Comparison Program (ICP) suggests that machinery and equipment tend to be relatively more expensive in African countries than the rest of the world (Cruz, Cirera, Hjort, Lang, Konte, and Edet, 2024). For digital products, including machinery, equipment, and software, prices in Africa are up to 34% more expensive than in the United States, in US dollar terms.<sup>3</sup> In this paper, we use detailed data on international trade flows and tariffs to study Africa’s imports of digital goods. We first provide evidence on the relative quality and quality-adjusted prices of Africa’s digital goods imports, as well as on the degree of tariff protection that is currently imposed on them. We then estimate the likely impacts of the African Continental Free Trade Area (AfCFTA) on digital goods imports, which we compare with a benchmark scenario of full unilateral import tariff liberalization from AfCFTA members towards all countries.

We begin by outlining the key features of digital goods imports and tariff protection across African nations that are part of AfCFTA. In 2019, Africa imported $59.4 billion worth of digital goods, with 35 percent sourced from China and 27 percent from the European Union. Digital goods constitute a smaller share of African imports (about 13 percent) compared to the rest of the world (around 21 percent). A few countries – South Africa, the Arab Republic of Egypt, Nigeria, Morocco, and Tunisia – collectively accounted for 70 percent of Africa’s digital goods imports, while intra-African trade in digital goods remains minimal.

Despite this heavy reliance on imports, Africa imposes relatively high tariffs on digital goods globally, with an average tariff of approximately 5 percent, compared to an average of 2 percent in other regions. These tariffs remained relatively constant in recent years. Moreover, the level of tariff protection on digital goods correlates negatively with income per capita across African countries, with upper-middle-income economies like South Africa imposing tariffs as low as 0.9 percent, while low-income countries such as the Central African Republic and Cameroon applies tariffs as high as 15 percent, with some large economies such as Ethiopia and Nigeria, imposing tariffs around 9 and 10 percent, respectively on average.

We proceed by estimating the quality and quality-adjusted prices of Africa’s imports of digital goods. We apply the methodology proposed by Feenstra and Romalis (2014), using detailed data on international trade flows and tariffs. We find that African nations tend to import relatively low quality, low price digital goods, as would be expected given their relatively low income per capita. Once we adjust prices for quality differences, digital goods in Africa are sourced at broadly similar prices relative to higher-income countries. If import tariffs, along

> 3The ICP item-level prices for machinery and equipment include import duties and other product taxes paid by the purchaser, the costs of transporting the asset to the place where it will be used, and any charges for installing the asset so that it is ready for use in production. Thus, it captures the final prices to customers, which include factors beyond trade tariffs.

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