New Ecommerce Users Increased by 5% in Sub-Saharan Africa in 2020
VISA has issued the ‘Ecommerce developments across Sub-Saharan Africa’ report which points out that the pandemic has driven customers to ecommerce and digital payments. The report also points out that economic shocks that followed COVID have reduced spending power across the world. VISA forecasts that ecommerce sales will grow to US$7 trillion across the globe by 2024, with the Asia Pacific, China, India, and Southeast Asia, being the key driving forces behind the market at 56% of global volume. Countries in the Middle East and North Africa region have the largest growth potential over the next 5 years, according to VISA, but the Sub-Saharan Africa region will lag behind the Middle East and North Africa region, however, it still shows strong potential, with a 42% year-on-year growth across the region from 2019-2020.
EFA is surprised that the VISA report believes that growth will include cross-border transactions which VISA estimates at over half of all ecommerce transaction volumes in Sub-Saharan Africa. According to the report, this mirrors the global trend of online business-to-consumer (B2C) online shopper cross-border transactions. The report also claims that a portion of these cross-border volumes in Sub-Saharan Africa comes from consumers accessing the rising domestic African ecommerce stars across local borders, such as Jumia (Nigeria), Kilimall (Kenya), and Takealot (SA). VISA, of course, holds vast data resources to base its forecasts on, but EFA points out that: (1) none of the 3 named platforms sell across frontiers – the most active, Jumia, has separated national markets precisely due to the difficulty in selling cross border; (2) the rapid increase in transport costs especially cross border due to COVID have made cross-border ecommerce, specifically to the developed economies, even more, expensive and unsure; and (3) finally, EFA suspects that the estimates are based on VISA card payments, where the largest purchases in value may indeed be for luxury goods bought from abroad.
This reinforces EFA’s call to governments and researchers to improve data on all aspects of ecommerce in Africa. The report concludes that because domestic ecommerce in Sub-Saharan Africa is only just beginning it presents an exciting opportunity for the region to develop its own big hitters in the ecommerce market and increase the continents’ connection to the rest of the world.
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