SINGAPORE FINTECH FESTIVAL 2020
KEYNOTE ADDRESS
BY
DR. ERNEST ADDISON
GOVERNOR, BANK OF GHANA
December 7, 2020
The Managing Director, Monetary Authority of Singapore,
The Singapore FinTech Association,
Captains of Industries and Financial Technology Companies,
Distinguished Guests,
Distinguished Ladies and Gentlemen,
1. It is a great pleasure to deliver the keynote address for the session on
'Digitization of the Afro-Asian Small and Medium Enterprises (SMEs)
Trade Corridor - A Multimillion Economic Zone' at this year's Singapore
Fintech Festival. I would like to thank the organizers for choosing
Ghana as a satellite host, which among others, endorses the country's
growing technological capabilities and strong Fintech industry.
2. Ladies and Gentlemen, trade relations between Africa and Asia has
witnessed tremendous growth over the past decade. This
phenomenon, led by SMEs, has leapfrogged with technological
advancement and the emergence of digital trade channels. Currently,
trading activities between the two continents are shifting to e-
commerce platforms due to enhanced access to the internet and
adoption of digital products fostered by Fintechs.
3. Indeed, the ongoing digital transformation is disrupting existing modes
of trade and business models including, the deployment of resources,
and organization of production, marketing and trading of goods and
services. This disruptive process, which is felt at every stage of trade
relations, has become a necessary enabler for SMEs in international
trade.
4. Ladies and Gentlemen, SMEs in Ghana, similar to others across the
African continent, contribute significantly towards economic growth
through provision of goods and services, creating job opportunities,
and helping with poverty reduction. Notably, the SME sector is
dominated by women and the youth, with vast opportunities to harness
economic potential. According to the World Bank estimates, about a
third of all SMEs in Africa are owned by women.
5. These contributions notwithstanding, SMEs across Africa face severe
constraints that stifle their active participation in international trade.
Over time, however, the growing adoption of digital technology by
government, businesses, and households are gradually opening
opportunities for SMEs to explore affordable digital alternatives to
actively participate in the global value chains on trade, production, and
investments.
6. Across Africa, mobile money adoption is the game changer in
promoting financial inclusiveness and enhancing economic growth. For
instance, the increasing use of technology has engineered innovative,
efficient and competitive financial products and services in Ghana's
payment service space. These outcomes are underpinned by sound
regulatory frameworks and policy guidance by the Government and
the Bank of Ghana to support the payment service providers, including
Fintechs.
7. Ghana's example shows that strong policy support and interventions
are useful and can leverage the capabilities of digital payments
industry to enhance SME competitiveness for international trade.
Ladies and gentlemen, on a positive note, actions have been initiated
by African governments and their counterparts in Asia to allow for the
interconnection of markets through harmonization of technology and
trade policies, as well as sharing of knowledge and experiences. In this
regard, I will like to recognize the lead role of Singapore in promoting
SME international trade between Africa and Asia under the Business
Sans Borders project.
8. Currently, the African Union is also exploring the potential of digital
trade to drive economic growth and transform the tenets of
international trade through the African Continental Free Trade Area
(AfCFTA) established on May 30, 2019. The Free Trade area is
expected to open up African markets, which has an estimated
population of 1.2 billion and a combined GDP of more than US$2.5
billion, to international trade. This will also create vast opportunities to
SMEs on the continent to expand and effectively participate in
intraregional trade as well as explore global markets.
9. For African SMEs to take advantage of international trade, there needs
to be ready access to digital merchant accounts, legislations
that enforce data protection and cyber security, and
comprehensive national strategies to drive the agenda.
10. In most countries, the requirements for businesses to access digital
accounts is onerous and steep, making merchant digital account only
accessible to big businesses. To remedy the unintended exclusion of
SMEs from such opportunities, there is need for digital merchant
account policies based on the principles of regulatory proportionality
and aimed at achieving merchant inclusiveness. This is because digital
trade policies that address merchant inclusiveness are likely to bring
about remarkable digital transformation. Ghana has adopted this
approach and laid the foundation for SMEs to receive and make digital
payments.
11. Another critical component required to advance the agenda of
promoting the Afro-Asia SME Trade Corridor is for member countries
to implement legislations that enforce data protection,
consumer protection and consumer recourse mechanisms,
and cyber security. These regulations are expected to secure cross-
border flow of data, protect consumer rights on digital platforms and
promote security of trade platforms to engender confidence in digital
trade.
12. Facilitating global market access by SMEs using digital technology also
demands a comprehensive national strategy that aims at
building a digital economy. In Ghana, SMEs digitization is part of a
broader national strategy to digitize the economy. The strategy
addresses issues pertaining to infrastructure, cyber and data security,
digital and financial inclusion, and digital innovations. This holistic
approach identifies and harnesses complementarities, particularly in
digital payments and e-commerce for efficiency and cost effectiveness
in the development of merchant e-commerce platforms.
13. A robust and resilient digital infrastructure is expected to lay the
foundation for SMEs to use digital technology to extend product and
service delivery across different jurisdictions. In January 2012, the
African Union adopted an Action Plan for Boosting Intra-African Trade
(BIAT). The action plan, which is aimed at deepening Africa's market
integration using trade as a tool, will need massive investment in digital
infrastructure for the achievement of rapid sustainable socio-economic
development.
14. Ladies and gentlemen, despite the challenges associated with
digitization of trade, the onus lies more with African economies to build
local capacity, support SMEs growth, and encourage the adoption of
digital technologies in trade relations with counterparts on the Asian
bloc. Additionally, African countries would have to embrace digital
trade and formulate policies and strategies that will enable them to
benefit from future trade engagements. With the convergence of
digital networks steadily deepening, prospects for an international
digital economy regime remains brighter now than before.
15. In conclusion, Ladies and Gentlemen, let me emphasize the path
towards deepening trade through digitization demands investments in
capacity building and skills development of SMEs. This will propel the
rapid adoption of digital technologies and ease trade relations with
counterparties. I believe that this forum will offer new thoughts and
perspectives on shaping policy directions towards addressing some of
the challenges associated with digital trade on the Africa-Asia bloc, and
overall global trade. Thank you and enjoy the rest of the programme.