The increasing use of smartphones across Africa could help to boost the value of the continent's e-commerce market to US$75 billion within the next ten years, but some significant barriers to growth remain, according to a recent report from the Economist Intelligence Unit (EIU).
The report, "How technology is driving retail in Africa," notes that the increasing use of technology, in particular smartphones, is changing shopping culture across Africa and is leading to a "leapfrogging" effect whereby "an increasing number of Africans are embracing the potential of e-commerce by using mobiles, rather than personal computers (PCs), for their online purchases."
That trend could help e-commerce sales in Africa reach $50-75 billion per year within the next five to ten years, with Nigeria "in pole position to take advantage of e-commerce potential, on the basis of its high business environment opportunity potential," according to the EIU.
The report's authors note that the mobile penetration rate in Nigeria is set to rise from 103 lines per 100 people in 2016 to 122 lines per 100 by 2021 and that Nigerian users of two of the biggest e-commerce companies in Africa, Jumia and Konga, use their mobile devices to access those sites.
But the potential growth of the e-commerce sector in Africa faces some significant challenges, according to the report, including: fear of fraud among consumers; logistics network problems; the fragmented nature of African retail markets; the quality and reliability of mobile data network services; and the "entrenched problem of illiteracy among a significant proportion of the African population."
Overcoming those hurdles will require "significant investment from both the public and private sector."
The e-commerce sector in Africa is still in its early stages and the dominance of physical shopping outlets and the use of cash is not going to be overturned any time soon, but "the gains will be numerous" for those companies willing to "adopt a long-term approach in shaping a burgeoning sector," finds the report.
Access the report by clicking on this link.
— Ray Le Maistre, , International Group Editor, Light Reading for Connecting Africa.