The Rise of E-commerce In Africa

By 2025, it is anticipated that Africa will have more than half a billion online shoppers, representing a market with a consistent compound annual growth rate (CAGR) of 17%.

According to data provided by the International Trade Administration, Africa leads the world in the generation of web traffic from mobile devices, with 69% of its overall web traffic coming from mobile internet users.

By 2040, the market is expected to be dominated by mobile devices, according to them.

By 2021, the African continent will have a mobile internet consumption that is 13% higher than the global average and about 5% higher than Asian markets.

This should suggest a "mobile-first" strategy to any business looking to sell online to the various African markets as the continent has made significant advancements in internet penetration—estimated at 70%—and is home to MPESA, which invented mobile payments. However, it still lags in access to energy and road networks.

Consider the Republic of Kenya, for example.

The government will digitize its operations to improve service delivery, according to President William Ruto's statement from last year

During a roundtable discussion on micro, small, and medium enterprises held by the Kenya National Chamber of Commerce and Industry in Nairobi, he delivered these remarks.

The President also stated, outside of the same agenda, that the government was developing a policy framework for the creative economy to safeguard children and increase their capacity to support themselves via their skills.

Speaking at the Jamhuri Day celebrations in Kenya last year, Ruto underlined the government's commitment to digitizing all of its services.

He claimed that to make this a reality, his administration intends to construct a 100,000 km long expressway of internet through cities, municipalities, and the entire nation.

In addition, the head of state noted that just 15% of services were already provided digitally in the nation, with the remaining services expected to be implemented soon.

“It will soon be possible for Kenyans to access government services from the comfort of their homes using the internet,” he said.

He also said that for easy access by small firms, export documentation and business information would also be digitalized and combined in a single platform.

This merely demonstrates that the country is already getting moving, as it always has.

Additionally, it has served as a model for other nations in the region.

Investors seeking to establish their enterprises on the continent must therefore be prepared to follow the trend and launch their operations, just like in many other African nations.

Online sales in Africa were predicted to produce about 37 billion US dollars in revenue in 2022, up from about 13 billion US dollars in 2017.

Statista Digital Market Outlook predicted that between 2022 and 2027, e-commerce sales in Africa would continue to grow

Thus, it is believed that technology is still revolutionizing various industries throughout Africa, none more so than the burgeoning e-commerce market, which is changing how the retail sector operates and connecting the continent's hundreds of thousands of small and medium-sized businesses with a sizable potential customer base.

The second iteration of TechCabal Media's Future of Commerce event was held in Lagos in September of last year. Business leaders, industry experts, and retail operators from all over Africa attended to discuss how social media, payments, agent networks, informal trade, and social commerce will drive the expansion of Africa's e-commerce market.

The event focused on the inventive and unique methods that startups and established businesses may include the unorganized sector in the e-commerce ecosystem.

What is the impact of Covid-19 on the prospects for e-commerce in Africa?

I think the most typical question I get is this one.

The pandemic changed ecommerce in Africa, as it did everywhere else in the world, from a convenience to a need for both customers and businesses.

However, the need there may have been more urgent.

E-commerce offered a secure substitute for both buyers and sellers during lockdowns when open marketplaces were blocked for a while.

Online shopping has become a routine and will probably continue to do so for some time.

And how can businesses make greater use of the chance that digitalization offers?

The response of policymakers to the opportunity will play a role in the solution.

For instance, e-commerce is playing several roles in Africa, but two of them are particularly significant: 1) lowering barriers to entry for retail and enabling millions of Africans to participate in the economy; and 2) facilitating the consolidation of a highly fragmented industry

Combinations must work together

A still-fragmented economy struggles to draw in targeted institutional investment resources.

For Africa and its enterprises, social commerce, which blossomed during the pandemic, poses this problem.

Despite being digital, it is still mainly dispersed.

According to reports, the amount of investment money entering the African digital market has increased significantly, reaching $5 billion in 2021, and is tellingly focused on industries like fintech and e-commerce, where platforms are utilizing aggregation to promote value creation.

Given that there is still a sizable headroom for investment across all segments (including other ones like health, agriculture, energy, and more), understanding the difference between fragmented digitalization and aggregated digitalization seems to be essential to understanding how African countries can draw in more investment to fully leverage the potential of digital business models.

And what can African firms learn from this?

It's crucial to keep in mind that for businesses to succeed, they must incorporate the sometimes unsettling contrasts of Africa into their business models and create innovative solutions that are specifically tailored to the market. Investment capital will also follow where cutting-edge solutions and digital aggregation are creating real value as digital penetration rises across the continent.

What are some strategies for ecommerce to expand in Africa?

Imitating business practices and government regulations now in place in Kenya is one way that eCommerce can develop.

Kenyan banking is a global pioneer in the use of mobile money, and the country's e-commerce sector has experienced rapid expansion.

There are numerous examples of "best practices" there.

Hundreds of young entrepreneurs are contributing to the expansion of e-commerce thanks to the over a dozen digital hubs that are fostering app and business development close to Nairobi.

Through their digital hubs, many other African nations have promoted app creation as well.

Another leader in South Africa.

The number and locations of Africa's tech clusters are estimated in this article.

Two significant barriers to the expansion of e-commerce in several African nations are customer trust in using the internet and internet access.

It can be challenging to access the internet outside of urban regions, making e-commerce problematic as well, however, the mobile phone system offers an alternative.

The internet must be made more accessible to those with purchasing power to improve ecommerce.

To be accessible, the internet must function consistently and at a "reasonable" speed.

Second, there is a lot of work needed to change people's skepticism of conducting business online.

Enough security measures are required, and businesses that promote e-business must establish exemplary reputations, be entirely reliable, and provide money-back guarantees for goods supplied.

As a final note, social media marketing for the specific organization needs to be strengthened along with traditional lines of marketing that direct consumers to the internet as a source of supplies.

Middle-class and higher-income residents are using the internet to purchase their home-delivered meals or groceries in the urban centers of Africa where traffic is a serious bottleneck due to the congestion.

Having things delivered to customers saves them a lot of time compared to having to constantly navigate traffic and polluted air outside.

In some of these cities, there may be genuine chances for growth.

Trust, quality, and reputation are still important factors.