The financial and banking sector in Africa has snowballed into an era where traditional payment methods, characterized by its hectic and daunting procedures have passed batons on the run to activate a spark in electronic commerce where banking as a business becomes suave and easy with the invention of quick payment platforms.
E-commerce in Africa boasts as the economy’s centre piece of survival, following the evolution of businesses owned by software engineers, web developers, and tech experts using their operational software packages as catalysts for transformative change on the continent’s economy, further ushering a state of e-commerce boom.
It’s therefore important to explore the rapid growth of e-commerce in Africa and its significant impact actively spurred by increased mobile penetration on the internet.
Examining how these inform trends and shape economies in view of the future beckons heavily on the need of this article.
The internet and increased mobile penetration in Africa are root reasons behind the growth of e-commerce in Africa. Without high engagement in internet connectivity, businesses online wouldn’t thrive.
The revolution in Africa is purely as a result of technology and the mind-shift that comes with it. According to the GSM Association (GSMA), 495 million mobile application subscribers were recorded in Sub-Saharan Africa at the end of 2020.
This figure is mounted on the expectancy rate of growth in 2025 raking 615 million mobile subscribers – BCG Global.
This data draws a parallel with the internet usage and subscribers therein. Over 272 million mobile internet users are projected to climb to a peak of 475 million by 2025 and might grow beyond its expectations.
Behind these figures are the accessibility and availability rate of smartphones and mobile network connectivity of Africans.
Frontier countries like Nigeria, Kenya and South Africa have buoyantly utilized the internet creating avenues for e-commerce initiatives, especially after being motivated by the shimmering potentials of 4G and 5G, in view, for guaranteed satisfactory user experience.
All of these and more gave rise to the potentials gagged from the IT industry, marking the blooming landscape of e-commerce in Africa.
Digital Payment Platforms
Away from the limitations of traditional banks, digital payment platforms explore convenient patterns of banking by providing easy payment transactions to people without the arduous formalities associated with conventional banking infrastructures.
This contributes hugely to the success of e-commerce because digital payment platforms are now on the increase leading to drastic development in the industry; in the long run secures jobs and financial security for users. Some of these platforms include:
Mobile Money: Began operations in 2007, this digital application runs a mobile money system where users can easily deposit, transfer and withdraw money in exchange for goods and services all with their mobile phones.
M-pesa, popularly used in Kenya is a distinct example of this service and with its 40 million users this has made waves on the country’s economy, according to BCG Global.
Fintech Innovations: Financial technology burgeons as a result of technological advancements.
Basically, these applications are innovations that advance payment procedures of mobile money systems through the provision of avenues where transactions can occur via different currencies all in a single application. Typical example of this is Flutterwave, with its signature 140 million transactions worth $9 billion in 2020 (BCG Global).
Cryptocurrency: This is a digital payment platform that has gained massive traction and users across the globe, most especially Africans who constantly milk its opportunities.
Cryptocurrencies mine coins and can be used for transactions in exchange of anything. Modern crypto now exchanges coins tantamount to the currency value, say Naira for instance. Although currently banned in Nigeria, it served as a bright digital prospect for Nigerians, opening pathways for wealth accumulation through currency trade. Platforms like Luno and Binance are popular crypto-oriented platforms for buying, selling, and storing cryptocurrencies (Ref: Ventures Africa).
Successful E-commerce Ventures
Jumia
Ask 10 Nigerians about their awareness of Jumia, be rest assured that 8 or more of them would attest in affirmative.
Launched in Nigeria, 2012, Jumia is a popular e-commerce venture, vested in the buying and selling of goods and services of different ranges in 14 African countries.
This platform has stood a test of time and maintained buoyant prosperity because of constant technological upgrades and partnerships from local associates including a well mapped-out logistics network, ensuring timely and consistent delivery.
Technically, Jumia manages its inventory and supply cycle with advanced machines programmed with algorithms that optimizes cost and efficiency (Ventures Africa).
