Continental Africa’s number of internet users exceeds those of America and UK combined

Africa – “the forgotten continent” is going through a mobile internet and e-commerce revolution of its own.

The African continent is ripe for digital retail expansion

With 54 countries, 1.29 billion people in 2018, but a limited internet penetration of only 36%, Africa has a substantial potential for e-commerce. The continent leapfrogged the rest of the world, skipping a technological generation by switching from typewriters straight to smartphones. Thus, it is essentially a mobile e-commerce market according to the 2018 report ´Africa: The Next E-commerce Revolution and the centre of the mobile money market´. Connectivity rates are shooting up across the continent. In addition, as the shortened version of the graph below indicates, Nigeria and Kenya have the highest number of internet penetration as of April 2018. Moreover, according to Gaurav Jain of Nigerian Jumia Group, Africa’s number of internet users exceeds those of America and UK combined.

(Official source and graph: Statista, 2018)

Nigeria, South Africa and Kenya in the e-commerce lead

Although the continent is vast, and there are many countries, there are three countries standing out economically: Nigeria, South Africa and Kenya. They are the ones to watch.

Nigeria

In less than half a year, Nigeria experienced a 12% increase in internet penetration to more than 10 million users, thereby illustrating how connectivity rates are indeed steadily growing across the African continent. Moreover, with 40% of Africa’s e-commerce ventures headquartered in Nigeria, it is the African country with the most e-commerce sites. Thus, it is home to Konga.com, dubbed “The Amazon of Africa”, and Jumia. In addition, Jumia is considered to be the best-funded e-commerce startup of the continent, and the largest e-commerce player (Luo, 2018). It is present in 14 African countries, has 3 million customers, and offers brands such as HP, Leroy Merlin, Apple, Samsung, and Orange. It processes one transaction or lead every two seconds (United Nations, 2IFC).

South Africa

While it sits at the 4th position when it comes to the number of internet users, South Africa is still the African leader in online retail sales. It has the best cross-border potential. South African’s leading e-retailer, Takealot, is a giant in the country. Last year, it increased its gross merchandise volume by 57% (Writer, 2018).

Kenya

When it comes to the thriving mobile market, Kenya has become the leading African nation due to its developed mobile commerce platform M-Pesa. The mobile wallet provider, promotes and guarantees a secure payment system, which encourages internet access, as well as online purchasing.

The African consumer profile

(S)he is an educated millennial with a salary and a bank account. The African appetite for e-commerce is ceaselessly growing. In short, nearly two years after the No 1 Nigerian online retailer Jumia opened its doors for Nigerian and African consumers, figures showed that 70% of Nigerian shoppers and 55% of Kenyan consumers used their mobile phones to benefit from Jumia’s online offerings.

Pitfalls & challenges

Nevertheless, the African continent is still described as a laggard in e-commerce due to several reasons ranging from the lack of internet access and to logistical inefficiencies. Another element slowing down Africa’s rapid e-commerce expansion is the lack of trust by both customers and merchants regarding digital transactions. This feeds and maintains cash-based market places. Once Africans will overcome these challenges – at least the major ones -, the three leading countries, as well as the continent as a whole, will likely rise to the position of ‘‘e-power’’.

Potential & opportunities

Approximately 280 million Africans walk around with mobile wallets. This is three times the figure of Africans with bank accounts. The likelihood for the African consumer to have a mobile wallet is higher than the world average. Indeed, there is a prevalence of mobile money. Forecasts predict that by 2025, online shopping may account for up to USD 75 million or 10% of retail sales. The recently launched Pan-African B2B e-commerce platform, Afrimart, will as well contribute to this figure as it promotes intra-African trade and further feeds the ecommercial opportunity.

Conclusion

Ultimately, despite the various challenges to be overcome, including the shortage of digital talent and education, the African continent proves to be once again a well of wealth when it comes to ecommerce in this digital area. A continent, not to be overlooked anymore.