Africa’s E-commerce is changing retail business

May 11, 2017

Many of African countries already have prepared the ground for the digital economy to prosper and have taken the initiative to spur the growth of e-commerce within their own boarders.Some of the issues being addressed to grow ecommerce business is taxation, funding, consumer protection, human resources, logistics, communication infrastructure and cyber security.African governments expects the new policies packages some which are dubbed as e-commerce road map, to create techno-preneurs with businesses that have values of billions of dollars.What is fueling Africa’s e-commerce growth is the strong economies emerging across the region and infrastructure, rather than the number of consumers. One of the reason is high internet usage where more than 200 million people of Africa have internet access and the number of users is increasing every year. Generally speaking, this is a very high proportion and ensures that ecommerce websites are able to easily reach a large audience.Further, the increase of social media use for people of all age groups in Africa has introduced new ways to connect with potential customers. The rise of handheld devices, current there are about 650 million mobile phone users in Africa, which again accounts for a large proportion of the total population. With more people having regular access these devices, it is easier for online businesses to find potential buyers. This is one of the key factors behind the popularity of ecommerce stores.In 2016, about 70% of ecommerce transactions were made on smartphones and 19% consumers buy products from mobile devices on a weekly basis.Preference for shopping online according to data I’ve obtained, shows that Africans spent well over $25 billion on online shopping last year. And every 2 people out of 10 buy products from ecommerce stores at least once a month. The 2016 country report from shows that about 8% people of Africa shops online and this trend is going up. Africans are quite getting used to purchasing things on the internet and majority of internet users prefer this to traditional shopping.Stronger economies like Nigeria, Egypt and South Africa mean that people have more purchasing power and disposable income. That makes spending money whether it be spent online or elsewhere more possible.The same countries have strong infrastructure with over three quarters of urban providing retailers with a better opportunity for ecommerce retailers to grow their business.

Over the past three years, many physical shops have started online businesses and have become successful. Compared to many others countries, African online retailers face fewer bureaucratic hurdles and barriers to entry. This makes Africa an interesting destination for foreign ecommerce investment too.The kind of products Africans are buying online vary greatly. This is because some African governments want to better protect national interests and give priority to small and medium-sized enterprises and start-ups.They want to boost creative innovation and invention of new economic activities, especially for youths who enjoy playing around with new things.Africa’s e-commerce market is estimated to be have about 49 million consumers from a total population of 1.2 billion, according to the data I’ve.Some of the initiates which includes grants or subsidies to help start-ups boost their chances of surviving in the tough e-commerce industry will go along way to help the African companies realise growth. Also some countries aims to reduce taxes for locals investing in start-ups and simplifying taxation procedures for e-commerce start-ups with a turnover of less than $1m a year, so that the final income tax will only come to less than five percent. By going digital, African countries would be able to unleash their next level of economic growth to the tune of $800 billion in terms of impact by the year 2030 if it were able to address the most pressing issues adequately according to the report.Same report suggest that while some African countries were admirable in terms of the number of internet and smartphone users, most of them still did not adequately embrace modern technology. Internet penetration in some countries has only reached ten percent of the population, despite smartphone penetration standing at over 20 percent.The report partly places the blame for the low penetration on Africa’s relatively weak information and communication technology infrastructure. Some African countries internet bandwidth, for instance, is still at a relatively low average rate of 6.2 kbps per user.African government’s digital economy dreams could fail if they do not improve infrastructure and logistics. Some of them will not reach their maximum potential if their logistics remain the same. It may be fine in the bigger cities, but how will it work in the remote areas is another different story.Overall, Africa’ weak infrastructure remains its biggest task.

Contador Harrison