Konga
Konga, standing tall as Jumia’s major competition, is a leading e-commerce platform in Nigeria whose transactional history bears the trademarks of focus and innovation.
Konga was acquired by Zinox Technologies in 2018 and has since then offered multidimensional shopping experiences for customers through her technology’s incorporation of offline and online retail channels.
Technically, Konga operates a hybrid cloud infrastructure to monitor its dynamic operations through the use of microservices that allows for feature development and versatility (Ventures Africa).
Takealot
Takealot is in South Africa and has proven to be dominant as an e-commerce driver. It holds a diverse range of products and is known for fast deliveries. Its technological framework ensures seamless transactions with easy payment patterns.
Technically, Takealot banks on data analytics to manage its marketing strategies to ensure that algorithms pinpoints the interests of her users. Mr D Food which is the platform’s logistics partner, efficiently uses GPS tracking to easen deliveries and reduce mishaps (Business Insider Africa).
The emergence of e-commerce has blessed the economy to stupendous dimensions.
The growth of e-commerce gives immense contribution to business opportunities and water dreams of many whose idea conceptualizes small scale businesses, to hope that their dreams are valid and can produce effective returns upon venture.
Furthermore, e-commerce has served as the cornerstone for job opportunities especially in fields that bothers on logistics, customer service and IT. In areas pertaining to GDP, e-commerce proves to contribute significantly upon yearly return.
This further correlates the findings of the United Nations Conference on Trade and Development (UNCTAD), stipulating that the e-commerce sector could contribute up to 10% of Africa’s GDP by 2025, up from 4% in 2020 (Ventures Africa).
Evidenced here is exponential growth on the backdrop of increased consummage by consumers, digital expansion and internet penetration.
E-commerce has also enhanced financial inclusion as its digital payment solutions attract people especially those with no prior bank experience into utilizing mobile money applications.
This has crystallized the possibility of financial awareness and the introduction of financial liberty schemes to minimize the rate of poverty and hunger.
Challenges and Opportunities
Some of the challenges e-commerce face in Africa include Infrastructure, Regulatory frameworks, and cyber security.
E-commerce faces stiff realities that hinders smooth operation ranging from bad roads to epileptic power supply that leads to an overall slack in operations.
The issue of regulation about the mobility of payments across countries pose a threat to inclusivity, disabling the universal objective of e-commerce.
Cyber security isn’t appropriately staged yet in Africa, this is the reason why some e-commerce softwares are hacked and robbed of their resources.
Some of the opportunities of e-commerce in Africa include Fintech Integration, Local solutions and partnerships.
The marriage of e-commerce and financial technology grows highly possible to achieve beautiful results.
Here, e-commerce can align with financial technology to improve payment solutions that cover security and transparency.
E-commerce can be used to curate cultural-oriented values in ways that applications can be created to support local languages and preserve culture just as it’s fashioned in other countries whose hypertext markup languages are designed with indigenous language which can’t be understood if one isn’t familiar with the language. Another grand opportunity for the e-commerce industry is the possibility for greater accomplishments to be meted out especially when fruitful collaborations exist between tech companies and governments, international organizations and tech companies, this will accentuate the situation of things and bolster development.
With Statista’s $75 billion projection of ecommerce’s revenue in 2025 and GSMA’s prediction of mobile money payment peaking at $500 billion in 2025, the future of e-commerce in Africa definitely shines bright.
It’s left for e-commerce drivers to capitalize on these potentials by throwing creative expertise in the dynamic market for the sake of consistency and security of the Industry.
Conclusion
E-commerce is technology’s new gold. Creating diverse opportunities for tech professionals to thrive and build infrastructures to position the relevance of their works. Most prominent are Fintech experts whose input to the digital terrain is essential to the ultimate growth of technology and the economies of African countries which it practises.
Hilary Utuke is the CEO of Korlod Works, a top Digital Marketing firm in Lagos. He’s authored four books including “Digital Strategies for Online Brand Visibility” and created Digital Luminary Pro (TM), a model helping Nigerian Thought Leaders connect with Millenials and GenZ audiences.
