Africa’s e- commerce revolution opens up huge opportunities for businesses

Technology continues to revolutionise entire sectors across Africa, none more so than the emerging e- commerce sector, which is overhauling how the retail industry works and bringing the continent’s hundreds of thousands of small and medium enterprises into contact with a huge potential pool of customers.

In Lagos in September, TechCabal Media hosted the second edition of its Future of Commerce event in which business leaders, experts, and retail operators across Africa discussed how social media, payments, agent networks, informal trade and social commerce will power the growth of Africa’s e- commerce market. The forum highlighted the creative and innovative ways in which startups and large corporations can bring the informal sector into the e- commerce ecosystem.

Kelvin Umechukwu, co- founder and CEO of Bumpa, a business management app that helps business owners create websites, issue invoices, record sales, receive financial reports and manage operations, said that huge opportunities are opening up to SMEs now that social media platforms are seen by many Africans as a legitimate and safe platform to purchase goods.

“We have seen today that when customers want to purchase some goods, they will likely go to social media. It is becoming an inherent part of how a consumer thinks. Social media has captured consumers’ attention… it is just an easy case of merchants wanting to be where the customers are. It has and will continue being a big driver of revenue for businesses, including small business owners, not just in Nigeria, but across Africa and the world.” Africa is becoming one of the fastestgrowing e- commerce markets globally and social commerce – the use of social media platforms to promote and sell products and services – has contributed significantly. According to a Q1 2022 Social Commerce Survey, the social commerce industry in Africa and the Middle East is estimated to grow by 70.3percent annually to reach $ 8bn in 2022. Data from Statista also revealed that sales through social media channels around the world are expected to almost triple by 2025.

Joshua Chibueze, co- founder/ CMO of Piggyvest, an automated savings platform that helps customers invest spare money with the promise of interest rates, said social media promotion has helped push the growth of the platform among new and younger audiences.

“It was very important for us to put our business there because we were targeting young people who primarily would go to social media to look for anything. Speaking to how apps can collaborate with social commerce platforms, I think we are beginning to see a lot of those things happen. I think social media on its own cannot scale social commerce. There are still a lot of factors, a lot of things that come into play,” he said.

He said there is a need for collaboration between platforms to strengthen the social commerce sector to reach more customers and increase sales. At the heart of the continent’s social commerce revolution is the widespread and growing use of mobile money systems to allow for simple and safe financial transactions between customers and vendors. Nikki Naghavi, executive director for mobile network operators at MFS Africa, said that major telecommunications companies such MTN and Airtel are continuing to dictate the pace when it comes to the uptake of mobile money across the continent. Esigie Aguele, co- founder and CEO of QoreID, said that the explosion in mobile money use is crucial to the coming era of retail growth. “We have one of the highest numbers of the young population in Nigeria and almost everybody in Nigeria has a mobile phone before they have a bank account. That’s the expansion, and we are talking about an explosion. It provides financial inclusion in any economy but also opens- up the market for both small, medium, and large- size businesses as well,” he said.

Naghavi said the future of mobile money lies in partnerships between mobile network operators ( MNOs) and banks, which will allow for the extension of microloans to mobile customers to allow them to complete transactions. Ali- Kimanthi concurs that there remains a substantial need for banks to ease access to consumer credit.

“Over 90percent of the transactions in Kenya pay cash. So, there’s still a huge opportunity for the mobile money sector in Africa,” she said.

MNOs at the event say there is significant scope to offer more sophisticated financial products that will help the retail ecosystem develop.

Fawzia Ali- Kimanthi, acting chief consumer business officer of Kenyan mobile giant Safaricom, said that while millions of Africans are connecting into the ecommerce ecosystem every year, significant challenges remain in customers’ access to more sophisticated financial products that will allow them to transact freely online. MNOs are hopeful that regulatory systems will be liberalised to allow them to provide a greater suite of credit products to consumers.