Nigeria leads strong growth in Africa’s e-commerce sector
THE AFRICAN e-commerce sector is growing strongly, largely on the back of increased smartphone take-up among African consumers, with Nigeria in pole position to take advantage on the basis of its high business environment opportunity potential.
This according to research by the Economist Intelligence Unit (EIU), released yesterday. The firm said Nigeria ranked first in business environment opportunity in the continent with 80.4 points, followed by South Africa with 63 points.
“In Nigeria, for example, e-commerce is serving rural areas effectively, as companies such as Jumia are able to deliver to less accessible places, where sourcing goods from shops or stalls is not as straightforward.”
Nascent stage “This newfound access to technology is one of the primary drivers of e-commerce growth in Africa. That said, e-commerce is in its nascent stages in Kenya, largely because of the advanced nature of the formal retail sector, which is second only to South Africa in maturity,” the report said.
World Wide Worx (WWW), a local technology research firm, estimates that online spending in South Africa surpassed R9 billion last year, reaching the important milestone of 1 percent of the R900bn overall retail market.
South Africa’s online retail has been growing by more than 20 percent per year since 2000, according to the firm.
Different EIU said the South African retail sector was somewhat different from the rest of the continent, with improved infrastructure, internet access, mobile penetration and a larger proportion of middle-class consumers all contributing to greater e-commerce growth prospects.
“Both mobile penetration and mobile infrastructure are notably more advanced in South Africa compared with the rest of the continent. The market has reached maturity, with a penetration rate of 171 percent last year, which we forecast to rise to just under 197 percent by 2021.”
EIU attributed the anticipated growth to be fuelled by the demographic shift of greater swathes of the black population joining the ranks of the more affluent, with greater disposable incomes.
Challenges Local retail giant Massmart has previously claimed that it saw a 74 percent year-onyear increase in visitors to its Makro website last year, while rivals Pick n Pay, said is e-commerce revenue increased 38 percent last year.
The EIU noted that despite the surge in online shopping in South Africa, there remained challenges around internet access and low-income levels in the country, potentially holding back e-commerce growth.
WWW said in a study conducted with the support of Dark Fibre Africa that the South African Internet user population passed the 20-million mark for the first time in 2016, reaching 21 million, and was expected to grow to at least 22.5 million this year.
However, the study found that penetration declined rapidly, with income falling to 61.3 percent for those earning between R14 000 and R18 000, 42 percent for those earning between R3 000 and R6 000, and below 30 percent for those earning below R2 500 a month.
South Africa and Nigeria have enjoyed a heightened economic rivalry in recent years which came to the fore in 2014 when Nigeria overtook South Africa as Africa’s largest economy after a rebasing calculation nearly doubled its gross domestic product. South Africa then returned the favour last year reclaiming its spot as the biggest economy on the continent.