Nations are almost always better off when they buy and sell from one another. For businesses, globalisation can open up a world of opportunities. Access to the global economy provides new markets, new trade, new routes to consumers and new revenue streams, and nations with fundamental economic, social, political and cultural advantages.

Trade and cybersecurity are increasingly intertwined. Digital trade is crucial for almost every company, but it also introduces new complications. When products or services that contain a computer or can be connected to the internet – cross borders, cybersecurity risks emerge. And for today’s CISOs, managing cyber risk is Job #1, and it’s a full-time concern.

The role of trade finance is to introduce a third party to transactions to eliminate payment and supply risks. Businesses, organisations, and citizens increasingly operate online to deliver economic, social and other benefits. A recent McKinsey survey found that the pandemic has accelerated the overall adoption of digital technologies and applications by three to seven years in just a few months.

At the same time, cybersecurity threats have been growing. Large-scale fraud, data breaches, and identity thefts are increasing. The World Economic Forum’s Global Cybersecurity Outlook report indicates that cyber-attacks increased 125%  globally in 2021, with evidence suggesting a continued uptick through 2022.

There are many financial institutions focusing on international trade, and Euro Exim Bank (EEB) is the one to watch. Unlike a retail bank with counters, current accounts and holding client cash, EEB uses online 3rd party accounts with global banking counterparts and is constantly vigilant against cyber-attacks.

Government Capability in Managing Cybersecurity Risks:
According to the OECD, cybersecurity should “aim to reduce the risk to an acceptable level relative to the economic and social benefits expected from those activities, while taking into account the legitimate interests of others.”

We are highly dependent on electronic technology in the modern world, and protecting this data from cyber-attacks is a challenging issue. A government’s reactions are shaped by its capability to manage cybersecurity risks, such as: the laws and regulations on cybersecurity; the implementation of technical capabilities through national and sector-specific agencies; the organizations implementing cybersecurity; and the awareness campaigns, training, educations, and partnerships between agencies, firms, and countries.

The low cost of entry, anonymity, uncertainty of the threatening geographical area, dramatic impact and lack of public transparency, have led to strong and weak actors including governments, organized and terrorist groups and even individuals in this space, and threats such as cyber warfare, cybercrime, cyber terrorism, and cyber espionage. Governments must devise efficient systems to protect against the destructive impacts of cyber threats.

Many governments are introducing new policies to help increase their cyber security. The UK government for example  has published the Government Cyber Security Strategy (2022-2030) in which is sets out the government’s approach to building a cyber resilient public sector.

What is cybersecurity compliance?
Cybersecurity compliance is the organizational risk management method aligned with pre-defined security measures & controls on how data confidentiality is ensured by its administrational procedures.  IT security is made more challenging by compliance regulations, such as HIPAA, PCI DSS, Sarbanes-Oxley and global standards, such as GDPR.

Cybersecurity standards:
Cybersecurity standards represent a key step in the IT governance process. As a means for managing and containing risk to acceptable levels, the standards must be wholly consistent with IT governance instruments and closely aligned with and driven by the enterprise’s cybersecurity policies. Standards can build a common approach to addressing cybersecurity risks based on best practice.

The International Standards Organization (ISO) and the International Electrotechnical Commission (IEC) have developed a number of cybersecurity-related standards, including the jointly developed ISO/IEC 27000 series as well as sector specific-standards for electric utilities, healthcare, and shipping.

To address global cybersecurity challenges and improve digital trust, a new and improved version of ISO/IEC 27001 has just been published. The world’s best-known standard on information security management helps organizations secure their information assets – vital in today’s increasingly digital world.

Certification of compliance with cybersecurity standards:
Compliance certification can give business confidence in the cybersecurity of organizations and government. Under the EU Cybersecurity Act, June 2019, the European Union Agency for Cybersecurity will establish an EU-wide cybersecurity certification scheme. NIST has developed a different approach in the Baldridge Performance Excellence Program, which encourages self-assessment of compliance.

Using Trade Policy to Improve Cybersecurity:
Although digital trade increases cybersecurity risks, trade and cybersecurity policy can also work in tandem to support growth in digital trade as well as strengthen cybersecurity outcomes.

Reforms since World War II have substantially reduced government-imposed trade barriers. But policies to protect domestic industries vary. Tariffs are much higher in certain sectors and among certain country groups than in others. Many countries have substantial barriers to trade in services in areas such as transportation, communications, and, often, the financial sector, while others have policies that welcome foreign competition. Under the rules-based international trading system centred in the WTO, trade policies have become more stable, more transparent, and more open.

