Africa’s Perspective

• 14 Jun, 2021
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                                    Ecommerce: Africa’s Perspective

Over the past five years, the number of internet users has increased dramatically, with new estimates indicating that one-third of the world's population is now online. This advancement has aided the growth and use of e-commerce around the world. In addition to creating new forms of transacting, e-commerce promises economic prosperity for many developing countries. The adoption of e-commerce has been argued to aid development in a variety of ways, especially in Africa, which is home to many developing countries. To begin with, e-commerce has the potential to promote trade and other revenue-generating activities, thereby contributing to GDP growth and job creation through export growth.

Also, local businesses will also benefit from cost savings from electronic transactions while still being accessible to broader markets through the internet. This would boost commodity exports and, as a result, foreign exchange earnings, which could be used to fund the import of capital goods and other necessities for domestic growth. Concurrently, the business expansion would create job opportunities, allowing idle human capital to be utilized.

Furthermore, e-commerce will help to foster socio-cultural change by empowering women and expanding educational opportunities. E-commerce encourages entrepreneurship, which allows women, especially in developing countries, to put their skills to work and contribute to household income.

More so, the growth of e-commerce industries would increase the demand for skilled labor. This will benefit educational opportunities because tertiary institutions would be forced to expand their courses and programs in order to educate candidates who could fill the skills gap.

Thus, e-commerce has the ability to help many emerging economies that are struggling to find new ways to grow. Now, despite these significant advantages, e-commerce is yet to infiltrate African economies to the extent that it has in the Western world. The majority of African SMEs have yet to move into online trading, and many customers seem to be wary of making online transactions. As a result, several African countries have been unable to fully profit from e-commerce. There is three major digital divides serving as barriers to the development of e-commerce in Africa.

The digital divide is a multifaceted phenomenon. The most common definitions for the term is: ‘the unequal distribution of computers, internet connections, fax machines,, ‘the gap between those who do and do not have access to computers and the internet', ‘the divergence of internet access between industrialized and developing societies.

There is a digital divide between Africa and the developing world, as well as between various African areas. For decades, there has been a disparity in ICT infrastructure between the developed and developing worlds.

There is a scarcity of the "latest end-user innovations" that have characterized the modern era of e-commerce in many African countries. This issue is particularly acute when it comes to internet-related technologies. When it comes to implementing such advanced innovations, the continent has been left in a perpetual state of ‘catch up.' Most African countries' internet networks suffer from bandwidth limitations, resulting in poor and unreliable connections.

One of the critical factors that have contributed to this disparity has been the lack of funding for ICT projects by the African States. The cost of setting up appropriate ICT infrastructure is quite high. It has been estimated that in order to continue with the improvement of ICT, Sub-Saharan Africa would have to invest over the US $6.6 billion annually, which represents about 1.4% of the region’s annual GDP, into new technologies. This is an extremely high cost considering that most of these States are low-income economies that are extremely poor.

Africa's ICT cost and productivity have been impacted by a lack of ICT infrastructure. The cost of accessing the internet and telecommunications networks in Africa is generally much higher than in more developed countries.

Another factor that has widened Africa’s digital divide has been the lack of ICT knowledge. A large percentage of Africa’s population does not know how to use various technologies like computers and the internet. This is a consequence of the general lack of ICT training and education. Furthermore, cultural attitudes have, to some extent, also played a role in thwarting ICT literacy in Africa. It has been argued that in the greater Sub-Saharan region, people believe in face-to-face transacting and view electronic mediums of exchange as being rude and unfriendly. This argument may hold ground in areas where communities are keen on preserving cultural etiquettes such as handshakes when making deals.

Also, many transactions in Africa are still done on paper because companies and customers tend to be comfortable with conventional ways of transacting and are unaware of the advantages of e-commerce. Many Egyptians, for example, are used to paying cash for their transactions, which has led to consumer aversion to online payment methods. As a result, many online companies have been forced to open branch offices in some of Egypt's largest cities, where customers can pay cash and pick up their orders.

Furthermore, many Egyptians lack credit card facilities to facilitate online payment, which is partially due to the country's high illiteracy rate. This ICT illiteracy has led to Africa's low internet user population and explains why many small businesses and customers may be ignorant of e-commerce.

Finally, the threat of online fraud and cybercrime has widened the digital divide in Africa. Due to the fear of such crimes, many African companies and customers are hesitant to engage in e-commerce or use e-commerce platforms. Because of the high prevalence of online fraud, many Nigerians are wary of making purchases online. Consumers who are cautious have adapted to using company websites to compare prices and learn more about goods, but they still make their purchases the old-fashioned way.

Although, it is not all gloom and doom, despite the complexities of the digital divide, Africa has had some success in the spread of mobile commerce platforms. Many African countries have been able to incorporate mobile technology into their daily lives. M-Pesa, a mobile money service introduced by Safaricom in Kenya in 2007, has revolutionized mobile financial services in East Africa. M-Pesa allows cell phone users to pay bills over the phone, such as water bills and school fees. Users can also pass and withdraw money from a variety of Automated Teller Machines (ATMs) and M-Pesa outlets. Fintech companies in Nigeria include Kuda, Carbon, Paystack, Flutterwave, all making eCommerce transactions easier for Nigerians and Africans at large.

While Africa still has a long road to tour in E-commerce, with e-commerce platforms like Arfa (INSERT ARFA WEBSITE LINK) that amplify e-commerce consciousness and opportunities in Africa; it is safe to conclude that although bleak, Africa has a prosperous future in E-commerce.