Kippra: Addressing system key to unlocking continental trade

Delivery truck full of cardboard boxes and forklift with pallets. [Getty Images]

Kenya stands to benefit more from the African Continental Free Trade Area (AfCFTA) if the country puts in place a national addressing system which a think tank notes will also reduce the cost of doing business.

A national addressing system is a framework that provides for among others, naming and numbering of streets, numbering of properties such as buildings and parcels of land to facilitate identification and the location of a parcel or dwelling on the ground.

The Kenya Institute for Public Policy Research and Analysis (Kippra) says putting in place such a system would not only make cross-border payments easy but would also help settle disputes among traders.

Kippra says in a paper that digital trade is incomplete without an elaborate addressing system that facilitates the identification of the locations where buyers and sellers are based.

Such an addressing system could facilitate the delivery of goods ordered through digital platforms.

“The system could facilitate sellers and buyers to locate each other in case of a dispute,” reads the paper titled Effect of trade digitalisation on Kenyan exports to the AfCFTA published in July.

“The addressing system is, therefore, central to the reduction of costs of conducting trade.”

The paper sought to establish the effect of access to information on Kenyan exports to AfCFTA, ICT infrastructure on Kenyan exports to the AfCFTA, digital payments on Kenyan exports to AfCFTA, addressing system on Kenyan exports to AfCFTA and cyber security on Kenyan exports to the AfCFTA.

“The findings from the empirical analysis reveal that a country’s addressing system has a positive and statistically significant effect on Kenyan exports to the AfCFTA, specifically a one per cent increase in the number of outgoing items sent through courier is associated with a 0.561 per cent increase in Kenyan exports to AfCFTA,” the paper details in its findings.

Kippra says governments and development partners could invest in the development of elaborate addressing systems that are recognisable digitally.

“It could reduce the time taken for ordered goods to be delivered, and this is key in reducing trading costs and encouraging trade activity,” it adds. The paper explains that once buyers successfully place orders, the next step would be making payments digitally.

“For the ordered product to be discharged from the seller and successfully reach the buyer, an addressing system is vital to help deliver the product at the buyer’s location,” it says.

This challenge of the lack of a national addressing system, however, extends beyond Kenya, with the think tank referencing a 2015 study by the United Nations Trade and Development (Unctad) that found nearly 60 countries do not have a postcode in place.

Kippra says developing countries, like Kenya, face a major challenge when it comes to addresses, particularly in large urban areas with crowded neighbourhoods.

This forces delivery personnel to often call recipients repeatedly as they navigate through narrow alleys and lanes to confirm directions.

The discussion paper says in the absence of government intervention, markets and technology are filling the gap, with companies innovating to overcome these obstacles.

“This poses a challenge in the update of digital trade in developing countries such as those that are members of the AfCFTA,” it says.

“An elaborate addressing system could develop and nurture relationships between sellers and buyers in different countries within the AfCFTA.”

“This could promote survival and competitiveness of Kenyan exporters to the AfCFTA,” it explains.

AfCFTA is a trade agreement that came into play in 2019, which is meant to facilitate African nations to trade with each other. It was first adopted in March 2018.

This trade pact seeks to improve business in African nations by leveraging its 1.2 billion population. Intra-African trade averaged 15 per cent according to UN numbers against 58 per cent and 67 per cent for Asia and Europe respectively.

Kenya has been mulling a National Addressing System of Kenya (NASK) for years with notable steps being recorded from 2016 when the Communication Authority (CA) hosted stakeholder engagements in March and October of the same year to discuss the proposal. That was when a NASK Committee was constituted.