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MATCHING ESTONIA

These three countries are in the lead to be Africa’s e-hub after the free trade agreement

REUTERS/Tiksa Negeri
The African Union (AU) building in Ethiopia’s capital Addis Ababa.

Come Jan. 1, Africa will be home to the largest free trade area in the world. Although the African Continental Free Trade Area (AfCFTA), doesn’t go so far as to create a common market or customs union like the European Union, it represents a major step in that direction. That trend presents an opportunity for a forward-thinking first-mover nation to follow Estonia’s example in Europe and become the e-Residency pioneer for Africa.

Given the country’s tiny population, post-Soviet Estonia could never hope to enjoy economic influence in Europe like that of Germany and France, or even smaller nations like Sweden and Czechia. To remain competitive in an increasingly integrated Europe, Estonia focused on developing transformative, technology-driven government services.

Today, Estonians can pay taxes, vote, receive prescriptions, and more all from their own homes because the government there invested early in providing quality services electronically. Estonia has since leveraged its expertise in e-government to become a leading provider of access to the European market and its 448 million residents for both Europeans and non-Europeans around the world.

First introduced in Estonia in 2014, e-Residency is a simple tool providing market access and government services to entrepreneurs located in a different country. E-Residents are issued a digital identification by the Estonian government that allows them to paperlessly form an EU-based company with full access to the entire European market without ever even having to visit Estonia or another EU member state. To date, over 73,000 e-Residents from 170 countries have established 14,000 companies through the program.

The first nation that can replicate this technological and policy achievement for Africa’s increasingly integrated economy will become the gateway for entrepreneurs from around the world to easily engage African businesses and consumers. African entrepreneurs in countries where company formation is extremely difficult will benefit too—all they’ll need is an internet connection.

A handful of countries emerge as obvious candidates to seize the opportunity to become Africa’s digital entryway, including Rwanda, Mauritius, and Ghana.

Rwanda has been lauded by some as the “Singapore of Africa” for its economic performance and technocratic governance under president Paul Kagame (although it has also been criticized for limitations on political freedom imposed by Kagame). The country has already developed a world-class online business registration system where the registration process takes only a few days and is free.

This system could easily be adapted to administer an e-Resident program, and already recognizes the value of making business formation easier, not harder. Furthermore, being landlocked, it will always be in Rwanda’s economic interest to pursue economic activity not dependent on overseas trade.

Mauritius is another prime candidate for an e-Residency program. Like Rwanda, Mauritius ranks among the best countries in the world when it comes to ease of starting a business. The island nation has emerged as a leading international financial hub for Africa and is classified as a high-income country, both of which signal it has the resources and the technical expertise to successfully implement an e-Residency program targeted at international entrepreneurs.

Its proximity to and familiarity with entrepreneurs and those in the financial sector in India and the rest of Asia may supply a ready stream of applicants and their capital.

A third viable home for Africa’s e-Residency program is Ghana. Commentators have highlighted Ghana as one of Africa’s economic growth hotspots, and is generally considered well-governed and politically free. Although Ghana appears to have tried to manage its relatively recent oil wealth responsibly, e-Residency could be a welcome source of economic activity independent of resource revenues.

Ghana’s membership in Economic Community of West African States and proximity to Africa’s most populous country and principal tech hub, Nigeria, are additional points for Ghana as the best candidate for e-Residency.

As Africa pursues greater economic integration across the continent and its 1.2 billion residents become increasingly connected to the rest of the world, providing easy access to this market becomes an increasingly valuable proposition for governments to pursue.

And while the AfCFTA Secretariat’s recently announced AfCFTA Vision initiative—a “super app”-based platform for AfCFTA knowledge sharing and entrepreneurial venture financing—is a great way to celebrate the new agreement, an e-Residency program could be far more transformative. Estonia has shown that there is ample demand for such a service.

Whether Rwanda, Mauritius, Ghana, or another country provides that service for Africa remains to be seen, but the race to do so should already be underway.

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