ONE report from GSM Association (GSMA) and UK Department for Business and Trade highlighted the impact of e-commerce on micro, small and medium-sized enterprises (SMEs) to help them develop new markets, profitability and resilience.
However, in Africa, online retail as a percentage of total retail sales remains much lower than in other regions around the world, indicating that the continent’s SMEs are not taking full advantage of the e-commerce opportunity for growth.
The report was circulated in its fringes MWC Kigaliduring an event organized by African Business.
Details
Recent years have seen a steady improvement in connectivity and an increase in the adoption of mobile technology by both businesses, including SMEs, and consumers on the continent. However, in 2022, the report estimates that only 400 million out of 1.4 billion people in Africa used e-commerce services, indicating that there is much room for growth in the industry.
Digging deeper
The report, which is based on interviews with 1,500 SMEs using e-commerce in Egypt, Ethiopia, Ghana, Kenya, Nigeria, and South Africa, as well as interviews with experts in these countries, as well as others from Rwanda, Senegal and Tanzania, aims to gain a better understanding of the market to help SMEs better take advantage of the digital opportunity. It also aims to help donors and development partners better plan their interventions to support SMEs in Africa.
According to the report, some of the barriers to the growth of the industry include; limited financial resources and digital skills; regulatory gaps; poor enforcement; low uptake of digital payments; and challenging logistics and delivery.
The use of e-commerce is also hindered by factors such as limited smartphone penetration, low digital literacy, and lack of confidence in the quality of products purchased online.
recommendations
In response to these challenges, the report makes a number of recommendations to help boost e-commerce on the continent. these include financial products and retraining to help SMEs adopt e-commerce, better quality connectivity especially in rural areas and interventions to make smartphones more affordable.
Others are policy and law reviews to offer better protection for consumers and clarity for businesses, a shift from cash on delivery to digital payments and more reliable and cost-effective delivery and transport systems to facilitate the delivery of purchases to shoppers.
The report also shows how women, who are more likely to rely solely on social media to promote their businesses, can be further supported to build their e-commerce businesses through targeted interventions, including upskilling.
What they say
“E-commerce adoption is increasing and market forecasts indicate that there will be nearly 600 million online shoppers in Africa by 2027. We aimed to understand the problems and opportunities through an MSME lens. We also wanted to highlight how SMEs can be supported in adopting e-commerce as a key driver for operational efficiency and business growth,” explained Daniele Tricarico, Senior Director, Central Insights and M&E. Tricarico, who presented the report’s findings, highlighted some of the concerns raised by survey participants, such as the need for capital and training, as well as logistical challenges and a lack of trust, affecting the adoption of e-commerce services .
Jamila Saidi, Head of Digital Commerce at the UK business and trade department he said: “As Africa continues to harness the power of technology and drive digital transformation, it will undoubtedly contribute to the advancement of e-commerce, cross-border trade and digital entrepreneurship on a global scale. We are delighted to be working with the GSMA on this important research which sheds light on the e-commerce opportunities for women entrepreneurs and SMEs on the continent, as well as the challenges they face and how some of the key barriers can be addressed“.
Speaking in a fireside chat at the launch event, Philip Lucky, CIO of the Rwanda Development Boardsaid technology and services are at the heart of the country’s ambitious drive to reach the upper-middle-income level by 2050.In the last two years, we passed 19 laws to strengthen the regulatory environment, enabling, among other things, companies to set up here in any form they want,” he said of his country’s efforts to attract and retain investment..
Follow us on our WhatsApp Channelarge, Twitterand Instagramand subscribe to our weekly newsletter to make sure you don’t miss any news.