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Implementing Regulatory & Policy Frameworks To Support The Growth of E-commerce in Africa’s Fashion

Updated: May 18, 2023



The rise of e-commerce and digital platforms in the African fashion industry has witnessed significant growth over the past years. Partly due to the COVID-19 pandemic. E-commerce has the potential to revolutionize the way consumers engage with fashion brands and access new products. In sub-Saharan Africa, the electronic commerce industry is currently in its preliminary stages but exhibits significant potential due to the increasing prevalence of smartphones amongst one of the world's youngest and rapidly growing populations (African Business, 2021). However, this growth also presents a range of legal and policy challenges, particularly in the areas of cybersecurity, consumer protection, data privacy and intellectual property.


According to a 2017 report from Statista, the e-commerce industry in Africa generated revenue of $16.5 billion in that year. Presently, the research firm predicts that revenue within the industry will increase to $47 billion by 2024 and this expansion is being propelled by individuals below 35 years of age. Rubab Abdoolla, a senior analyst at Euromonitor specializing in beauty and fashion, also notes that the proliferation of internet retailing is providing support for the growth of e-commerce. The overall growth of e-commerce in Africa is being buoyed by sales within the fashion industry, with Statista forecasting revenue of $8.3 billion in 2020 and a projected yearly growth rate of 14.2% between 2020 and 2024. However, this burgeoning e-fashion market faces significant hurdles. With about 281 million online shoppers in Africa as of 2022 and an expected rise to 520 million shoppers by 2025, fashion is a major industry that will drive the African e-commerce boom and therefore, must be invested in and regulated (Rest of World, 2022).


The growth and development of e-commerce in Africa are impeded by various challenges including the prevalence of cybercrime, inadequacies in the legal framework, and insufficient consumer protection measures. To overcome these barriers, it is imperative to achieve legal harmonization across the continent and to enact new laws relating to cybersecurity, consumer protection, and e-commerce development. Additionally, efforts must be made to strengthen enforcement mechanisms and educate citizens on the legal framework and opportunities offered by e-commerce.



Areas for Regulatory and Policy Reforms in E-commerce for the African Fashion Industry


Firstly, the security of transactions is a significant concern for those involved in e-commerce, as cybercrime poses a major obstacle to the development of ICT and e-commerce. The identification of cybercriminals is difficult due to their different profile from conventional criminals, and the lack of data and strong policy agendas. Tough laws are essential to fight cybercrime, and in the past 15 years, there have been at least 246 laws or drafts of laws on cybersecurity (WTO, n.d.). However, cybercrime continues to have a significant impact on Africa, with McAfee (2018) estimating the cost of cybercrime to be 0.20% of its GDP annually. Furthermore, Africa's digital infrastructure is 83% more vulnerable than that of other continents (James, 2019). As a result of the high likelihood of becoming a victim of cybercrime, e-commerce in Africa is severely limited (African Cybercrime Forum, 2018).


The legal framework on cybersecurity shows wide inequalities on the continent, with only a few countries such as Morocco, Nigeria, Ghana, Senegal, and Tunisia among others having made advances in e-commerce and cybersecurity by promulgating laws on the protection of personal data and electronic communications. Other countries are struggling to enact laws in these fields (UNCTAD, 2015). The African Union has also adopted the "African Union Convention on Cyber Security and Personal Data Protection" to promote the harmonization and development of cybercrime regulations, with specific objectives of the Continental Free Trade Zone (CFTZ) including the implementation of trade facilitation measures and a dispute resolution mechanism that will bring countries to harmonize their various policies, including electronic payment security policy, and promote e-commerce development.


Secondly, in several African countries, there is a dearth of legislation pertaining to consumer protection, and some of the extant laws in this domain are inadequate. It is observed that certain African jurisdictions have enacted laws on consumer protection that only cover ancillary facets of consumers' rights while overlooking crucial aspects such as the right to recourse for non-compliant goods, assignment of liability for issues, and determination of the appropriate jurisdiction. In the development of e-commerce, a robust legal framework for consumer protection is essential. It instils confidence in consumers and promotes online transactions. However, numerous African countries lack adequate legislation governing consumer protection, and the existing laws in this area are often inadequate (Ndiaye, 1999). As more consumers turn to online shopping, concerns about the security of personal and financial information have grown. To address these concerns, policymakers need to work to develop legal frameworks that establish clear rules for data protection and privacy, and ensure that companies are held accountable for any breaches of consumer information.


