Mobile Penetration Set to Drive Take-off of E-Commerce in Africa

By January 09, 2014

Strong local e-commerce players are likely to emerge on the African continent, given the rise of the middle class and widespread Internet connections tailored to the needs of the local populations.

Despite some major logistical drawbacks, a relatively low level of banking penetration and some lack of awareness of the benefits of e-commerce on the part of consumers in rural areas, online shopping looks set to be a major trend in the coming years in Africa, predicts a report published by market research and market data firm Research and Markets. With online sales estimated to grow by 40% per year over the next ten years, the sector could well soon attract the global e-commerce giants to the African continent. South Africa, an online shopping pioneer, already has some fast-growing companies such as online books and electronics vendor Kalahari and online fashion retailer Zando. However, the fact that this country at the tip of Africa has so far relied on fixed Internet connections to develop B2C e-commerce means that it could well be overtaken by other countries which are taking advantage of Africans’ huge enthusiasm for mobile.

Egypt, Morocco, Nigeria, Kenya, Tunisia et al…

In Egypt the audience for e-commerce websites is constantly increasing in line with mobile penetration – no more than 50% of the population now use fixed Internet connections. Regional players and are already having to face competition from international players such as Alibaba and Amazon. In Morocco, the number of online purchases, e-consumers and banking transactions on the web are all showing sustained growth. In Nigeria, the large population, fast growing Internet penetration and relative shortage of bricks-and-mortar stores provide the country with all the incentives it needs to become the continent’s e-commerce leader.  Meanwhile Kenya is also likely to see powerful players emerge, driven by the 20% of its population who are already converts to e-shopping. Last but not least, Tunisia is also likely to emerge as one of Africa’s e-commerce champions. Some 500 platforms were already up and running by September 2013 as the El Ghazala Technopark system starts to bear fruit.

Strong incumbents and stiff regulations holding back some countries

Online auction sites and retailers, especially in the fashion business, are the South African ‘best sellers’. Egyptians also share the passion for online fashion, but their chief interest in terms of e-commerce is online music, tickets and reservations. Tunisia is no exception to the fashion trend but Internet users there are also keen to purchase tourism services and consumer electronics online. However, some African countries are finding it harder to go the e-commerce route. Cumbersome regulation in Algeria is slowing the entry of online players, while the telecommunications monopoly in Ethiopia is resulting in low penetration of ICT services. On the other hand, Senegal, Zimbabwe and Uganda are all showing encouraging signs, such as the implementation of nationwide online payment systems.

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