Forty-eight per cent of African micro, small, and medium enterprises (MSMEs) report that customers lack trust in online marketplaces and websites, according to a new survey by GSMA, a global organisation unifying the mobile ecosystem to discover, develop and deliver innovation that helps business and society thrive.
The survey referred to as the GSMA e-commerce survey 2023 was carried out between February and April 2023.
It consisted of 1,591 survey interviews conducted across six African markets to understand pain points and opportunities from the MSMEs' perspective. The countries included Egypt, Ethiopia, Ghana, Kenya, Nigeria, and South Africa.
While e-commerce is expected to grow globally due to improved connectivity and internet use, African MSMEs risk being left behind if they do not accelerate the use of e-commerce to sustain and expand their businesses.
According to the survey, 33 per cent of MSMEs found it difficult to use websites, 35 per cent struggled with using marketplaces, and 43 per cent preferred in-person interactions and cash payments. Returning items bought online was also considered challenging by 35 per cent of the surveyed MSMEs.
Presenting the findings on October 17 during Mobile World Congress in Kigali, Nigham Shahid, the Senior Insights Manager at GSMA, highlighted the five primary ways in which micro-entrepreneurs use mobile technology for their businesses. The five ways are: communication with customers and suppliers, digital financial services, marketing and advertising, skill development, and data storage.
The survey indicates that across various African countries, women micro entrepreneurs are less likely to use mobile phones for their businesses, even when they use them in their personal lives.
Barriers to mobile use for business included the lack of suitable phones, safety concerns, preference for cash transactions, and a lack of digital skills.
MSMEs rely solely on social media platforms
Tackling the e-commerce usage, Shahid noted that over 90 per cent of MSMEs surveyed across six markets reported increased sales and reduced operating costs as benefits of utilising e-commerce.
Additionally, significant percentage of MSMEs rely solely on social media platforms like Facebook, Instagram, and WhatsApp for their business activities.
Sixty per cent of micro versus 33 per cent of medium enterprises relied exclusively on social commerce, while only 11 per cent of micro versus almost a quarter of medium-sized MSMEs used all three social media platforms.
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Shahid highlighted two key trends: "As businesses grow, they tend to adopt more e-commerce channels beyond social media, and there is a gender-related trend where women are more inclined to stick with social media instead of expanding to other e-commerce channels."
The findings also highlight key needs of MSMEs for scaling their e-commerce operations, with capital being the most critical need for 40 per cent of them. Other needs included loans, credit, training in e-commerce channels, more skilled workers, and lower delivery costs.
She also mentioned challenges related to payments, particularly the prevalence of cash on delivery in some markets and its associated problems, adding that the delivery aspect poses notable challenges for MSMEs in the e-commerce sector.
According to the survey, between a fifth and a third of MSMEs experienced challenges related to delivery, such as a lack of delivery capacity, high shipping costs, lost goods, and delayed pickups.
Delivery costs in Africa were also reported to be higher due to infrastructure issues and fragmented third-party delivery services.
Shahid provided recommendations for improving e-commerce and mobile usage for MSMEs, emphasising the need for improved connectivity, affordability, and digital skills.
She also highlighted the importance of financial support for MSMEs, coordinated upscaling efforts and called for better transport infrastructure and clear e-commerce-related laws in African countries.
She further recommended supporting women-led micro-enterprises by increasing awareness, building their digital skills, and ensuring their access to suitable handsets and services.
