In the last 3 years, South Africa, Nigeria, and Kenya, have been the top market contributors to eCommerce in Sub-Saharan Africa (SSA) with Ghana also showing growth.
This is according to a recent report by payments technology firm VISA which has also shown that Sub-Saharan Africa, though one of the smallest regions of eCommerce globally, is showing steady growth potential with new new eCommerce users rising by 5% during lockdown compared to the previous year.
Speaking on the report, Lineshree Moodley, Head of Visa Consulting and Analytics (VCA) in Sub-Saharan Africa explained that, “The three leading markets in SSA are starting to mature, providing the region with an established foundation and, when twinned with the growing penetration of eCommerce, it offers players in the payment space an opportunity they can capitalise on while helping to further accelerate the expansion of eCommerce in the region.”
A VISA white paper confirmed that, as the world becomes increasingly digital, eCommerce has been driving the acceleration of digital commerce. According to recent GroupM estimates, eCommerce sales are projected to grow to $7 trillion across the globe by 2024
In Sub-Saharan Africa, the research paper found that cross-border transactions make up half of all ecommerce transaction volumes and that eCommerce is driven by retail goods and professional services.
The paper also revealed that mobile phones are the main source of digital access and that payment facilitators are a critical catalyst for digital payments with fraud protection key to maintaining customer trust.
In terms of the merchant categories driving eCommerce, the report revealed that for Kenya and Nigeria, there is a steady dedication to service-based merchants with a strong spread across services categories such as professional services, education, government, and business-to-business merchants. In South Africa, professional services and telecom/utilities merchants were the top drivers of eCommerce in 2020.
The most important eCommerce enablers – the ability to access financial services, digital payment channels and digital infrastructure – are starting to take hold across SSA noted the report.
Although cash may remain the dominant payment instrument in the region for now, VISA says there are signs that this will eventually change. In Nigeria, for example, cash is still particularly prevalent, while in Kenya mobile money is most popular and many South Africans choose cards as their main payment methods.
Other notable findings are that the Covid-19 pandemic has pushed consumers towards digital payments in the key eCommerce markets for SSA and the use of cards has increased across the continent, with the highest uptick taking place in Kenya.
Interestingly, there has also been a strong preference for contactless payments, a notable point for enabling safe card payments on delivery, as well as in the use of e-wallet services, as cash is seen as a vector for the virus, says the report.
In order to sustain the growth of eCommerce in the region, Aldo Laubscher, Country Manager at Visa South Africa said that it is important that eCommerce platforms are designed with end-to-end mobile enablement in mind, and that online payments provide a strong user experience that is secure and appears seamless to the customer, both for local and cross-border transactions.
VISA says as domestic eCommerce provision in SSA continues to grow, there is an exciting opportunity for SSA to develop its own regional eCommerce platforms and sustain growth, while increasing the continent’s connection to the rest of the world.