitalization. As advanced as technologies get, the more complex their uses become. During the lockdown period, when schools were closed, the government partnered other international organisations to educate pupils across Ghana. For students in deprived communities, learning occurred in established ICT centers. This indicates a step ahead in ensuring digital literacy. Yet, more efforts must be geared towards increasing digital literacy.

Commitment to bridging the digital divide: Carrying rural folks along

Digitalization is much less of a rural phenomenon than it is urban- urban bias. Although there has been significant improvement in the last couple of years, there is still a great many people who are not captured in the digital economy and who are predominantly in the rural areas.

Available data suggests that the number of people who have access to the internet in the urban and peri-urban areas still far outweigh those in the rural areas. Therefore, there is need for more commitment to carry rural communities along in this digital economy. Without increasing commitment to bridge this divide, it has the tendency of worsening the gap of inequality in income between urban dwellers and rural dwellers.

Data protection, cyber-attacks and fraud

Alongside these challenges, data protection, cyber-attacks and fraud remains a threat to Ghana’s digital economy. There have been scores of incidences of cyber fraud and attacks on the financial sector which has contributed to several loss of funds. Mobile money fraud, for example was a worrying trend during the lockdown period and restrictions.

To maintain this pace of digitalization or scale it up the more, there should be greater efforts by the government to build an educational system which is directed towards scientific and technical learning. Again, the educational system should be modeled in such a way so as to link courses taught in schools with the trend in digital technology advancement.

Lastly, the government should ensure that there is a coordinated response to building a more robust security system to protect data of users on e-commerce platforms and other digital platforms.

READ ALSO: New revenue measures: Ghana to join the digital services tax bandwagon soon?

Tags: Cyber-attackdigitalDigital economyDigital literacyDigital technologiesE-commerce
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