Africa is on the verge of becoming a digitally transformed continent, yet the road to this transformation is riddled with challenges that demand urgent solutions. Across the continent, markets remain fragmented, with differing regulations, uneven internet access, and a lack of interoperability in digital systems.

At the same time, almost millions of Africans remain unconnected, unable to access digital services that could transform their lives. From education and healthcare to entrepreneurship and trade, the opportunities of the digital age remain out of reach for too many. This divide is not just an infrastructure problem—it’s a lost opportunity for economic growth and empowerment in a region with the world’s youngest population.

In response to these challenges, the African Union (AU) have proposed a bold and ambitious solution: creating a Digital Single Market (DSM). A unified digital market could drive billions of dollars in economic growth, create millions of jobs, and position Africa as a global leader in digital innovation. But achieving this vision requires more than just ambition—it demands unprecedented collaboration among governments, the private sector, and international partners.

So, as Africa takes steps toward this future, we must ask: Can the dream of a single digital market become a reality? What will it take to unify 54 nations into one cohesive digital ecosystem, and what challenges stand in the way? This TechTalk Thursday article will unpack the potential of the unified Digital Market.

The Vision: What Is Africa’s Digital Single Market (DSM)?

The ambitious vision behind Africa’s Single Digital Market is a seamless and secure digital space where people, businesses, and governments can freely access, exchange, and innovate using digital technologies.

At its core, a digital single market eliminates cross-border barriers to digital infrastructure, content, and services. By integrating fragmented markets, it fosters economic growth, drives innovation, and improves service delivery for all.

“Transforming a continent into a single digital market can only positively impact socioeconomic development because it will unlock opportunities for SMEs and our startup champions. Additionally, it builds trust within our governments.”

Lacina Kone, CEO of Smart Africa

The Foundation: Africa’s Digital Transformation Strategy

In 2020, the African Union (AU) adopted the Digital Transformation Strategy for Africa (2020–2030),  laying the groundwork for creating a Digital Single Market (DSM) by 2030. This strategy envisions an Africa where digital technologies empower societies, foster economic integration, and promote inclusive development. A cornerstone of this plan is the alignment of the DSM with the African Continental Free Trade Area (AfCFTA), ensuring that the free movement of people, services, goods, and capital extends seamlessly into the digital sphere.

Under the DSM, businesses and individuals are expected to engage in cross-border e-commerce, share data securely, and leverage interoperable digital infrastructure across the continent. This vision integrates the AfCFTA’s goals with digital transformation to boost innovation, inclusion, and intra-Africa trade.

Africa’s DSM is inspired by successful global models, particularly the European Union’s Digital Single Market (DSM) strategy, launched in 2015. Europe’s DSM focused on creating a unified digital economy that promotes innovation, competition, and consumer access across borders.

Achievements of the EU’s DSM provide valuable lessons for Africa, such as eliminating roaming charges for mobile users, enabling cross-border access to digital content, and standardizing regulations for e-commerce. These initiatives have boosted the ease of doing business in Europe, setting a benchmark for what Africa could achieve with its SDM.

The African Digital Compact (ADC) , unveiled during the 45th Ordinary Session of the African Union Executive Council in Accra, Ghana, in July 2024, represents a pivotal milestone in Africa’s digital transformation journey. As Africa’s collective position on digital transformation, the ADC seeks to bridge the digital divide, safeguard digital rights, and create an equitable digital ecosystem. Rooted in the AU’s Agenda 2063 and the Digital Transformation Strategy, the ADC aligns with global frameworks like the Global Digital Compact while addressing Africa’s unique context. This initiative unites governments, businesses, and civil society to harness digital technologies for sustainable development, innovation, and inclusivity, ensuring that Africa emerges as a global leader in the digital revolution, fostering economic growth and societal well-being for all.

Africa’s Unique Approach to the DSM

Africa’s Digital Single Market will be built on three interconnected pillars:

A Single Connectivity Market:

By harmonizing telecom infrastructure and regulations, Africa aims to expand connectivity, improve service quality, and encourage investment. The goal is to create a level playing field where all citizens, regardless of location, can access affordable and reliable internet services.

