When looking at Africa in a global map, you see one solid mass of a beautifully shaped continent. Inside it, there are 54 independent states. It is home to 16 percent of the global population or about 1.25 billion people.
Surprisingly, the median age is just 19 years. Two in every five people are children. Africa's middle class will hit 40 percent by 2060, something that is sending innovators, entrepreneurs, western and eastern governments, and existing businesses purring. They can't wait to cash in on this massive population.
E-commerce tops the list of global businesses on the rise. Globally, it grows at a healthy 16 percent. In Africa, it grows at an unprecedented 25 percent. On the face of it, things are rosy, but a keen reveals a lot.
E-commerce Chains Grapple with Several Challenges.Fragmented Markets
Unlike in Europe and America where the markets subscribe to common terms of transactions including language and currency, Africa is highly fragmented regarding culture, languages, currencies, and platforms.
Africa population is mostly unbanked. Their only hope is in mobile wallets. Almost 40% of the adult population have a mobile wallet translating to about 280 million people.Non-Existent Infrastructure
E-commerce relies heavily on effective logistics and public address systems. Even in major cities, there are no postal services. Roads and other forms of transport are in deplorable state. Only about 25 percent of Africa's roads are paved. That makes logistics expensive and inconvenient.
However, these barriers do not discourage creativity and enthusiasm from enterprise companies. Two major e-commerce platforms, Jumia and Takealot, have received over $450 million in funding. Other players such as Kilimall, Bidorbuy and Konga are coming in strong.
There are challenges to any business. Perhaps the problems explain why only a third of the e-commerce startups are turning a profit. The challenge goes beyond mastering the ecommerce seo guide.
All everyone wants to see is how it influences Africa's economy.E-commerce Will Spur Innovation and Economic Growth
Job creation tops the list of Africa's economic concerns. With about 264 e-commerce companies coming up, they create a web of supportive services. Each company has its logistical support network including drivers and chain distribution experts.
These are jobs created in a continent bereft of ideas about economic growth. The fastest growing economy, Ethiopia, with about 8.5% will need several decades to achieve middle-income status.
In a region that lags economically, the clamor by China, America, Europe, and a few other economic giants is for a good reason. Access to foreign goods and services is waking the continent to partake in the global trade.
Access to the internet itself has seen a spike in all forms of technology. Agriculture technology, financial innovation, tech in general, and others are on the peak. E-commerce takes global ideas closer to the people.Possibly Stifle Local Production
In a study in 2015, SMEs had a positive growth thanks to expanded markets and e-commerce opportunities. However, as more competition comes in from outside, the little gains are likely to be eroded.
Access to cheap imports is already facing a backlash from local producers and manufacturers. As noted, local systems and policies are yet to catch up with global standards. Local producers in Nigeria, South Africa, and Kenya where e-commerce is fairly developed cannot compete with international brands.
In Nigeria, home to Africa's 40% of e-commerce sites, the focus is on UK and US produced goods. In a classic case of African markets, the platforms hope to capitalize on the love for goods produced in the first world.
Africa's earning power is still low. The clamor for cheap is signaled by the emergence of cheap tech goods from elsewhere. By 2025, Africa's smartphone market will stand at around 360 million, with the bulk of that going to cheap Chinese imports.Accelerate Adoption of Mobile and Cashless Transactions
It is already evident that cashless transactions can spur e-commerce adoption. Mobile payments, online sales, and card-based checkout systems are on the rise.
Although most of the e-commerce companies accept the popular cash-on-delivery model, commentators anticipate cashless transactions to grow significantly.Open the Economy to New Opportunities and Risks
Africa's economy will see a positive outlook thanks to e-commerce. Youths tend to adopt the platforms more than any other group. The same population is grappling with unemployment and mismatch in job skill sets.
Thanks to e-commerce, they can access platforms to sell their goods and wares. The cottage industry, though largely untapped, contributes significantly to local economies. Already, you can see locally-made crafts and art on online retail platforms.
By 2025, 10 percent of Africa's trade will happen inside online shopping platforms translating to at least $75 billion.On the flip-side
Global e-commerce and adoption of other technologies bring the world closer. In the 2008 financial crisis created by American firms, countries that had close commercial ties with the US suffered significantly. In Canada and Australia, the effects were significant.
Once Africa connects to the world economy, it will have to deal with threats emanating elsewhere. African countries cannot create and enforce digital space standards in the wake of cyber-attacks and threats. In such a case, issues of customer data and privacy will be an issue.Africa Will Have to Deal with Waste Management
Majority of the goods in e-commerce platforms have foreign origins. Most of them are cheap Chinese imports. African countries cannot handle electronic waste. Cheap smartphones have annual churn rates. E-waste will pose a significant concern whether there is e-commerce or not.
Africa will see a positive influence on its year-to-year growth. Jobs for the unemployed economy will be a crucial factor. There are opportunities that authorities can harness to reap benefits that are even more significant. There are also risks that come with any technology implosion, and Africa is not immune to them.