Ndubuisi Francis
Exports from the 54 Commonwealth nations, including Nigeria could increase by as much as $1.2 trillion in the next five years if trade reaches full digitalisation, according to a new report by the Commonwealth Secretariat.
In its Quantitative Analysis of the Move to Paperless Trade, the secretariat stated that if the 54 Commonwealth nations implement policies to facilitate digital trade across borders, exports could increase by around $90 billion, while the reform of laws to support electronic records in trade could unleash a further $1.1 trillion by 2026.
The report also stated that the cost of trade would fall by an average of 75 per cent, therefore making it easier for more exporters to access trade routes.
The report added that digital trade documents would improve access to finance, which has the effect of creating markets, especially for small and medium enterprises (SMEs) which are largely unable to access traditional forms of financing because of the due diligence costs involved.
The research, produced by Coriolis Technologies, aims to provide a business case in support of the Commonwealth’s Connectivity Cluster Agenda, an initiative that targets digital trade facilitation.
It follows a similar report from the International Chamber of Commerce (ICC), published in October last year, that found trade across the G7 could increase by $9 trillion in the next five years if the industry reaches full digitalisation.
While the Commonwealth’s potential trade increase in dollar terms is smaller than that of the G7’s, the developmental impact of digital trade facilitation in its countries is markedly more pronounced.
Of the world’s 42 small states, 32 are Commonwealth members, and of these, 25 are small island developing states.
The Commonwealth also comprises some of the world’s poorest countries, with 14 of its members classified as least developed countries by the United Nations.
These countries are especially vulnerable to global shocks, and – as the report points out – could benefit the most from trade digitalisation.
“The most striking finding is that at present, the average costs of international trade for some island economies and some nations in Africa are higher than the average revenues received.
This makes trade untenable in those countries,” the report stated, pointing to four economies for which costs are higher than 100 per cent of the revenues received from trade.
The countries include Vanuatu, Tonga, Gambia and Papua New Guinea.
It added that the gains from digitalisation present, “a compelling background case to the process of legal reform and should be a wake-up call to heads of state.”
Some Commonwealth members have already reformed their laws. Last year saw Singapore implement the UNCITRAL Model Law on Electronic Transferable Records (MLETR) into domestic legislation and then go on to carry out the first ever MLETR-enabled transaction with Abu Dhabi.
In February this year, Papua New Guinea signed its new electronic transactions act into law, which enacts MLETR along with other UNCITRAL texts on e-commerce.
Meanwhile, the work currently underway in the UK to achieve legal equivalence for electronic versions of trade documents in English law is expected to help pave the way for the rest of the Commonwealth’s jurisdictions.