Access to data:
As cybersecurity defence becomes more sophisticated, use of analytics and machine learning to monitor network activity plays a growing role in the analysis of risks and anomalies. The CPTPP and USMCA commitments to information flows across borders (subject to appropriate exceptions) and to avoiding data localization requirements, advances digital trade opportunities and cybersecurity outcomes.

Information sharing:
Trade agreements can include commitments to building public and private sector information sharing mechanisms. For example, the U.S.-Mexico-Canada trade agreement includes a commitment to sharing information and best practices as a means of addressing and responding to cyberattacks.

Why a risk-based approach to cybersecurity is the right business choice:
Monitoring of trade deals needs a risk-based approach. The move from a free trade approach to a risk-based approach marks a foundational shift thinking on trade. This has prompted an urgent development of new policies, which includes a greater reliance on export controls. Cybersecurity is one of the main topics for business managers in today’s world. The approach to cyber risks has changed from “maturity based” to “risk-based” over time.

Risk-based approaches are often presented in opposition to compliance-driven approaches. A risk-based approach to cybersecurity is also proactive rather than reactive. Instead of focusing on incident response, a CIO at an organization using this approach is likely to invest heavily in testing, threat intelligence, and prevention. Finally, this approach is inherently realistic. The goal of a risk-based cybersecurity program is meaningful risk reduction, not 100% security.

New trade rules that can both support risk based effective cybersecurity regulation, build bridges between the cybersecurity policy in different countries to maximize synergies, and minimize barriers to trade are needed.

Euro Exim Bank (EEB) complies with the ever-changing policies and is a global organisation that caters to many countries with different jurisdictions, enacting end-to-end security and frequent evaluations with ongoing improvements. EEB was an early participant in the Ripple community and achieved xCurrent connectivity enabling institutions to instantly communicate and settle cross-border payments with end-to-end visibility and tracking, all in record time. EEB also participates with Ripple’s ODL service, and with expansion of crypto globally, looking to issue its own stable coin in 2023.

As the digital economy is growing, so too is the opportunity for malicious actors to exploit IT vulnerabilities. Recent high-profile cyber incidents, such as SolarWinds and Microsoft Exchange, along with the notable increase in ransomware attacks on organisations and critical national infrastructure such as the Colonial Pipeline in the US, have demonstrated the disruptive potential of these threats and the real world impacts they can bring about.

Doing nothing is no longer an option.  You can protect your organisation, and your reputation, by partnering with a well-recognized financial organisation like EEB, with years of experience for effective management of risk in the facilitation of global trade.

Africa FDI Set To Recharge

Investors often associate Africa with high levels of risk, but the continent can also generate the best returns. In 2021, FDI into the continent rebounded sharply after an acute decline in 2020 due to the pandemic, but inflows weakened again in 2022 amid a deteriorating global economic environment and security situation. This year however looks set to mark another upturn.

An important positive is the African Continental Free Trade Area (AfCFTA), the largest new free trade area since the establishment of the WTO in 1994. It promises to increase intra-African trade via deeper levels of trade liberalisation and improved regulatory harmonisation and coordination. It is also expected to boost the competitiveness of African industry and enterprises by means of increased market access, economies of scale and more effective resource allocation.

AfCFTA could present major opportunities for increased FDI into the region. By reducing tariff and non-tariff barriers to trade, investors in one member state could have access to an expanded market for goods and services across Africa. Intra-African investment, an increasingly important source of FDI, could also improve under AfCFTA. Only 18% of all Africa’s commerce is intra-African trade, while the equivalent figure in east Asia is between 35% and 40%.

In recent years, African countries have made great efforts to create a favourable investment climate, which is key to attracting and retaining more private investment and creating more and better jobs. GDP growth and FDI flows have seen a positive trend generally. All this needs to go with macroeconomic stability, good governance and the rule of law. Access to markets, the physical and digital infrastructure as well as a country’s policy framework are also key.

Mining and gas projects are set to drive FDI in Africa this year. While the global economic environment remains uncertain and international flows of capital are under pressure, the limited supply of Russian oil and gas to Europe is prompting investors to look to Africa. This is good news for Africa’s energy sector, while mining ventures could also receive more attention should Western mining companies and commodity traders increasingly shun Russian supplies of metals and minerals.

Three enormous LNG projects with a total investment of $55bn are planned for Mozambique. Two are large onshore undertakings: one led by French oil and gas major TotalEnergies and known as the Mozambique LNG project, and another led by US-based ExxonMobil and known as the Rovuma LNG project. The third, smaller project – Coral South – is led by Italian oil and gas major Eni, which plans to invest $7bn.

