Ecommerce growth in Sub-Saharan Africa driven by mobile

A recent report from Visa has given credence to the message that ecommerce is on the rise locally, but that seems to be the case in other African nations as well, particularly Nigeria, Kenya and Ghana.

The eCommerce developments across Sub Saharan Africa white paper (which you can find the PDF of here) reveals that while the region is one of the smallest in terms of ecommerce globally, the growth is steady at 42 percent year-on-year between 2019 and 2020.

“The leading markets in SSA – South Africa, Nigeria and Kenya – are starting to mature, providing the region with an established foundation and when twinned with the growing penetration of eCommerce it offers payment issuers and acquirers an opportunity they can capitalize on while helping to further accelerate the expansion of eCommerce in the region,” writes Visa.

Some notable findings from the paper include:

  • Cross-border transactions make up half of all ecommerce transaction volumes
  • Ecommerce is driven by retail goods and professional services
  • Mobile phones are the main source of digital access
  • Payment facilitators are a critical catalyst for digital payments
  • Fraud protection is key to maintaining customer trust

Mobile phones don’t mean access anymore

The mention of mobile phones being the main source of access really underplays the importance of the tech. That’s because mobile phones can also behave as the payment method as well, a fact Visa does of course acknowledge.

Solutions such as Telkom Pay’s virtual card which was launched today go a long way to not only making the mobile phone a gateway, but a payment method as well.

This is incredibly important when one considers how many people are unbanked in South Africa, Nigeria and Kenya as illustrated in the table below.

Source: Visa eCommerce developments across Sub Saharan Africa white paper.

As we can see, mobile phone connectivity is incredibly popular and in the case of Nigeria, a mobile phone payment solution that doesn’t require a traditional bank account would likely perform well.

But this doesn’t mean that offering ecommerce will automatically lead to more sales.

Looking at the contributors to the growth seen by the following are the biggest in each of the three largest growth regions.

Source: Visa eCommerce developments across Sub Saharan Africa white paper.

For clarity, “Professional services” is in reference to investment, accounting, business-to-business and bill payment services.

As we can see retail isn’t as big of a contributor to growth aside from in South Africa. That being said retail services and goods shouldn’t be ignored, especially if there are discounts to be had.

What this does show us however is that there is an appetite for ecommerce when it comes to making life easier. Paying bills, buying prepaid electricity and airtime and shopping for good deals are clearly top priorities for buyers in the SSA region and as such ecommerce solutions that leverage this hunger will likely perform well.

Ecommerce is definitely growing, don’t get left behind because you’re looking at the international market. There is clearly gold in the hills of SSA but it requires investment in platforms that cater to the needs of users in the region.

[Image – CC 0 Pixabay]


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