According to Forbes, globally we exceed over $19 trillion in cash transactions on a yearly basis. You can only then imagine what percentage of that is done in Africa where cash payment remains king.
There are over 100 million micro, small, medium sized enterprises (MSMEs) that exist today in Africa and over 40 million of that exists in Nigeria. Consumer spending is on the rise in Africa. In fact, in 2015, consumer spending surpassed $1 trillion and it is projected to exceed $2 trillion by 2025. So it begs the question, why is the drive towards the adoption and expansion of digital marketplaces extremely slow?
I have a few thoughts to why this could be the case:
Trust remains a major contributor in the lack of adoption in using digital payments for e-Commerce transactions. The establishment of trust between the consumers and merchants (including supply chain companies) will need to be addressed. There are recommendations out there about creating rewards and loyalty programs to help drive consumers towards the adoption of digital payments. These are good suggestions, but it still does not address the problem. The establishment of trust is key in every business model.
Secure Payment Methods is critical to every digital online platform that processes payment transactions. The rise of internet fraud has created a stigma around the adoption of digital marketplaces for countries especially around sub-Saharan Africa. It is apparently clear that e-Commerce platforms across Africa show commitment towards the security of consumer sensitive data, especially their financial data.
Counterfeit and Fraud is another contributing factor. Circulation of counterfeit goods and fraudulent activities such as fraudulent returns and other forms of chargebacks are constraints. Consumers on e-Commerce platforms need to have ways to provide provenance on the goods listed on their platforms. There will be a huge incentive for merchants to have assurances in the prevention of fraudulent chargebacks. These are not largely in existence today, and if they do, these are mitigated manually which drives up operational costs.
These are all perfect use cases for Blockchain Technology. Through the implementation of blockchain, e-Commerce platforms can establish trust, security and provenance by leveraging smart contracts, concensus and decentralization. These are features all known to be offered by blockchain. Blockchain needs to be used beyond just cryptocurrency trading which seems to be its major use across Africa.
Its application in powering e-Commerce in Africa, will potentially be a driving factor towards it’s adoption and expansion.