A Single Data Market/ Unified Data Policy:

This involves creating secure and interoperable systems for storing, processing, and sharing data across borders. Key areas include robust data protection, enhanced cybersecurity, and content regulation to ensure that data flows are secure and beneficial to regional growth.

A Single Online Market:

Here, individuals and businesses will access and provide digital services seamlessly. Whether it’s e-commerce, digital payments, or public services like e-governance, this pillar ensures that digital transactions and services are accessible across the continent.

The Potential: Why Is It a Game-Changer?

Africa’s single digital market represents not just a technological shift but a profound economic and social transformation. By breaking down digital barriers across 54 nations, the SDM has the potential to redefine how Africa interacts with itself and the world. Its benefits span every sector, from economic growth to innovation, and its ripple effects promise to touch every African citizen.

A single digital market could unlock a $700 billion digital economy by 2030, transforming Africa into a global digital powerhouse. With streamlined cross-border trade in digital goods and services, businesses will gain access to a vast consumer base, enabling economies of scale and fostering regional trade.

Also, Africa’s youthful population, with a median age of just 19.2 years,  stands to benefit immensely from the SDM. The digital economy is a fertile ground for job creation, particularly in tech and entrepreneurship. From coding bootcamps to app development startups, young Africans will have access to new opportunities that align with the demands of a global digital workforce. Initiatives like mobile money interoperability in East Africa —where services such as M-Pesa and Airtel Money work seamlessly across borders—are clear examples of how digital innovation can spur entrepreneurship and financial inclusion, creating jobs in fintech and beyond.

One of Africa’s biggest challenges has been its digital divide—urban versus rural, connected versus unconnected. The SDM is a direct response to this disparity, aiming to ensure that all Africans, regardless of location, have equal access to digital infrastructure, services, and opportunities. Through harmonized regulations, investments in affordable connectivity, and the expansion of mobile broadband, the SDM will bring millions of marginalized individuals into the digital fold.

A unified digital market creates fertile ground for innovation. By harmonizing data regulations and fostering interoperability, the SDM will remove barriers that trample on creativity and collaboration.

The Challenges: What Could Hold It Back?

While the African Digital Single Market holds immense promise, several challenges could hinder its realization.

Africa’s diverse regulatory landscape poses obstacles. Differing data protection, e-commerce, and cross-border tax policies create barriers to seamless digital trade. For instance, only about half of African countries have comprehensive data protection laws, leaving gaps in consumer trust and cross-border business compatibility. Without harmonized policies, the DSM risks stalling at the implementation stage.

Reliable digital infrastructure is critical, yet Africa still struggles with limited internet penetration and energy reliability. As of 2021, GSMA reported an internet usage gap of 53% and a coverage gap of 19%—more than three times the global average. Additionally, power outages in underserved areas hinder connectivity, stalling progress in integrating rural and urban economies. Investments in broadband expansion, energy grids, and data centers remain vital.

A lack of widespread tech literacy among citizens could also leave millions unable to benefit from the single digital market. Many young people lack access to quality education in digital skills, and the current workforce is often underprepared for the demands of a digital economy.

Importantly, Interconnected systems heighten exposure to cyber threats such as data breaches, ransomware, and digital fraud. African governments and businesses have historically struggled with underfunded cybersecurity measures, leaving systems vulnerable.

Opportunities and Solutions: What’s Needed to Succeed?

To unlock the potential of the African Digital Single Market (DSM), several actionable steps are crucial for overcoming the challenges and ensuring sustainable growth.

1. Harmonizing Regulations

Creating a unified regulatory framework across African nations is essential for fostering digital trade and protecting user rights. This includes developing laws on data protection, electronic transactions, and cybercrime. Currently, fragmented policies hinder cross-border data flow and digital commerce. By learning from the EU’s experience in harmonizing regulations, such as the General Data Protection Regulation (GDPR) and the e-Commerce Directive, the African Union (AU) can establish common standards that promote legal certainty, consumer trust, and digital economy growth. Close cooperation between the AU and EU could streamline regulations, ensuring smoother cross-regional data flows and enhancing Africa’s digital integration.

