E-commerce: Mirage or untapped potential?

Sunday January 6 2019

 e-commerce

A man using the internet. E-commerce can turn cottage industries into flourishing enterprises with the capacity to package high quality goods for local markets and export. FILE PHOTO | NATION MEDIA GROUP 

RITA OKUTHE
By RITA OKUTHE
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Just over a year ago, Safaricom launched Masoko, our e-commerce platform. It’s a decision that was based on the desire to tap into an opportunity whose potential to open up Africa to the world could eventually make it a key driver of economic growth.

In that time, we’ve had the opportunity to see first-hand how e-commerce can create vibrant markets, connecting small businesses with buyers around the globe, creating employment for Kenya’s connected youth, and transforming the lives of communities all over the country.

INTERNET CONNECTION

Imagine being able to connect the jua kali wood carver in Shauri Moyo to the African art enthusiast in Boston, or the basket weaver from northern Kenya to an interior designer in Europe. Online trade eliminates middlemen and ensures that the people doing the hard work can enjoy higher income through direct sales.

Yet for a country whose population enjoys access to fast internet (fast enough for it to be noticed by Alibaba’s Jack Ma), and whose smartphone penetration continues to rise significantly, we still have a long way to go before we can fully embrace e-commerce.

But our current position is not so much a challenge as it is an opportunity, and the data on internet penetration and the growing popularity of e-commerce bears me out on the shift that is happening around us, albeit slowly.

According to the International Telecommunications Union, over 51 per cent of the global population will have access to internet by the year’s end. Africa recorded the highest growth in internet connection over the past decade.

This increase in internet access and usage has caused a surge in global e-commerce, which clocked $2.304 trillion in 2017, a 25 per cent growth compared to 2016 figures according to eMarketer. Interestingly, the Middle East and Africa recorded the highest retail sales growth across platforms, having reached a high of $23.3 billion in 2017: an increase of close to 25 per cent over the previous year.

YOUTHFUL POPULATIONS

These global e-commerce figures are expected to double by 2021, when it is projected that the number of African households with access to internet will have grown significantly from the current 24 per cent.

Yet globally, only 10 per cent of retail sales were carried out online in 2017. Africa accounted for just two per cent of this, indicating the immense potential that still remains untapped. What does this mean for the fashion designer in Mombasa? It means that in a few years, she could be servicing a client list from Nigeria to Australia, and doing it all online.

But before this happens, governments and businesses will have to work together to break down the barriers preventing growth of e-commerce, especially in Africa.

While the continent’s population explosion has been touted as one of the biggest resources at our disposal, governments must look beyond that to the innate industriousness, innovation and grit of their youthful populations — that’s where the magic lies.

The expansion of the digital economy, while important, is not enough on its own. Investing in infrastructure that will support connectivity is critical, but just as crucial is creating robust structures that support online industry.

MEANINGFUL EMPLOYMENT

This means complementing mobile and internet penetration with access to credit and market; it means investing in skills such as computer literacy, web design, digital marketing and financial management to bridge the skills gaps and address skills mismatches, and building a reliable postal network and home address system to facilitate last mile delivery.

E-commerce can turn cottage industries into flourishing enterprises with the capacity to package high quality goods for local markets and export; it can boost the agricultural sector by connecting local farmers to local or international markets through a platform such as Masoko. E-commerce can create global franchises out of business dreams that start small.

Imagine how many youths could be engaged in meaningful employment if we got this right; how many families would be assured of decent living, and how success in e-commerce would disprove the notion that the biggest thing Africa has going for it is its population.

Ms Okuthe is the Chief Enterprise Business Officer, Safaricom.

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