No doubt the e-commerce sector is significantly evolving to become a major driver of global economic transformation, although its growth in Africa has remained relatively low when compared to other regions.
According to a survey, consumers in Kenya, South Africa, Nigeria, and Egypt were 40 percent more likely to either maintain the same shopping levels they had before the pandemic or increase them.
The growth has been low, which has seen the percentage of online shopping traffic in Africa, still represented at less than two percent of the total number of e-commerce users globally.
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The number of internet users globally has drastically increased over the last five years, showing that one-third of the world’s population is now online. Although the African continent lagged from the rest of the world in its internet usage due to poor infrastructures.
However, today the African continent has gradually increased in the number of users of the Internet. In the African region, internet use increased from 120 million in 2014 to 270 million in 2019.
Despite the huge benefits e-commerce has to offer, it has not really dominated the African economy like the western world. A lot of businesses in Africa, most especially small and medium-scale enterprises in Africa are yet to take their business online, while many consumers in the region seem to be wary about online purchases.
One major barrier that is hindering e-commerce in Africa is related to the lack of infrastructure. This problem is particularly associated with internet-related technologies. Unfortunately, the African continent has been playing catch-up with the adoption of latest technological trends.
Internet services in most countries in Africa are abysmally poor, which often affects connection. Africa has the lowest number of internet users compared to the number of internet users in Europe.
Another factor that has been proven to hinder e-commerce growth in Africa is the lack of ICT knowledge. In Africa, there is a low rate of ICT knowledge, especially in rural areas where people would rather opt for face-to-face transactions than use electronic medium.
It is argued that a lot of transactions in Africa have remained paper-based as businesses and consumers appear to be content with the traditional methods of transacting and lack knowledge of the benefits of e-commerce.
Therefore, it is not far-fetched to say that ICT illiteracy which is high in the African region has contributed majorly to the low number of internet users in Africa, which explains why small and medium-scale businesses remain unaware of e-commerce and also do not see the need to take their businesses online.
Lagos Top Among Cities In Africa
Lagos state emerges top among cities in Africa with the highest volume of electronic commerce orders in Africa. The commercial city ranked first, with Cairo, Egypt in the second position, followed by Nairobi Kenya in the third position.
A whitepaper titled “Towards a flourishing digital economy for all- a spotlight on Africa” revealed that the e-commerce status in Lagos already has lots of businesses that are already creating a vibrant e-commerce market.
It further reveals that the city has developed innovative ideas/solutions to Africa’s plethora of challenges around payment, identity, and delivery addresses. Fashion products are said to record the highest sales with 21 percent order volume, making them the highest purchase on the continent.
In the second position is beauty products at 15 percent, home and living at 12 percent, food delivery at 12 percent, digital services at 12 percent, fast-moving consumer goods at 10 percent, phones at 8 percent, electronics at 7 percent, and others 3 percent.
With the world rapidly evolving, technological advancements have no doubt enhanced the standard and process of business operations across the globe. It comes as no surprise at all that the city of Lagos ranks top in Africa in e-commerce order volumes.
All thanks to the massively high population in the city with a population of 15,388,000 million people. It has been predicted that by 2030, the city would have a population of 20 million people.
There is also a phenomenal increase in the number of internet users in the region. In a report published by the National Bureau of Statistics, Lagos recorded the highest number of internet users with an estimated number of 16.4 million subscribers.
In the state, MTN had 5.38 million subscribers, Airtel had 4.8 million, 9 mobile had 2.7 million and others accounted for 184,117 internet subscribers. A large percentage of the growing adult in the city, are more inclined to shop online as they prefer to use their smartphones at the comfort of their homes/offices.
Cash on delivery used to be the most preferred payment method among shoppers in the region, but it has drastically reduced, as there is an increase in the number of stores enabling digital e-commerce services.
Lagos state has a GDP of an estimated $91bn which is currently Africa’s 5th largest economy. It is Nigeria’s financial nerve which is currently home to 65 percent of businesses in Nigeria with one of the largest collections of small and medium-sized enterprises in Africa.
It is well known that ICT and e-commerce are inseparable because e-commerce businesses require the application of ICT. One of the reasons why Lagos continues to rank top in Africa in the e-commerce sector is that the city is the major ICT hub of West Africa and potentially the biggest ICT market in the continent.