Tanzania, Kenya highest Mobile Commerce growth in East Africa

June 26, 2014

United Republic of Tanzania and Kenya have the highest m-Commerce growth in East African region, but the region’s less populous member Uganda is seen to have the most potential, according to latest growth figures. In an analysis dated June 10, 2014 entitled “East Africa at an inflection point for Mobile Commerce,” the inflection point for smartphone penetration and mobile Commerce in East African region. Tanzania saw a three-fold increase in smartphone penetration in 2013 alone, while Kenya has increased from 5 percent in 2012 to 12 percent currently with country’s largest mobile network operator accounting for more than two million smartphone users in the country. This is despite a low credit card penetration, inefficient supply chains, inhibitive customs and tax regulation and embryonic Internet penetration, which do not bode well for online mobile-tailing in East Africa. But business is thriving with the EAC region having reached its ‘mobile moment’, with the majority of traffic coming from mobile devices with the rollout of 3G, and more affordable devices some costing less than $100 for android powered smartphone. Tanzania and the Kenya have the highest growth in the region, while Uganda has the most potential, the report said. While market data suggests online penetration in East Africa could be as low as 40 million users, the report authors said their analysis suggests the region has 70 million potential Internet users (50 percent penetration), rising to 100 million within the next two years.

Currently, there are 52 million active social netizens in East African Community member states of Kenya, Tanzania, Rwanda, Burundi and Uganda. Estimates on the size of the Mobile Commerce market vary greatly especially in Tanzania and Kenya. This is because they used proprietary analysis based on Big Data algorithms to model the market from bottom up perspective. Beneficiaries of Mobile commerce boom are limited to telecom operators in what is known as data boom. The analysis also noted that mobile retailing, especially through platform ‘price disruptions’ is a key risk to the traditional ‘bricks & mortar’ retail models. This means retailers will have to quickly devise a cohesive Mobile Commerce strategy. Regionally, the supermarket model has come under pressure from mobile Commerce platforms. While consumer education and ‘trust’ is the key bottleneck to Mobile commerce growth in East Africa, a lack of logistics infrastructure is a key impediment to online mobile shopping, at least in terms of next day delivery. Inefficient infrastructure in East Africa is not the only issue; Mobile Commerce supply chains can be significantly more complex than the industrialized pallet model that has been the backbone of the logistics industry. This has led to a significant number of Mobile Commerce start-ups.

Contador Harrison