2. Cross-Regional Data Flows

Ensuring seamless data exchange between Africa and global partners, especially the EU, is vital. However, differing data protection standards complicate this. The EU’s GDPR imposes strict conditions on data transfer, requiring equivalent protection in third countries. For Africa, creating an adequate data protection framework, such as the Malabo Convention, is essential for enabling secure and efficient cross-regional data flows, supporting digital trade and collaboration with international markets.

3. Overcoming Infrastructure and Financial Barriers

Africa’s digital infrastructure is underdeveloped, limiting internet access and digital adoption. With only 152 local data centers  and a significant geographic and gender divide in internet usage, investments in broadband and data storage are crucial. The EU’s Global Gateway initiative, which seeks to mobilize billions in infrastructure investment, can play a pivotal role. Additionally, targeted investments from international donors and financial institutions, such as the African Development Bank’s Africa Digital Financial Inclusion Facility, can accelerate digital infrastructure development and bridge digital gaps, ensuring inclusivity and accessibility across the continent.

4. Strengthening Digital Skills

Building a skilled workforce is fundamental for the DSM’s success. Initiatives to improve digital literacy, especially among underserved populations, will empower individuals to actively participate in the digital economy. Cross-border partnerships can foster knowledge exchange and enhance digital education across Africa, enabling citizens to harness the full benefits of digital transformation.

5. A unified Digital Identity System (KYC)

A unified digital identity (ID) system is crucial for realizing an African Digital Single Market (DSM). Unlike other regions, Africa lacks comprehensive infrastructure for verifying and authenticating digital identities, with many relying on paper-based systems or fragmented databases. This undermines seamless cross-border transactions and leaves much of Africa’s digital activity dependent on foreign platforms, putting critical digital footprints outside the continent’s control.

A robust KYC framework would enable secure cross-border transactions, integrate national ID systems, and foster trust in digital ecosystems. Key steps include building interoperable databases, enforcing strong data protection standards, and ensuring accessible registration processes, especially in underserved areas.

Without a unified digital ID, Africa cannot fully own its digital economy or benefit from the digital single market. By investing in such systems, the continent can secure its digital assets, enhance financial inclusion, and drive economic growth.

In an exclusive interview at MWC 2024, Lacina Kone, CEO of Smart Africa shed light on this critical barrier:

“The KYC—where is the African KYC? It’s the foundation of a platform. With a platform backed by digital ID—essentially KYC—all African platforms can build on it. When private sector companies launch services in Africa, how do they identify the population? Through Gmail or Yahoo, or their ID? And how do we authenticate that ID? We should be calling for the development of a platform, which is based on the digital ID”

By addressing these opportunities with collaborative efforts and strategic investments, the African Digital Single Market can thrive, propelling the continent into a new era of economic growth, innovation, and inclusivity.

Finally: A Connected Future?

Does Africa’s goal for a Single Digital Market signal a connected future? The answer is yes. Africa’s Digital Single Market (DSM) is not just an aspirational goal; it is a vital necessity for thriving in today’s global economy. By embracing digital transformation, harmonizing regulations, and investing in infrastructure, Africa can unlock immense opportunities for growth, inclusion, and innovation.

Alliances like SMART Africa  are already paving the way by driving efforts to transform Africa into a single digital market. SMART Africa’s vision aligns to create a seamless digital ecosystem that fosters collaboration, innovation, and cross-border integration. The Smart Africa Alliance, which has grown to include 40 African countries representing over 1 billion people, is a testament to the continent’s commitment to digital integration.

“As Smart Africa, we have nearly 34 initiatives, with 12 in the pilot phase. We’re creating special purpose vehicles to scale them up on the continent. A crucial aspect of digital transformation is digital identification, which we refer to as E-KYC (Know Your Customer). It’s vital to transform Africa into a single digital market. To truly transform society, we need digitized government services and private sector initiatives to reach every corner of the continent. We have moved beyond just talking about these issues and are now taking action.”

– Lacina Kone, CEO, SMART Africa  

The journey toward a connected future is within reach, and it is up to all of us to make it a reality. Let’s continue the conversation and collaborate on solutions to bring Africa closer to a unified digital economy.