Connect with us
Advertisement

Key Contributors to the rise of eCommerce in Africa

E-Commerce has rapidly grown in the recent years across Africa and the world at large.


This is conceivably because of the plentiful positive outcomes it has had on various industries including travel, tourism, and hospitality sectors, with a ripple effect on entire economies especially in developing countries. These include but not limited to increased revenue returns as businesses diversify their clientele reach, as well as efficient and faster transactions both online and via mobile money solutions.

For instance, the popularity of the famed HYPERLINK "https://travel.jumia.com/en-gb/kenya-black-friday-deals?utm_source=WebEngage&utm_medium=onsite&utm_campaign=BFSH"  Black Friday Sales in Africa that take place on every 25th November on various platforms such as Jumia Travel, is in itself a success story on eCommerce. Statistics by the leading online hotel booking company show that in 2015, it registered record performance on Black Friday having attracted more than 5 million visitors in Africa with a record of 250 000+ gross orders.

 

Bigger impact is expected this year, with mind-blowing deals already running since 14th November, with the actual Black Friday taking place on 25th November, 2016. That said, various factors have contributed to the rise and success of eCommerce in Africa, as discussed below.


Increasing mobile penetration
Statistics by GSMA Intelligence, the definitive source of mobile operator data, indicate that 46% of the population in Africa subscribed to mobile services at the end of 2015, which is equivalent to more than half a billion people. In Kenya alone, mobile penetration stood at 88.1% with 37.8million subscribers in 2015/2016, according to CAK. The adoption of mobile and smart devices has largely contributed to the growth of ecommerce due to the easy availability and accessibility of real-time information on the go.

Better connectivity/Internet growth
GSMA Intelligence also reports rapid growth in mobile internet adoption in Africa with the number of mobile internet subscribers having tripled over the last five years. By the end of 2015, 300 million mobile internet subscribers were registered, and an additional 250 million are expected by 2020.
The implication of this is that more people have access to more online services and products, which in turn boost eCommerce.

However, note that about 65% of mobile subscribers in Africa still operate feature phones according to Pew Research Center. Therefore, there’s need to develop ways to diversify operations to both online and offline processes, thus fully tapping into the market.

A digital savvy population
There is a growing population of DIY (Do It Yourself) millennials who are extremely ‘digitally’ smart. They seek relevant online content that will engage their energetic and curious mind. They are also after memorable online experiences, be it while doing an online purchase, a hotel booking, ordering food online etc. Online service providers are therefore propelled to give nothing but the best, as well as offer personal experiences to retain customers and stay competitive.

Mobile Money Solutions
Whether sending money to family or friends, booking hotels online or buying goods online, mobile payments which are done via mobile devices provide a convenient and efficient process for users. In Africa, the mobile money market is predicted to be worth $14.27 Billion by 2020. Mobile payment is highly preferred due to its convenient. For instance, approximately 60% of customers on Jumia Travel  HYPERLINK "https://travel.jumia.com/en-gb/kenya-vacation-packages" pay for their bookings via mobile money, including Mpesa in Kenya and Tigo Pesa in Tanzania.

Increased Consumer Spending
A McKinsey Global Institute analysis projects that by 2025, Africa’s household consumer spending will reach US$2.1Trillion, representing an increase of 45% from 2015. This presents promising business opportunities in a wide range of consumer-facing industries from entities offering healthcare to housing and leisure (travel). Projections show that Sub Saharan Africa (SSA) will contribute 67% (US$ 433B) of Africa’s total growth in consumer spending between 2015 and 2025 which is projected at US$ 645B in total.

Foreign Investment
Upon identifying Africa’s potential in ecommerce development, both angel investors and companies are playing an important role by investing in ecommerce businesses in the continent. Driven by the amazing innovative talents, tech startups are on the rise, and require constant mentorship and funding. For instance, Millicom, MTN, AXA, and Orange have equity stakes in Jumia, the parent company of some of Africa’s leading e-commerce platforms, including Jumia Travel, Jumia Mall and Market, Jumia House and Jumia Food.

Josephine Wawira is Global PR Assistant – Jumia Travel
 

Continue Reading

Business

Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

This content is locked

Login To Unlock The Content!

Continue Reading

Business

Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

This content is locked

Login To Unlock The Content!

Continue Reading

Business

Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

Continue Reading
Do NOT follow this link or you will be banned from the site!