In addition to consumer protection and data privacy, intellectual property is another key area of concern for e-commerce platforms in Africa. With the rise of digital platforms, it has become easier than ever for counterfeiters to sell fake products online, posing a threat to both consumers and legitimate businesses. To address this challenge, policymakers need to strengthen intellectual property protections and crack down on counterfeiters.


When it comes to implementing regulatory and policy frameworks to support the growth of e-commerce in Africa's fashion industry, the absence or inadequacy of legislation is a significant obstacle. Unclear tax and regulatory requirements, as well as the lack of harmonization of e-commerce technology, such as mobile telephony, across the region, have been identified as some of the challenges in this area. For example, the elimination of the excise duty on call bonuses in Guinea would not only reduce the cost of services and increase investment in the economy but also create over 4,000 new jobs and increase tax revenues (WTO, 2020). This has resulted in some companies avoiding e-commerce altogether or operating informally, thereby hindering the growth of the industry. To address these challenges, there is a need for governments to develop clear and comprehensive regulatory frameworks that provide guidelines for the operation of e-commerce in the fashion industry. This includes the establishment of harmonized tax systems that do not discourage businesses from engaging in e-commerce. The government should also work towards harmonizing regulatory requirements for e-commerce platforms to enable players to operate seamlessly across borders. By implementing appropriate regulatory and policy frameworks, African countries can harness the full potential of e-commerce in the fashion industry and realise the sector's growth potential.



The Importance of Legal and Policy Frameworks


Despite these challenges, there is significant potential for legal and policy frameworks to support the growth of e-commerce and digital platforms in the African fashion industry. By establishing clear rules and regulations for online transactions, protecting consumer data privacy, and strengthening intellectual property protections, policymakers can help to create a more stable and secure online marketplace that benefits both businesses and consumers. While many African countries have implemented laws and regulations to govern e-commerce, these frameworks are often fragmented and inconsistent, creating uncertainty and complexity for businesses and consumers alike. This can make it difficult for companies to navigate the regulatory landscape and comply with relevant laws, particularly when operating across multiple jurisdictions. Countries such as Algeria, Morocco, Senegal, and Tunisia have made noteworthy progress in enhancing their legal frameworks to support e-commerce development and can serve as models for other African countries. Ultimately, the successful regulation of e-commerce and digital platforms in the African fashion industry will require a collaborative effort between policymakers, industry leaders, and consumers alike.



References

  1. Adegoke Y, “Fashion Will Drive an African E-Commerce Boom, Says Losode’s Ajose-Adeyemi – Rest of World” (Fashion will drive an African e-commerce boom, says Losode’s Ajose-Adeyemi – Rest of World, April 5, 2022) <https://restofworld.org/2022/fashion-will-drive-an-african-e-commerce-boom-says-losodes-ajose-adeyemi/>

  2. “Africa: E-Commerce Revenue 2017-2027 | Statista” (Statista) <https://www.statista.com/statistics/1190541/e-commerce-revenue-in-africa/>

  3. “Africa: Number of Digital Shoppers 2017-2027 | Statista” (Statista) <https://www.statista.com/statistics/1190579/number-of-online-shoppers-in-africa/>

  4. Pierce Atwood, “IP Rights in Virtual Fashion: Lessons Learned in 2022 and Unanswered Questions” (Pierce Atwood, January 11, 2023) <https://www.pierceatwood.com/alerts/ip-rights-virtual-fashion-lessons-learned-2022-and-unanswered-questions>

  5. African Cybercrime Forum (2018), “Politiques et Législations, Coopération Internationale et Renforcement des Capacités”, 15 October 2018

  6. Ndiaye, A. (1999), “Développement du commerce électronique en Afrique : le cas du Sénégal”, Publication de l’Union Internationale des Télécommunications

  7. McAfee (2018), “Statistiques sur les menaces, logiciels malveillants (malwares), incidents, menaces ciblant l’environnement web et les réseaux”, Rapport de McAfee Labs sur le paysage des menaces, March 2018.

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