Preparing Nigeria for Africa’s $75b eCommerce revolution
Africa is on the rise. From entertainment to agriculture, Africa is boldly expressing its identity and productivity in a brave new world. But the real boom, indeed the next revolution on the continent, is without a doubt, e-commerce.
Africa’s e-commerce quotient is daily being fuelled by a number of factors.
There is a changing lifestyle among Africans that is witnessing a growing middle class. This growth has thrown up young men and women who can spend between $4 and $20 a day.
According to data from the African Development Bank (AfDB), this group is expected to grow to about 40 per cent by 2060, which translates to over one billion people. This will spell a boom for e-commerce going forward.
The growth in Africa’s mobile market coupled with the growing deployment of broadband infrastructure and increase assimilation of emerging advances in technologies including artificial intelligence, robotics, blockchain, Augmented Reality (AR) among others are sure indices that e-commerce will boom across the continent sooner than later.
As far back as 2012, consumption spending in Africa stood at over $1 trillion from $364 billion in 2000. That’s an impressive jump. And if the Internet penetration factor, which is in on the rise with a good 50 per cent of the continent expected to have access to the Internet by 2025, one can imagine the impact of this on online shopping.
McKinsey report predicted that online shopping could account for 10 per cent of aggregate retail sales. This works out to $75 billion a year of total retail spend. This figure is expected to shoot up in the coming years.
This is why the focus is shifting to Africa. E-commerce pundits are looking to Africa to deliver the next revolution in wealth creation through a burst of e-commerce activities. And Nigeria is tipped to lead the African e-commerce chart. Indeed, e-commerce is an area that Nigerians have only recently started exploring. As such, people are also gradually learning about the technicalities involved.
Instructively, Nigeria pioneered e-commerce in Africa through Buyright Africa Dotcom, a baby of digital entrepreneur, Leo Stan Ekeh. Buyright Africa was Africa’s genuine online outpost birthed to deliver online services to a continent-wide audience starting from Nigeria. By 2012 when Buyright Africa was founded, it was obvious it came ahead of its time. Poor infrastructure, poor debit (credit) card transaction culture and low internet penetration frustrated the vision of its founder, who is also the Chairman of Zinox Group.
But Ekeh bided his time. Already, he had sowed the seed and in no time, the idea was given life again by his son, Prince Nnamdi Ekeh, who founded Yudala, a truly composite online-offline e-commerce platform. Though short-lived, Buyright Africa is historically the forerunner of all modern-day e-commerce companies in Africa.
The Zinox Group later acquired another truly indigenous e-commerce company, Konga, to add to its growing conglomerate. Konga acquisition and its merger with Yudala, therefore, gave rise to the biggest truly African e-commerce giant. Konga has already set sight on over-running the competition on the continent. Konga’s ambition of ruling Africa is helped by the unwillingness of e-commerce players in South Africa to re-invest in their businesses.
A 2019 survey of online retail in South Africa conducted by research group, WorldWide Worx, showed that South Africa online retail shop demonstrated a manifest unwillingness to re-invest to expand the business. Only one in five companies surveyed invested more than 20 per cent of their online turnover back into their business. Half invested less than 10 pe rcent. This is essentially why e-commerce is not enjoying astronomical growth in South Africa. This leaves the market open for Nigeria’s Konga to take the shine.
The other e-commerce giant, Jumia, though doing well, however, appears more like a foreign company. Jumia founded by two French businessmen has its headquarters in Germany and Dubai. While the company runs the e-commerce business across Africa with operations in Kenya, Morocco, and Egypt, its incorporation in Germany, to pundits made it look more like a foreign company in Africa.
In a recent interview on CNBC, Jumia co-CEO, Sacha Poignonnec, tried to convince his interviewers that Jumia is an African company, but his explanations fell short of answering the question of why Jumia incorporated in Germany, has its head offices outside Africa, and its major executives’ non-Africans.
While the battle for the African market gets intensified, today, aside Konga and Jumia, there are more players in the Nigerian space including Payporte, Vconnect, Kara, Fashpa, Gloo.ng, Obeezi and Wakanow, and a host of others. They have collectively pushed the frontiers for Internet businesses in the country, getting over 500,000 online orders every 24 hours in Nigeria.
E-Commerce has become a thriving global industry. A report by the Oxford Business Group revealed that retail sales hit a whopping $22 billion globally in 2016, with online shopping accounting for a major part of this outlay.
Africa is regarded as the next big thing to happen in e-commerce, and Nigeria is at the cusp of this expected wealth boom. With a population of about 200 million and currently Africa’s largest economy, the prospects are colorful for e-commerce.
Experts have predicted that none of the foreign e-commerce players would sizzle the African market. Some have projected Konga to play a leading role in positioning e-commerce on the continent. They cite Konga’s indigenous ownership, a truly African company, its innovativeness, tradition of delivering only original products, prompt delivery culture, offline presence in every neighbourhood, strong capital base, seamless operational efficiency and sound backroom technical integrity as reasons why Konga has the clear capacity to dominate the continental market, which enjoys a forecast of $29 billion in revenues by 2022, according to research firm, Statistica.
Africa waits for Konga. But even Africa is not a good hunting ground for ICTpreneurs. This is the only continent in the world where the top 10 billionaires list is not dominated by digital entrepreneurs. Africa, especially Nigeria, is a difficult place to do business. In the words of telecoms expert, Kehinde Aluko, if the promoters of Konga can succeed in this difficult clime with other companies within the conglomerate, Africa is lucky to have a company owned and run by Africans leading the charge in the soon-to-explode e-commerce market.
Edward Heaton, an expert on African e-commerce placed Konga as the best-poised company to create the next Jeff Bezos out of the continent.