Africa Business Communities

Glenn Davies: M-Commerce - The Future of Africa

The rise and rise of a mobile world means endless opportunities to transact in a private and secure way. We are no longer confined to our homes, our laptops or local retail outlets and can now do everything previously limited to a PC environment via our Mobile device - and in fact we can do a LOT more. The world is embracing this in record numbers, and no more so than Africa.

But it hasn’t always been this way. Emerging markets like Africa continue to face road blocks and hurdles when it comes to the explosive growth of m-commerce. Issues such as a lack of awareness on what’s available and how to transact using your mobile device is top of the order. Education is going to be key to ensure consumers continue to jump on board and feel comfortable with any mobile transaction.

Increasing concerns about security and risk is also high on the list; And even more so than with Internet-based e-commerce, ordinary users worry about the safety and reliability of conducting business over a wireless connection.

Another challenge is developing applications for multiple networks and a wide range of devices. Whilst there are limited major Web browsers for PCs, in the world of mobile phones there are multiple operating systems with multiple browsers, so the same application can look completely different on different screens. Without standardization, developing m-commerce applications can be prohibitively expensive.

And last but certainly not least is the lack of high speed connections. Access to high-speed networks is important to providing “rich” applications. The dedicated 4G networks that will deliver higher speeds for mobile connections are on the way but have not yet arrived across all of Africa.

So why the love of m-commerce?

People have a much more intimate relationship with their Mobile phones vs. their computer. They are not limited by location and by their very nature, are everywhere. Further, Mobile devices are filing up “boredom time” on the go that retailers have never before had access to. This consumer down time is a key marketing gap that is being targeted very hard. And if marketers are looking for the ultimate ‘mobile’ consumer to promote their products, they need look no further than Africa. The African region is witnessing one of the strongest increases in mobile data use in the world. Forecasts point to a a 20-fold increase by the end of the decade in Africa, with mobile Internet traffic doubling between 2015 and 2016.

But what’s driving Africa’s m-commerce boom?

One of the most significant reasons why m-commerce is growing faster in African markets compared with developed markets is it’s underdeveloped traditional banking channels. All African countries are classified as either emerging or frontier markets. The African Development Bank (AfDB) estimates that less than 25% of African families have bank accounts.

The World Bank also estimates that less than 25% of adults have an account at a formal financial institution. Without doubt there are wide disparities between countries, with Ethiopia, Uganda and Tanzania among countries with the lowest bank branch penetration and Namibia, Mauritius and Botswana among those with the highest penetration. South Africa and Egypt also have relatively developed financial services sectors. However, a considerable proportion of their population is without access to traditional banking services as in many other countries in the region.

Further factors influencing Africa’s m-commerce boom is the rapid growth of the Middle Class.

While Nigeria leads the pack in terms of countries witnessing high economic growth, closely followed by South Africa, even lesser known countries like Morocco, Senegal, Kenya and Mozambique are making their presence felt on the economic map of Africa. The growing middle class in these countries has more spending power and wants better product and services within shorter delivery periods.

The African growth story has caught the imagination of big players in the world of m-commerce. According to AT Kearny’s 2014 African retail development index, sub-Sahara Africa has one of the fastest urbanization rates and mobile adoption rates in the world. As a result, online giants like Kaymu and Jumia have opened shop in the region, funded by the deep pockets of Africa Internet Group (AIG). Recently Jumia, who likes to call itself ‘the Amazon of Africa’ announced fresh investments worth US$150-million. But unlike Amazon, Jumia’s core focus is all about mobile and riding the m-commerce train. It’s becoming an extremely competitive market with new players launching every day. Therefore the critical refinements necessary for players like Jumia to maintain their current position and continue to pursue their goal of market domination will be based on speed and usability of the platform as demand for mobile phones and mobile shopping continues to grow.

Conclusion

So to conclude, there is a general assumption that, in the world of technology, Africa needs to learn from more advanced markets. But what if it is actually leading the way? Perhaps it is the time where Africa has lessons to give rather than to receive? I think with such a ‘mobile first’ continent like Africa, m-commerce is definitely an industry where Africa will lead the way. And it has to - its economical existence depends on it.

Glenn Davies is Group CEO of Inigmah

 

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