Nompumelelo Mokou
Nompumelelo Mokou

The African retail sector is ripe with innovation

by Nompumelelo Mokou. The potential of the African retail market is massive and innovation abounds on the continent.

by Nompumelelo Mokou. Technology and innovation combined with population growth, urbanisation, and the steady expansion of a small but important middle class, suggests the potential of the African retail market is massive. The simple demographics say as much. And while we know Africa is not a country and we must take care not generalise markets that are quite unique, it is worthwhile looking at some general trends to build a picture of the future retail market on the continent.

Urbanisation will play an important role in economic growth across the continent. Large cities are growing at a rapid rate, with 40% of the African population now living in urban areas. It is estimated that in 2019, the population of Africa was 1.3 billion people. A large proportion of this population is between the ages of 15 to 24 years. Consultancy Compliant IA estimates that by 2030, Africa’s largest cities will have a combined buying power of USD1.3 trillion. The African Development Bank estimates there will be USD 2.1 trillion in consumer spending up for grabs across the continent by 2025.

While the population will be young, Bearing Point estimates that by 2040 the middle class could number 900 million people – greater than the middle class of China and India combined. A recent Deloitte’s Consumer Review estimates that by 2060, a staggering 1.1 billion people on the continent will be deemed middle class. We must however by cautious about this label as this middle class group is both fluid and quite fragile. We must also recognise that the continent suffers from some common debilitating realities such as poor infrastructure, inadequate logistics networks, low banking penetration, poverty and interestingly enough, a lack of physical stores.

Open for innovation

A young population means a population keen to innovate and open to innovation. Mobile technology is playing a key role in driving innovation. Mobile phones in particular offer a direct path to consumers – as evident with the shift in consumer shopping behaviour as Black Friday took on a new shape in 2020. However, we should be careful to put too much stock in modern technology bridging the digital divide. It seems that certainly there is potential for African innovators to use technology and imagination to leapfrog the infrastructure and logistical constraints that constrict the continent

The GSMA association for mobile development noted that three-quarters of the population of sub-Saharan Africa, or 747 million people, had a SIM connection in 2018. By 2022, Africa’s mobile economy is expected to generate $150 billion in economic value. Cell phones are critical to life in Africa. According to Trendwatching, 96% of web traffic on the continent goes through a mobile network, so brands who want to engage with the African consumer need to remember that they are mobile first. As I mentioned earlier, Africa is not a country so I would like to now take a look at some case studies that will demonstrate the above within the context of retail innovation in Nigeria, Kenya and South Africa to give an idea of how regional innovators are responding to local challenges with local solutions. These three countries are the top recipients of venture capital funding on the continent, and while a few players have emerged in this space in recent year, we expect to see many more successful start-ups joining the ranks in the future.

  • Jumia is an online marketplace connects local African companies directly with consumers, allowing them to pay for food, travel, flights and even real-estate through their secure payment platform. The company, based in Lagos, Nigeria as the first African company to win the world retail awards. Jumia offers its millions of subscribers’ access to millions of products products from 13 African countries and thousands of national and international brands.
  • Kenyan start-up Sokowatch raised USD14 million in a second round of funding earlier this year. The company has as its mission the revamping of supply chains for informal retailers. This is significant because like any African countries much of Kenya’s retail trade takes place at the informal level. Sokowatch offers its customers an app for ordering products that also includes data analytics. The company also operates its own fleet of delivery tuk-tuks. Since launching n 2016 the company has expanded operations into Rwanda, Tanzania and Uganda. All countries with strong informal sectors. This is the other end of the retail scale compared to the well-resourced Jumia, but the thinking is the same. To serve a local need.
  • B2B start-ups abound. Twiga Foods from Kenya raised SD 30 Million in 2019; Nigerian trucking and logistics company Kobo 360 raised USD 20 million largely backed by New York investment bank Goldman Sachs; and Kenyan-based logistics company Sendy raised USD 20 million in January. South African on-demand grocery delivery start-up Zulzi raised USD 1.6 million in early 2020 in order to grow its team and expand its operations. While not on the same scale as some of the other examples mentioned the intention is the same: to innovate and disrupt.

There is a growing list of start-ups and innovation on the continent that spans sectors and regions and extends from the retail examples mentioned above into energy, medicine, finance and recycling. These are indeed exciting times for technology and innovation in the retail sector on the continent.


Nompumelelo Mokou is Intelligent Customer Experience Executive, Dimension Data. A Chartered Accountant by profession, she has always had a love for business. She has co-founded a project management company; been chair of the Business Women’s Association of South Africa, Soweto branch; and has headed up marketing and business development and finance in the past at various firms.


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