The rapid rise of mCommerce in Africa

By Dermot Latimer, Group CEO, Point Group. Showing a stable 17% CAGR, Africa is forecast to surpass half a billion e-commerce users by 2025. A report by Google and the International Finance Corporation (IFC) further estimates that, by the same year, digital commerce could contribute $180 billion to the continent’s GDP (or 5.2% of Africa’s total GDP).

This growth is largely driven by the increased penetration of mobile phones, the acceleration of internet access, and the adoption of digital financial services, particularly mobile money (which has been revolutionary for consumer payments in Africa). Currently, Africa leads mobile device web traffic generation and is even forecast to become almost exclusively a mobile-based market by 2040.

Mobile-first in Africa

For most Africans, the mobile internet is becoming the internet – and this large-scale shift towards mobile-first is presenting unique opportunities for e-commerce brands wanting to expand into Africa. Such brands will also be quick to take note of Africa’s m-commerce readiness and future potential:

• Although 3G will remain the dominant connectivity technology in Sub-Saharan Africa (accounting for over half of total connections by 2025), 4G mobile subscriptions in SSA are expected to rise from 260 million in 2022 to 600 million in 2028.
• 5G-related activities are accelerating in Africa, such as 5G spectrum auctions, pilots and commercial trials. It’s estimated that by the end of this decade, there will be more than 340 million 5G connections in Africa.
• The monthly data traffic per smartphone in SSH will increase by 26% – from 4.6 GB per month in 2022 to 18 GB per month in 2028.
• Africa has over 781 million registered mobile money accounts (accounting for 48.8% of global users).
• More than 500 African companies provide technology-enabled innovation in financial services (fintech).
• Collaboration between Briter Bridges and the GSMA Ecosystem Accelerator programme identified 618 tech hubs active across Africa.

As encouraging as these stats and projections may be, Africa also has a unique set of hurdles stifling growth in its m-commerce space. According to a report commissioned by the UK’s Department for International Trade and conducted by GSMA, some of Africa’s ecommerce challenges are the connectivity deficit and usage gap, the affordability gap, and the issues of identity and postal addresses.

1. Connectivity, usage, affordability: The continent will remain the least connected region in the world. It’s estimated that by 2025 only 40% of people in SSH will be connected to mobile internet, which means more than 600 million will still not have access. A core reason is that many live in remote and rural locations where the cost of building and maintaining network infrastructure can be double that for urban areas (in which case revenues can be as much as ten times lower). One of the factors limiting networks from investing in mobile broadband is a lack of user demand (the usage gap), which in turn is driven by a general lack of awareness and a shortage of skills in Africa. The continent’s usage gap is widening year after year and stands at 53%. Therefore, despite living in areas with mobile broadband coverage, more than half of Africa’s population is not using mobile internet. Affordability is another issue: in 37 African countries, more than 50% of the population cannot afford 1GB of data per month, and just 31% of all African firms have a website. (In SSH, the poorest 15% of people can expect to spend as much as two-thirds of their monthly income on a data plan.)
2. Identity and postal addresses: According to GSMA’s report, 29% of adults in Sub-Saharan Africa have no way of identifying themselves. The percentage is much higher among women, youth, and the very poor. With digital identification in other countries generally centring on a combination of bank card, phone, address and email, in Africa, such identification is not as straightforward as in the Western world. Millions of Africans also do not possess an official postal address, which makes delivery a big issue. In Kenya alone, 40% of e-commerce users face challenges in receiving deliveries. Often, companies have to rely on descriptive directions and landmarks provided by customers during the online purchase process.

Driving digital innovation

Africa is not standing alone in tackling its digital challenges. One partnership showing promising results in driving innovation in digital technology across Africa over the last decade, is that between the FCDO (UK’s Foreign, Commonwealth & Development Office) and the GSMA. This collaboration’s Mobile for Development scheme promotes mobile technology as a channel through which to stimulate economic growth, fund innovation, and develop infrastructure (as well as address societal issues such as inclusion and gender inequality).

Furthermore, GSMA Mobile for Development, in partnership with the UK Department of Business and Trade, is also undertaking research with MSMEs in Egypt, Ethiopia, Ghana, Kenya, Nigeria and South Africa, to understand pathways, opportunities and challenges for the adoption of e-commerce. This research will culminate in the launch of a report at MWC Africa 2023 in Kigali, Rwanda – offering examples, best practices and recommendations for e-commerce platform providers and MSMEs transitioning to e-commerce.

The World Bank Group’s Digital Economy for Africa (DE4A) is another initiative making inroads.

Working towards the highly ambitious goal of ensuring that every individual, business, and government in Africa is digitally enabled by 2030, DE4A has already helped increase access to broadband internet in Africa from 26% in 2019 to 36% in 2022. The average broadband download speed in Africa also grew from 2.68 Mbps in 2019 to 8.18 Mbps in 2022, while the average price of 1GB decreased from 10.5% of the monthly Gross National Income (GNI) per capita in 2019 to 5% in 2021.

Besides promising developments such as these (and others in the pipeline), what’s even more encouraging is that there has always been widespread confidence in Africa’s private and public sector working together to help the continent become a flourishing hub for e-commerce. Also, Africa’s growing tech community and its young tech-savvy citizens (who are rapidly adopting digital lifestyles) find themselves at the helm of the continent’s digital transformation. This is not going unnoticed, and with a lot of hope resting on their shoulders, Africa’s m-commerce future does, after all, look bright – no matter the current hurdles frustrating the continent’s digital ascendancy.

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