To unlock the next stage of growth in Africa’s e-commerce sector, issues like fragmented payments, lack of trust for digital platforms, and regulatory bottlenecks must be addressed. This was the major takeaway from a panel discussion at Moonshot by TechCabal on Thursday.
According to recent data, the African e-commerce market is projected to reach $75 billion from 478 million consumers by 2025. Despite the growth, e-commerce penetration on the continent is currently at less than 40%, showing the potential for further growth. `
Addressing the trust deficit is a key step: e-commerce platforms must bridge the gap between consumers and traders.
“If there is a trust deficit, the e-commerce provider has to address it because trust determines the success of any transaction,” said Sunil Natraj, CEO of Jumia Nigeria. According to Natraj, to ensure trust, e-commerce platforms have to ensure that they keep the service promises that they make to consumers.
Partnerships between industry players are also essential to unlock the growth opportunities in Africa’s e-commerce sector. Tappi, an African e-commerce company that helps small businesses onboard onto the internet, partnered with telcos in West Africa to leverage their distribution channels.
“Scaling is based on distribution and instead of trying to reinvent the wheel, you can utilise the reach of existing players to get to your target market,” said Kenfield Griffith CEO of Tappi.
While partnerships are important in unlocking the next level of e-commerce in Africa, startups must prioritise building a good product for customers. Because of the highly customised nature of e-commerce businesses, identifying synergies with potential partners can end up being a distraction away from a company’s core mission.
“Consider partnerships only after figuring out the market,” said Anu Adedoyin Adasolum, CEO of Sabi. “Being able to scale through referrals should be a prelude to any partnership.”
The market potential for e-commerce in Africa is vast, but so are the hurdles to be overcome before that growth can be realised. Navigating the route to that growth will take a collective effort to address issues of lack of trust, less-than-ideal infrastructure and tough regulatory and compliance frameworks across the continent.
