E-Commerce Poised for Explosive Growth in Africa

Africa is on the cusp of an e-commerce boom, with the number of online shoppers projected to surpass 500 million by 2025, representing a steady 17% compound annual growth rate.

This rapid adoption of digital commerce is being driven by increasing internet penetration, the ubiquity of mobile phones, and a young, tech-savvy population eager to embrace online shopping.

Africa leads the world in mobile internet usage, with 69% of its web traffic coming from mobile devices in 2021 - 13% higher than the global average. This mobile-first environment is shaping the trajectory of e-commerce on the continent. Entrepreneurs are leveraging social media platforms like Facebook, Instagram and WhatsApp to reach customers, showcase products and facilitate sales.

Local online marketplaces are also gaining prominence, catering to regional tastes and bridging the gap between sellers and consumers. However, challenges remain that are hindering the full potential of e-commerce in Africa.

Barriers to E-Commerce Adoption

Despite the promising growth, Africa still lags other regions in e-commerce adoption. A study by Mobile for Development (M4D) highlighted several barriers:

• Poor internet connectivity and high data costs
• Low affordability of smartphones
• Lack of trust in online transactions
• Unregulated online retail environment
• Insufficient logistics and delivery solutions
• Preference for cash payments over digital methods

The study found that up to 97% of micro, small and medium enterprises (MSMEs) reported increased sales after adopting e-commerce, especially in Ghana and Kenya. However, most still prefer selling via social media rather than dedicated e-commerce platforms due to higher trust, flexibility and lower commissions.

Experts argue that building trust through regulations on cybersecurity, data privacy and consumer protection is critical. Improving digital literacy among MSMEs and investing in logistics infrastructure are also key to unlocking Africa's e-commerce potential.

New Regional Strategies Aim to Boost E-Commerce

To address these challenges, regional bodies are developing strategies to accelerate e-commerce growth:

• The Economic Community of West African States (ECOWAS) recently endorsed a regional e-commerce strategy to diversify economies and create jobs.
• It aims to build trust, harmonize regulations, promote digital payments, and empower vulnerable groups like women and informal cross-border traders.
• The African Union is developing a continent-wide e-commerce strategy ahead of the African Continental Free Trade Area (AfCFTA). This will complement national and regional strategies to create a thriving digital market.
• UNCTAD has been supporting these efforts through its eTrade Readiness Assessments, which identify key barriers and provide policy recommendations.

Intellectual Property Protection Becomes Paramount

As more businesses shift online, protecting intellectual property rights has become a pressing concern. Counterfeit products sold on e-commerce platforms can undermine consumer trust and harm brand reputations.

African countries are strengthening IP laws and enforcement in the digital realm. However, businesses must also be proactive in monitoring online marketplaces, using authentication technologies, and educating consumers on the risks of counterfeits.

China-Africa E-Commerce Cooperation Grows

Cross-border e-commerce is becoming an important engine for China-Africa economic cooperation. Chinese platforms like Kilimall, Alibaba.com, Kikuu, and Shein are entering the African market, while African goods like coffee, tea, and cashew nuts are finding their way to Chinese consumers.

Live-streaming events and online shopping festivals have boosted sales of African products in China. For example, sales of Kenyan black tea and Ethiopian coffee surged during a recent festival. Chinese companies are also investing in African e-commerce infrastructure and creating jobs.

As Africa's e-commerce landscape matures, cross-border cooperation with China and other partners can help overcome barriers and unlock the sector's full potential. With the right strategies, investments and policy frameworks, e-commerce can be a catalyst for Africa's economic growth in the digital era.

NEWS SOURCES

• https://www.trade.gov/rise-ecommerce-africa
• https://www.trade.gov/country-commercial-guides/south-africa-ecommerce
• https://www.prnewswire.com/news-releases/b2c-e-commerce-market-in-south-africa-cross-border-online-shopping-was-led-by-millennials-and-generation-x-in-south-africa-in-2020-301496579.html
• https://eng.yidaiyilu.gov.cn/p/313953.html
• https://unctad.org/news/new-strategy-set-boost-e-commerce-west-africa
• https://intellectual-property-helpdesk.ec.europa.eu/news-events/news/intellectual-property-protection-and-e-commerce-platforms-africa-2023-10-04_en