Lilongwe – Africa south of the Sahara has shown steady growth potential in e-commerce as its leading markets begin to mature, providing the region with a foundation on which to build economies.
This is contained in a new paper by VISA Consulting and Analytics titled “e-Commerce developments across Sub Saharan Africa”. The paper says the region experienced 42 percent year-on-year growth in e-commerce from 2019 to 2020.
Cross-border transactions make up over half of all e-commerce volumes in Africa south of the Sahara, mirroring global trends.
“As domestic e-commerce provision in (the region) is only just beginning, it presents an exciting opportunity for (Sub-Saharan Africa) to develop its own big hitters in the e-commerce market and increase the continent’s connection to the rest of the world,” notes the report.
South Africa sits in first place of total e-commerce volumes in 2019 and 2020, with two other SADC countries making it in top five: Mauritius and Zambia, which are ranked fourth and fifth respectively. The others in the top five are Nigeria (second), and Kenya and Ghana (joint third).
More people on the continent are migrating from physical to digital payments, and VISA says this calls for stronger regulations and greater awareness so that customers feel safe with e-commerce and criminal elements are rooted out.
Increased Internet usage and greater mobile penetration, twinned with a rapid growth in e-commerce merchants, has contributed to the shift in consumer preferences towards digital commerce over the past decade across the globe.
In Africa, online activity is largely facilitated by mobile phones. While Internet penetration is growing, it is often limited to urban areas, but even then, urban dwellers mostly participate in e-commerce using mobile phones.
VISA says, “Furthermore, mobile devices don’t just provide access to e-commerce, they can themselves be a payment instrument. As a result e-commerce acquirers need to ensure that their e-commerce platforms aren’t just online friendly, but are also mobile friendly for everything from browsing through to payments”.
The report notes that the COVID-19 pandemic has driven e-commerce as authorities try and minimise physical movements. In Africa south of the Sahara, lockdowns have been credited for a five percent rise in e-commerce.
“Quick service restaurants and traditional offerings that converted to a takeaway food model saw a rise of over 160 percent in usage during lockdown. Retail services, groceries, pharmaceuticals and building supplies all saw increased usage of around 50 percent,” the report adds.
“When exploring the digital payments usage, the use of cards has increased across the continent, with the highest uptick taking place in Kenya. There has been a strong preference for contactless, a notable point for enabling safe card payments on delivery, as well as in the use of e-wallet services.”