“Since the days of the Internet boom we’ve been hearing that ecommerce is going to change the way Africa does business. The details of this transformation always remained somewhat fuzzy so it’s time to take a look at the nuts and bolts of ecommerce in Africa and to evaluate how its doing so far. As it stands the ecommerce in Africa is worth about $31 million – with $30 million of this coming from South Africa.”
She goes on to outline the current status of eCommerce in Africa — both positive and negative:
- Connectivity and software were once a problem in Africa but are now sufficient. All the capitals of Africa today have adequate connectivity, and there are plenty of capable IT companies ready to provide software and hardware.
- Taking credit card payments is a major barrier to eCommerce. Sub-Saharan African businesses find it very difficult to secure payment services for the major credit cards such as Visa and Mastercard. It’s especially tough following 9/11, due to legislation closing business residency loopholes that legitimate businesses had relied upon.
- Marketing is expensive for most African businesses. So far Africa has no eCommerce success stories.
- Shipping and trade barriers are the same problem on the Internet as off the Internet. African sellers still have to deal with export/import issues, middlemen who control markets for certain commodities and goods, and restrictive trade agreements — all of which drive up the costs for African sellers.
- Finally, Africa is facing competition from those two low cost providers, India and China. African sellers now have to worry about holding their own against not only the West, but also against a rising Asia.
Sometimes I think small businesses in the West don’t realize the business advantages that we have. I know I take for granted such services as merchant banking for Visa and MasterCard payments — the options seem endless and it’s so easy to sign up for them. I really have to hand it to any African eCommerce business that perseveres despite so many conditions stacked against it.