COVID-19 boosts online trade in Africa
June 9, 2020
Shamim Sserunjogi and her brother Moses were forced to become digital entrepreneurs when COVID-19 restrictions in Uganda forced everyone to remain at home.
"He had a motorcycle, I had a plan. That's how we started," 32-year-old Shamim told DW.
Before the COVID-19 pandemic, Shamim sold tilapia and Nile perch from nearby Lake Victoria. But when coronavirus lockdown measures were implemented, her clients stayed away.
To keep her business running, she thought she could connect with her clients via Facebook, WhatsApp, and other online social media platforms. Shamim is now able to sell her goods with the help of her brother Moses, who makes about eight deliveries a day on his motorbike, navigating Kampala city traffic.
Her new business model was so successful, it even brought her more clients than she had before the pandemic hit the east African nation.
Shamim's story resonates in many African countries. While the pandemic severely restricts people's movement, online trade is picking up fast. Small, medium, and large entrepreneurs alike are now doing business online. The Ivorian online fashion label Afrikrea told DW that orders have doubled since February, resulting in a 53% increase in turnover. Every third order includes hand-sewn protective masks.
Nigerian online retailer Jumia – which has been struggling with heavy price losses since its US IPO a year ago – also reported its highest earnings in a long time.
In the second half of March, as COVID-19 swept across the globe, orders for consumer goods quadrupled.
The trend shows no sign of slowing down says Jumia spokesman Abdesslam Benzitouni. Jumia received 6.4 million orders in the first quarter of 2020.
Read more: Coronavirus underscores urgency to bridge digital divide
Taking positives out of the pandemic
Alastair Tempest from the Ecommerce Forum of Africa told DW there are a number of reasons behind the success of online businesses during the pandemic.
"Because of the lockdown, people were simply not able to go out to the shops or they weren't able to buy the things they wanted in the shop," he says. "The second issue is that there's been a lot of news about how the disease is passed from person to person with things, which people suggest is cash. So using e-commerce which is cashless obviously, is a senseful way to go about it.
Rwanda and Kenya have both been actively promoting cashless payments.
Coronavirus has also fast-tracked ongoing developments in the field of digitalization, says economist Honest Prosper Ngowi from Tanzania's Mzumbe University. "In my opinion, Africa, especially its urban centers, is in the middle of the digital revolution," he told DW. "COVID-19 has further accelerated this."
Business between retailers and consumers – the so-called 'business-to-customer' (B2C) sector – is still mainly reserved for the urban middle and upper class, Ngowi explains. However, there is also a lot of movement in the 'business-to-business' B2B industry, particularly between entrepreneurs, says Tempest.
For example, digital service providers are brought directly to small farmers and market sellers – thus avoiding expensive intermediaries.
Not an easy market
Mobile internet coverage is also improving, according to Ngowi. "The digital divide between urban and rural areas is being narrowed at lightning speed in Tanzania and elsewhere in Africa."
However, outside the cities, online service providers still face more practical obstacles. "We first need good roads, and traders like Jumia need a certain number of customers so that it is worthwhile to drive to the countryside," says Ngowi.
Transporting goods to remote locations within a reasonable time window is one of the biggest challenges, according to Jumia Group spokesman Abdesslam Benzitouni.
His company does not send its suppliers to rural areas but instead cooperates with partners, such as postal companies or service station chains.
"We work with third parties who know the area well," he says. "And we have pick-up stations across the country."
But one particular challenge for suppliers is to gain the trust of their customers, says Nigerian analyst, Adamu Babibkoi.
"Some [customers] are quite apprehensive," he told DW. "Not everybody is confident about it because the tendency might be that you are on a wrong platform – people are not well educated about that."
Whether online trade in Africa can profit from the coronavirus pandemic in the long term remains to be seen. "I think once the pandemic is gone, we'll see a flattening of the curve on e-commerce," says Tempest. "But it won't be a downward go, it will just be a flattening.