Africa needs to strengthen policy framework to realise E-Commerce potential, aays GSMA

Agwunobi Joy

A report by GSMA Central Insights Unit and the UK’s Department for Business and Trade has shown that while the e-commerce sector in Africa is growing, there is still significant untapped potential.

The report, titled “E-commerce in Africa: Unleashing the Opportunity for MSMEs,” was released at the 2023 Mobile World Congress in Kigali, Rwanda, and found that small and medium-sized businesses are not fully utilising the potential of e-commerce in Africa.

Despite the fact that connectivity and mobile technology adoption have improved in recent years, the report found that only 400 million of Africa’s 1.4 billion people are using e-commerce services, indicating that there is still significant untapped potential for the sector.

The report, which was based on interviews with 1,500 MSMEs using e-commerce in Egypt, Ethiopia, Ghana, Kenya, Nigeria, and South Africa, as well as experts in those countries and others in Rwanda, Senegal, and Tanzania, highlighted the need for more understanding of the market to help MSMEs better leverage the digital opportunity.

Other key barriers to e-commerce growth in Africa highlighted by the report include limited access to financial resources and digital skills; inadequate regulatory frameworks and poor implementation of legislation; low uptake of digital payment systems; and challenging logistics and delivery services.

The report makes a number of recommendations to address the challenges identified, including the provision of financial services and reskilling programs to support MSMEs in adopting e-commerce solutions, the improvement of internet connectivity, especially in rural areas, and the lowering of the cost of smartphones to make them more accessible to a wider range of people.

It also suggests policy and legal reforms to protect consumers and clarify regulations for businesses, a move away from cash on delivery to digital payments, and the improvement of delivery and transport systems to make them more reliable and affordable. In addition, the report highlights the need for targeted interventions to help women build e-commerce businesses, such as reskilling and access to digital tools, since they are more likely to rely solely on social media to promote their businesses.

Daniele Tricarico,senior director,Central Insights and M&E who presented the report’s findings, highlighted some of the pain points and opportunities that were revealed in the survey, including the need for access to capital, training, and improvements in logistics and trust, all of which are key to the uptake of e-commerce services.

Tricarico  noted that many of the challenges faced by businesses in Africa are common to those in other parts of the world, but that it is important to understand the specific context and challenges in Africa in order to effectively support MSMEs and encourage the growth of the e-commerce sector

In a comment on the report, Jamila Saidi, head of digital commerce at the UK’s business and trade department, said: “As Africa continues to harness the power of technology and drive digital transformation, it will undoubtedly contribute to the advancement of e-commerce, cross-border trade, and digital entrepreneurship on a global scale.

During a fireside chat at the report’s launch event, Philip Lucky, CIO of the Rwanda Development Board, spoke about how technology and services are at the heart of the country’s ambition to become an upper middle-income economy by 2050. He highlighted the 19 laws that have been passed in the past two years to strengthen the regulatory environment and make it easier for companies to set up and operate in the country. “We have seen tremendous results in the form of increasing investment in Rwanda,” he said.