Business
5 reasons why Africa is ripe for e-commerce growth
Do not be surprised if you come across news that says e-commerce is dramatically spreading its wings in Africa. There is no doubt digital commerce is heading Africa’s way. According to a report, by the Hamburg-based business intelligence organization yStats.com, e-commerce has tremendous growth potential in Africa. Though a late entrant, Africa is seen by industry giants as one of fastest growing e-commerce markets in the world.
So what is it that has made the African landscape ripe for e-commerce growth?
1. Growing internet penetration
A growing number of young, internet–savvy Africans are triggering the growth of internet across many countries in the continent. With over 33 percent of Nigerians having access to reliable internet connection, Nigeria is witnessing an internet boom that is enabling e-commerce to take off smoothly in the country. Having eclipsed South Africa as Africa’s largest economy, Nigeria is now the growth engine of the African e-commerce industry.
Also, over half of internet users in South Africa, the second biggest economy in Africa, shop online at least once in a week. The prevalent use of internet and availability of a large number of local online shopping websites has increased the sales of local vendors plying their trade on the World Wide Web.
2. Rise in Mobile Connections
Africa is filled with digital opportunity and many industry stalwarts are investing in it – this has created a forward momentum that is driving e-commerce growth in Africa. With an 82 percent mobile phone penetration rate, the African digital revolution is also taking shape on mobile screens.
Another fact you must keep in mind is that 7 out of 10 of the world’s fastest growing economies are in Africa. This has created a strong market for smartphones because they are an indispensable part of the modern digitized economy.
The lowering of smartphone prices and entry of key international mobile service providers has seen a spurt in the adoption rates of mobile telephony in Africa. With over 87 million users in Nigeria, 20 million mobile users South Africa, mobile commerce is growing at a relatively rapid rate on the African continent. Africa has witnessed a dramatic rise in mobile device transactions and one of the testimonials of this fact is that 19 million of Kenya’s population of 44 million uses the M-Pesa mobile money platform. This has enabled the masses to tap the benefits of e-commerce. Mobile payments and online shopping are helping them overcome the barriers of time and distance and get their hands on the products they need.
3. Growing Buying power of Middle Class
While Nigeria leads the pack in terms of countries witnessing high economic growth, closely followed by South Africa, even lesser known countries like Morocco, Senegal, Kenya and Mozambique are making their presence felt on the economic map of Africa.
The rapidly growing middle class in these countries has more spending power and wants better products and services with shorter delivery periods. They see e-commerce as a great way of satisfying their needs and requirements in this regard. Hence Africa is witnessing a surge in online shopping.
The Central Bank of Nigeria is encouraging people to adopt the cashless route while making purchases. The aim is to reduce cash-based transactions and e-commerce is playing a big role here. The growth of the African middle class and its subsequent impact is being felt across Africa. With the growing middle class seeking better shopping experience and price control, the stage is set for big players and startups to improve their services and tap the huge opportunity that lies in the e-commerce sector in Africa.
4. Overcomes the problem of Physical Store Accessibility
E-commerce offers a fantastic opportunity to people living in far-flung areas or regions where physical access to a good brick and mortar store is a big challenge. In this scenario, domestic and international e-commerce websites offer to deliver high quality local and international products, to the doorsteps of consumers. This is another huge benefit that is fueling the growth of e-commerce in Africa.
Consumers are quickly realizing that they have access to the best products and services online. They do not have to live with the fact that there is no good brick and mortar store in their neighborhood that is selling the kind of products they want. They can go the online route to buy these products.
5. People with Deep pockets are Investing in Africa
The African growth story has caught the imagination of big players in the world of internet and e-commerce. According to AT Kearny’s 2014 African retail development index, sub-Saharan Africa, with over one billion people has one of the fastest urbanization rates and mobile adoption rates in the world.
As a result, e-commerce giants like Kaymu and Jumia have opened shop, funded by the deep pockets of Africa Internet Group (AIG). Recently Jumia announced a fresh round of investments worth US$150 million.
It is predicted that the e-commerce market in Africa will grow to US$75 billion – according to a report by the McKinsey Global Institute.
Source: Africa News Wire