A good trade system is essential for the sustainable development of an economy. For an economy to survive, there needs to be a conducive structure in place for commerce to thrive. Africa has long benefited from commerce, both within the continent and through its interactions with other regions. These commercial relationships have influenced various aspects of African life, including religion, culture, language, and ideology.
Today, commerce has evolved to meet the demands of modern times. With technological advancements and the proliferation of digital devices, trade has expanded beyond physical shopping to include online shopping, or e-commerce.
The African e-commerce market is rapidly growing and is starting to rival other global markets. According to the International Trade Administration, ITA, Africa’s e-commerce users are expected to surpass half a billion by 2025, a steady 17% compound annual growth rate (CAGR) of online consumers for the market.
This growth is driven by mobile internet adoption, urbanization, and an expanding middle class. Africa’s population is currently the youngest and second largest population in the world which gives the continent a vast digital audience. These youthful and tech-savvy audience generate 69% mobile traffic out of the total internet traffic in the continent.
ITA records that as of 2021, Africa led in mobile internet usage, with a rate 13% above the global average and almost 5% higher than in Asian markets. This reflects the youth population’s eagerness to embrace mobile technology and the increasing internet penetration that has significantly boosted online shopping.
Online shopping was already a growing trend in Africa, but the COVID-19 pandemic accelerated the trend, as people sought safer and more convenient shopping methods. Between 2017 and 2022, the number of online shoppers grew from 138.9 million to 387.5 million. This growth solidified e-commerce’s role in the continent’s economy. Africa’s most competitive markets—Nigeria.
Africa’s most competitive markets; Nigeria, South Africa, Kenya, Morocco, and Egypt, are enjoying the dividends of the online retail boom. In Nigeria, online retail platforms like Jumia and Konga have revolutionized consumers’ shopping behaviour, offering everything a variety of goods from the comfort of the home. Takealot is having a similar experience in the South African market and so is Kilimall in Kenya.
The growth of the e-commerce industry in Africa, according to Statista, has brought revenue from an estimated $20 billion in 2020 to $34.57 billion in 2024. These numbers are expected to experience significant growth as the industry’s annual revenue is expected to climb to $56.03 billion by 2029.
Online shopping has not only impacted the continent financially but has helped bridge the logistical issues that affect the shopping experience within the continent. The rise of e-commerce is also reducing the issues of high tariffs, and regulatory barriers while serving as a conduit for small and medium-sized enterprises (SMEs) to access new markets within the continent.
Although e-commerce is evolving and becoming a primary shopping option in the continent, it is limited by several challenges that affect its effectiveness. The most notable of these is the absence of adequate infrastructure. Unreliable internet connectivity and inadequate logistics networks hinder the purchasing and distribution of products through e-commerce.
The banking sector in many African countries are still collectively behind in global consumer banking. According to the ITA, “almost half of the adults not in possession of any formal bank account prefer to pay in cash. Debit card payment methods make for 10% penetration of the population, while credit card ownership rates are low with an average of 2% for the entire continent.” This affects the payment method and poses a challenge for businesses targeting e-commerce consumers in Africa.
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Regulatory inconsistencies are also a big challenge to e-commerce across national borders. The African Continental Free Trade Area (AfCFTA) is reducing the impacts of the challenge. By simplifying cross-border transactions and customs policies, e-commerce platforms can improve regional trade traffic and enhance consumers’ shopping experience.
The e-commerce industry in Africa is filled with significant opportunities for growth and development. As the industry evolves, leveraging the power of digital technology and fostering collaboration among all stakeholders involved, will ensure the continent benefits maximally from the industry. Africa can unlock new avenues for trade, create jobs, and drive sustainable economic development and build a more interconnected and prosperous future.
