Over the years Africa has witnessed an increase in electronic commerce. Though it is nothing compared to that of the western countries it’s a major part of our growing economy. The fast spreading of internet and mobile services to various parts of the continent could well be the bases for the success of e-commerce in Africa. According to nur bremmen, in his article, seven countries with booming ecommerce markets, africa internet group, one of the continent’s leading e-businesses, ranks africa’s top seven e-commerce friendly countries.
Africa is a burgeoning and largely unexplored consumer market. According to McKinsey and Co. consumer facing industries in Africa are predicted to grow by over US$400-million in 2020. This includes ecommerce, which is gaining momentum throughout the region.
AIG, an internet platform with nine companies active in over 25 countries across Africa, evaluated the top seven countries for technology and e-commerce growth in the region, with the help of independent studies, field surveys and research. McKinsey offers a new and insightful way to estimate the importance of ecommerce — known as iGDP, it measures the percentage that ecommerce contributes to the GDP of a country. iGDP presents a realistic picture of how e-commerce shapes the economy of a country.
Below is a list of the top seven countries in Africa where iGDP is significant and why it is in the spotlight for AIG’s ventures, investors and venture capitalists.
This country leads the pack in Africa with an iGDP of 3.3%. Initiatives like the Jjiguene Tech Hub – Jjiguene means ‘woman’ in Wolof – are designed by women for women in Senegal, it aims to help women enter the world of IT driven businesses. The potential for this initiative has been recognized by a number of investors including IT giant Microsoft.
Close on the heels of Senegal is Kenya, with an iGDP of 2.9%. The previous president of Kenya launched a $14.5bn project earlier this year to build a city to shape African tech businesses – something similar to the Silicon Valley; called the African Silicon Savannah. This city is designed to become a hub for outsourcing of BPO operations and general IT support, as well as helping to foster growing businesses.
On the international radar as one of the top three African countries with rapid growth. Recent collaborations with China have further enhanced their agricultural industry and, in addition to this, real estate and hospitality opportunities are abundant. It is among the top five economies in Africa which have made significant progress in the IT sector. Mozambique now has an iGDP of 1.6% and this looks set to increase as IT underpins many other areas of growth in the country.
The pride of Africa, being its largest economy. It has an iGDP of 1.5% and is also the ecommerce hub of Africa with ecommerce sites especially popular among the fashion conscious urbanites who do not shy away from making purchases online. IT is thriving in Nigeria and, apart from multiple technology hubs, there are several accelerators in Nigeria to help start ups and to facilitate IT based businesses.
Follows Nigeria closely with an iGDP of 1.4%. It is among the most economically developed nations in Africa and it is one of the most receptive. South Africa has IT hubs all along the Western Cape province – among which is the city of Stellenbosch is known as the Silicon Valley of South Africa – but growth needs to be accelerated as other African countries are steaming ahead with investment into the IT sector.
Though last on the list here, with an iGDP of 1.1%, it is definitely not the least. Only recently, the president of Ghana promised to build an IT city near Accra – the capital – with a total investment of about $5.2 bn. Plans involve building a tower which aims to be the tallest in Africa.
Apart from the the Top Seven above, Egypt, Tanzania and Cameroon are additional countries in which businesses are thriving and growing. Africa is the second fastest growing region in the world and it is attracting investors across multiple sectors. ( http://ventureburn.com/2014/12/7-african-countries-booming-ecommerce-markets/ )
The mobile money service offered by many mobile network operators is an example of how far Africa is going. The success of M-pesa cannot be ignored when speaking of e-commerce in Africa. The service allows users to deposit money into an account stored on their cell phones, to send balances using PIN-secured SMS text messages to other users, including sellers of goods and services, and to redeem deposits for regular money. Users are charged a small fee for sending and withdrawing money using the service. M-Pesa is a branchless banking service; M-Pesa customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents.
M-Pesa has spread quickly, and by 2010 had become the most successful mobile phone based financial service in the developing world. By 2012, a stock of about 17 million M-Pesa accounts had been registered in Kenya. The service has been lauded for giving millions of people access to the formal financial system and for reducing crime in an otherwise largely cash-based society (Wikipedia). Also in Ghana, the introduction of the E-zwich card, though not as successful as M-pesa, has helped in a cashless society.
So what is the future of e-commerce in Africa? Well, we are decades away from having companies like eBay, Amazon and on our soils since they are highly dependent on cheap delivery services which is not the case in Africa with the minimum cost being $200. But the mobile money system together with E-banking can help revolutionize the continent. A recent report found nine African nations now have more mobile pay accounts than traditional bank accounts. The traditional commerce system may not be able to reach every citizen but technology can help better our.
BY EDMOND MENSAH
LEAD DEVELOPER AT OASIS WEBSOFT.
THIS STORY ALSO APPEARED IN TODAY’S EDITION OF THE GENERAL TELEGRAPH NEWSPAPER IN ACCRA.