A new International Trade Centre report analyses opportunities for online marketplaces in Africa to be better integrated in African economies.
Recent evidence signals an upsurge in Africa's use of digital trade, as a reaction to COVID restrictions. Yet consumer traffic on online marketplaces in Africa still has vast untapped potential.
One way to tap that potential is to provide reliable information about e-marketplaces for sellers, buyers, companies and policymakers across the continent.
A new International Trade Centre (ITC) report aims to help plug this information gap. Business and policy insights: Mapping e-Marketplaces in Africa provides insights, drawn from a new International Trade Centre database about online marketplaces across Africa, called the Africa Marketplace Explorer.
Both the report and the database were prepared with the Amsterdam University of Applied Sciences.
E-commerce is still nascent in Africa - the continent's 631 online marketplaces recorded 2.17 billion visits in 2019, only 8% of the traffic on Amazon. Just 10 countries, including South Africa, Egypt, Nigeria and Algeria, are responsible for 94% of all online business in Africa, the report finds. Meanwhile, consumer traffic on online marketplaces in Africa slipped by 5% in 2017-19.
'This publication helps confirm the vast untapped potential of African e-commerce,' observes Pamela Coke-Hamilton, "Ideally, online marketplaces should provide opportunities for small enterprises and invigorate trade across Africa. To this end, negotiations on e-commerce and digital trade under the African Continental Free Trade Agreement have been fast-tracked, as the COVID-19 pandemic and economic crisis have accelerated the need for a legal and governance framework.'
'We actively support e-commerce in Africa and look forward to working with countries and entrepreneurs in the region to make it more inclusive and accessible,' she added.
The largest and most active sites are present only in the biggest, most advanced economies. The top challenge in accessing a marketplace, the report finds, is that it may be available just to sellers in certain locations. Only three of the 10 international marketplaces examined in the report are open to sellers from more than 50 African countries.
Two-thirds of African marketplaces are classified sites, where sellers can place advertisements, but must arrange payments and delivery themselves. While only 26% are online shopping malls - which integrate payments and other services - these are becoming increasingly popular in Africa. This suggests that African consumers are drawn toward the most innovative, high-tech and high-service e-commerce platforms.
'For e-commerce to succeed in Africa, countries must develop modern, technologically and commercially advanced marketplaces,' the report recommends. 'Steps must be taken to promote innovation, attract investment and encourage competition.'
Policymakers should help develop cross-border e-commerce and invest in technology. Large online marketplaces can help train African entrepreneurs, to adapt their products and services to the changing patterns of demand.