Africa also appears set to receive much more foreign investment in the mining sector given the global energy transition. Africa has some of the world’s largest deposits of minerals vital to the energy transition, including nickel, cobalt, graphite, lithium and rare earth elements. It accounts for around 80% of the world’s total supply of platinum, 50% of manganese and 66% of cobalt, for example. But while the continent has around 30% of the world’s mineral reserves, it only produced around 5.5% of the world’s minerals in 2019.

Renewable energy investment is another area where Africa is lagging the rest of the world but that could be set to get better. Despite rapidly growing electricity demand and improving policy frameworks, relatively little capital has been deployed recently for new wind, solar, geothermal or other renewable power-generating projects. New project announcements in South Africa however include a $4.6bn clean energy project finance deal sponsored by British renewables energy company Hive Energy and a $1bn greenfield project by US IT services management company Vantage Data Centers to build its first African campus.

According to James Zhan, senior director, investment and enterprise at UNCTAD, “For long-term prospects, the African continent has great potential to attract international investment in the green and blue economies, as well as infrastructure. A challenge is to further improve the investment climate and strengthen Africa’s capacity to absorb such sustainable investment.”

The blue economy focuses on fisheries sectors and marine and coastal resources. The World Bank is pioneering Blue Economy for Resilient Africa Program, announced at the United Nations Framework Convention on Climate Change’s annual Conference of the Parties (COP27). The Program will work with Africa’s coastal countries to leverage the opportunities and manage the risks inherent in growing their budding Blue Economies.

Meanwhile, service-based sectors are a major focus for foreign investors, according to Sandile Hlophe, EY’s Africa government and infrastructure leader. She says that there are three main reasons. First, Africa’s young population is increasingly using digital platforms. Second, service industries are emerging around the renewable energy and telecoms sectors. Third, global investors have a lot more visibility on the markets in Africa and the demographic changes on the continent. “Before the pandemic, they had to travel to the region to see the opportunities, now they can just undertake market intelligence or reconnaissance online”.

Kenya and the World Bank Group Provide a $390 Million Boost the Digital Economy

The World Bank Group Board of Directors approved $390 million in financing for the first phase of a program that aims to expand access to high-speed internet, improve the quality and delivery of education and selected government services, and build skills for the regional digital economy.

The Kenya Digital Economy Acceleration Project will use a multi-phase programmatic approach (MPA) with two phases where phase one will run from 2023-2028, focusing on expanding access to high-speed internet, improving the quality and delivery of education and selected government services, and building skills for the regional digital economy, and phase two will run from 2026-2030, concentrating on building a data driven and secure environment for enhanced digital service delivery and innovation for the regional digital economy. The project will also mobilize an estimated $100 million in private capital by crowding-in the private sector for broadband infrastructure development.

“Broadening access to digital technologies and services is a cross-cutting pathway to accelerate economic growth and job creation, improve service delivery, and build resilience,” said Keith Hansen, World Bank Country Director for Kenya, Rwanda, Somalia and Uganda. “The Kenya Digital Economy Acceleration Project aims to help make Kenya’s growth more equitable by shrinking disparities in digital skills and connectivity, and expanding the digital marketplace.”

While Kenya has made impressive gains, there remains a persistent digital divide in access to broadband, digital public services, and the skills needed for individuals and businesses to thrive in an increasingly digitized economy and society. Kenya needs the economies of scale and network effects of a larger and more competitive regional market to achieve its vision to become one of the premier digital investment and innovation hubs on the African continent. Likewise, the lagging countries in the sub-region would benefit from greater access to Kenyan innovation and services.

“The initiative will increase last mile connectivity by boosting broadband network coverage for over 70% of Kenya’s population that resides in rural and underserved areas,” said Tim Kelly, Lead Digital Development Specialist at World Bank. “Kenya’s digital agenda, reflected in the ambitious ‘ICT Master Plan’, aims to transform the country into a regional ICT hub by increasing fiber optic coverage to 100,000 km and digitizing 80% of public services.”

The project will increase access to broadband through an expansion of the fiber optic backbone and last mile connectivity to government and learning institutions, as well as along Kenya’s borders, benefiting the regional digital market. The project will also boost digital skills to support the uptake of digital services and the development of a competitive labor force for the digital economy, and enhance access to regional and global markets through regulatory and policy harmonization with regional initiatives. As such, it aims to strengthen Kenya’s capacity to drive regional digital integration with positive spillovers to other countries. Expanded access to connectivity will also reduce the need for travel to access information and services thereby minimizing the carbon emissions footprint, and facilitate service delivery in times of emergencies requiring remote operations.