Nigeria in pole position to take advantage of e-commerce market in Africa, EIU reports

A new report released today by The Economist Intelligence Unit (The EIU) looks at how the e-commerce sector in Africa is helping to re-shape both the retail sector and consumer shopping habits in the continent. Estimates as to the potential value of Africa’s e-commerce vary, but it could be worth as much as US$75bn per year within the next decade. The e-commerce sector is growing strongly, largely on the back of increased smartphone take-up among African consumers, who are using mobiles to access a variety of e-commerce shopping platforms. This increasing access to technology, via avenues such as smartphones, is helping consumers in previously hard to reach areas to access all manner of e-commerce opportunities, including emerging African fashion.

However, several obstacles to e-commerce growth remain, including fear of fraud among African consumers, a logistics network beset by problems, the fragmented nature of African retail markets, a pressing need to improve telecoms network infrastructure and the entrenched problem of illiteracy among a significant proportion of the African population.

Although e-commerce is growing fast, it is unlikely to topple the retail dominance of physical shopping outlets in Africa. Consumers in African countries prefer to use a network of physical stores, street traders and informal market sources for their purchases, which are predominantly carried out in cash. Consumers also flock to the continent’s growing number of shopping malls, in order to partake in a more engrossing shopping experience, which constitutes a day out for many families.

That is changing, and according to EIU Canback data, Nigeria is the country that is best-placed to take advantage of a growing e-commerce sector. According to EIU Market Explorer data, which uses external-environment indicators relating to the overall business environment, market opportunities, mobile subscriber penetration rates (per 100 people) and PC ownership (per 100 people), Nigeria has a business environment opportunity score of 80.4 out of 100. This therefore places the country in pole position to take the lead in the African e-commerce market.

Matt Kendall, Telecoms Analyst at The Economist Intelligence Unit said: “Supported by an operator focus on expanding network coverage and delivering more advanced connection speeds via LTE services, Africans are turning towards e-commerce in ever-increasing numbers. This is owing to a variety of factors. An expanding middle-class population is one reason, as is technological innovation and increasing smartphone usage. While entrenched structural issues are likely to hold e-commerce growth back somewhat, the irrefutable point is that access to technology in continental Africa is bringing a larger range of goods to a wider range of consumers, and that signals a positive future for e-commerce companies that are prepared to play a long-term game in shaping a burgeoning sector.”