Digital Transformation is key to supporting Africa in the fight against illicit trade

 

Feb 21, 2022

 

The 6th EU-Africa Summit, a two-day meeting bringing together government leaders from the EU and more than 50 African countries, last week came to an end. The summit’s agenda included a wide range of important topics, which aimed to strengthen the strategic and socio-economic partnership between the two continents. Determined to move beyond past declarations, the summit’s discussions steered toward the need for concrete and actionable initiatives. The results of these discussions have been summarised in a published Joint Vision that highlights several ambitious agreements linked to policy areas such as health, trade and economic growth.

 

Since the last EU-Africa Summit in 2017, there is a strong acknowledgment among many African countries that digital transformation forms a cornerstone of Africa’s future growth and success. Seen as an important underlying force in facilitating many of the ambitious policy objectives, the African Union recently published its 2030 Strategy on Digital Transformation. The Joint Communiqué issued after the AU-EU Ministerial Meeting in October 2021 echoed the importance of this strategic approach. To that end, digitalisation is also reflected throughout the EU’s external investment plans (MIP) for individual African countries, with several country plans like those covering Benin, Ivory Coast and Nigeria even stipulating the digital economy as a key priority.

In these discussions, often overlooked though is the fact that digital technologies do not only illustrate a driving force for innovative, inclusive and sustainable growth. Digital technologies also offer the potential to transform how countries make policy, enabling government leadership to implement and execute core policy initiatives in more effective ways while also measuring their success and impact on the ground.

As a global leader in the digital economy, Dentsu Tracking provides countries worldwide with digital solutions that support government and society in their digital transformation efforts, enabling them to better face some of their greatest challenges.

A case in point for those challenges is the devastating illicit trade pandemic. Illicit trade is a global phenomenon that knows no borders. Estimates suggest that illicit trade causes a drain of around US$2.2 trillion to the global economy, depriving states worldwide of vital revenues.

On the African continent, across affected product categories, tobacco and alcohol are some of the largest markets for illicit goods. Illicit trade upends the rule of law, erodes public trust in governments, and hampers trade and (foreign) investments. It also poses a significant threat to citizens and public health, seriously undermining the achievement of global objectives such as the Sustainable Development Goals (SDGs).

The ongoing COVID-19 pandemic has further accelerated the illicit trade across various markets, including excise goods and medical products, and once again highlights the importance of protecting the integrity of supply chains and ensuring full visibility over related processes by public authorities.

The EU has been a frontrunner in addressing this ongoing challenge and over the years adopted wide-ranging strategies aimed at stepping up the fight against the illicit trade. Illicit tobacco trade is in this context of particular concern among the EU-27 Member countries, causing an estimated EUR10 billion loss to EU national budgets every year.

An important part of the EU anti-illicit tobacco strategy is its ratification of the WHO FCTC Illicit Trade Protocol in 2016. The Protocol lays down a package of measures to be taken by countries to eliminate all forms of illicit trade in tobacco products. One of the key measures set out in the Protocol relates to the obligation of the Parties to secure the tobacco supply chain by deploying a so-called Track & Trace system.

In 2016, the adoption of the EU’s new Tobacco Products Law paved the way for the establishment of an EU-wide Track & trace system for tobacco products, ensuring that the EU complies with its obligations under the FCTC Protocol.

A core requirement of the EU system was that it had to be fully digital, effective to its objectives, while not disproportionately impacting legitimate business operations.

Following a competitive public procurement process, the EU in 2018 contracted Dentsu Tracking to design, establish and operate the central platform of the digital EU Track & Trace system for tobacco products. Spanning across all the EU-27 Member countries, the digital solution operated by Dentsu Tracking for the EU is the world’s largest digital Track & Trace system.

The digital EU Track & Trace system enables the movement of legal tobacco products to be monitored (tracking) and allow the EU authorities to detect and fight the different forms of illicit trade. In doing so, Dentsu Tracking’s solution enables government to further reduce the circulation of non-compliant tobacco products that do not meet all legal requirements, thereby ensuring the collection of all applicable duties and taxes.

Following the success story of the EU solution, the government of the United Kingdom (UK), who is known for its strong stand on anti-fraud policies, in 2021 decided to contract Dentsu Tracking for the implementation and operation of a similar digital Track & Trace system on the UK territory.

Most African countries are also Parties to the FCTC Protocol. Therefore, the digital Track & Trace systems established in the EU and UK may be considered important references for African leaders when moving ahead in finding ways to comply with obligations provided by the Protocol.

The innovative approach to integrating the benefits of digital technology into the deployment and operation of Track & Trace solutions enables Dentsu Tracking to deliver a highly secure government system that is more robust, much less intrusive on industry operations, and comes with a higher level of government control compared to other track & trace systems offered on the market.

Each Dentsu Tracking solution is tailored to the individual needs of a country and its specific challenges, leveraging a unique way of combining digital and data-driven elements and integrating state-of-the-art intelligence and analytics. This approach is rooted in the belief that gaining full visibility and control across the supply chain requires a holistic approach, which does not stop at collecting data but translates that data into meaningful and tangible information.

By creating powerful economic intelligence, Dentsu Tracking enables governments to achieve important policy objectives in the fight against the illicit trade, including tax optimisation, more effective enforcement activities, and the protection of consumers and legitimate businesses.

Given the global nature of illicit trade, it cannot be tackled in isolation but rather requires extensive cross-border cooperation between countries. The FCTC Protocol addresses this aspect by establishing a global information-sharing focal point that allows countries to exchange supply chain information on (seized) tobacco products. However, fighting illicit trade across borders also requires that national Track & Trace systems are interoperable among each other, facilitating a more holistic view on supply chain activities beyond national borders.

Dentsu Tracking has addressed these aspects by designing digital Track & Trace solutions that are aligned with best international practices and common logistic standards, not only to ensure interoperability with third-country systems and the FCTC focal point but also to avoid unnecessary barriers to trade.

Concluding on the above Philippe Castella, Managing Director said:
“the digital Track & Trace systems operated in the EU and the UK are evidence of the various benefits gained through digital transformation efforts, and the important role that digital technology plays in empowering countries to address key policy concerns most effectively across different government sectors”

Dentsu Tracking stands ready to deploy its group of leading experts in interested African countries, leveraging the team’s extensive experience and expertise in utilising digital technology to fight the illicit trade, while making sure that the digital regimes provided are tailored to the national needs and challenges of each country. Doing so will also empower African governments to further accelerate their national path toward digital transition, treating digital technology not only as a product but rather as means to achieve policy ends.

 

About

Dentsu Tracking is a global leader in digital supply chain control solutions, allowing governments to get maximum visibility and control over highly regulated product markets. The solutions implemented by Dentsu Tracking are a proven international reference in fighting illicit trade and optimising tax collection. Dentsu Tracking is headquartered in Geneva, Switzerland, and is a brand of Dentsu International, a multinational digital services company with $9 billion turnover and registered on the Tokyo Stock Exchange.
www.dentsutracking.com

For further information please contact:

Brittany Groot

Media / Press Contact
Dentsu Tracking, Geneva.