A new wave of Digital Commerce Arrives in Africa

The GMSA estimates that there will be 500 million mobile internet users in Africa by 2020

Transformation of African economies to begin with affordable mobile devices

For African countries there’s a $700-billion opportunity over the next five years. This is solely dependent on if they can close the gender gap in mobile-phone ownership, according to GSMA, the global mobile-trade body. The body arrived at that estimate on the commercial opportunity for mobile operators and the expected boost to GDPs as more female own mobile devices.

The smartphone, vital for internet connections on the continent, will become progressively affordable as new entrants introduce cheaper (under $50) smartphones and “smart feature phones” (under $20) to market.

The GMSA estimates that there will be 500 million mobile internet users in Africa by 2020, with up to 70% of mobile subscriptions to be internet-connected by 2030.

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Digital commerce will be a big beneficiary, the sector—everything from retail e-commerce and the sharing/gig economy to the platform economy and digital trade—is still just 1% of retail commerce in Africa, compared with 14% and above in countries like the United States and China., says a new white paper from consulting firm BFA, commissioned by the MasterCard Foundation.

Chart 1

The impact on employment will be key. With so many jobs in the informal sector—up to 85%, the International Labor Organization says—there are not many white collar African jobs to be stopped by technology. BFA says a new category of connected Africans called iWorkers will make up more than 10% of the labor force by 2030.

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Growth could have a massive impact on African countries, with their young and increasingly urban populations. The only mitigating factor being that most governments are not ready. “Most African policymakers do not yet have a clear and comprehensive voice on the issues at stake or a national stance toward them,” writes BFA. Save Egypt which  is the only African country with any kind of e-commerce policy.

Chart 2

Governments should “test and learn” now to update and improve policies. African micro-entrepreneurs already using Instagram, WhatsApp and Facebook to transact business even though the platforms weren’t originally earmarked for that.

Even though low trust, lack of familiarity and credit-card limitations are still huge issues in most African markets. Up to 85% of e-commerce transactions in Africa are still payment-on-delivery. The policy changes are pivotal to take advantage of a sector that could generate more than $500 billion a year by 2030—close to 10% of expected GDP on the continent.

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