Visa predicts eCommerce in SSA to hit $7trn by 2024 as Nigeria, Kenya and SA show strong growth
The volume of eCommerce activities in sub-Saharan Africa (SSA) is on an impressive path of growth. The sector is projected to be worth no less than $7 trillion by 2024.
This is according to the report on eCommerce developments across Sub-Saharan Africa by Visa.
In SSA, the growth of eCommerce has been largely driven by the demand for professional services like accounting services, the prevalence of discount stores, business to business services, education and government services. Also, the covid-19 pandemic has made many businesses pivot from offline modes of payment to online payment systems.
Mobile devices have played a big part in pushing eCommerce in the region. With broadband penetration standing at 42% in 2020, the bulk of transactions have been carried out on mobile devices. This number is higher in South Africa and Kenya where 62% and 43% of the population have access to the internet respectively.
The number of people with mobile phones is also on the rise. 83% of Nigerians have a mobile phone connection while Kenya and South Africa have 98% and 176% respectively. With these volumes of mobile devices, it is imperative for eCommerce service providers as well as payment service providers to design more with mobile in mind.
SSA, MENA and Asia Pacific to drive strong ecommerce growth
Strong growth has been predicted for the sector in the coming years and sub-Saharan Africa is one of the regions in the lead of the growth. It had a 42% year on year growth from 2019 to 2020. Although SSA’s growth rate is impressive, it still lags behind the Asia Pacific (APAC) region and countries in the Middle East and North Africa (MENA).
In SSA alone, the lockdown saw new eCommerce users rise by 5% when compared to the active base in SSA the previous year
China, India and Southeast Asia are the main APAC countries driving the growth of eCommerce in their region. Together, they represent 56% of the global eCommerce volume.
The Middle East and North African countries have the highest growth potential of all three regions. Combined, they have a Compound Annual
Growth Rate (CAGR) of 23% which is almost twice that of the other two regions.
Nigeria is second largest driver of ecommerce in SSA
The strong eCommerce growth in sub-Saharan Africa has been driven by transactions that require ATM cards and Card Not Present (CNP) transactions. People are gradually moving from cash-only models, although cash is still the dominant payment method in Nigeria.
Visa reports that South Africa has the highest percentage of transactions from 2019 to 2020 in SSA. Nigeria comes in at second position while Kenya and Ghana both take the third position. Mauritius is the fourth largest contributor while Zambia is the fifth.
Nigeria’s performance is supported by eCommerce companies like Jumia and Konga, as well as payment companies like Flutterwave and Paystack. With payment options and eCommerce platforms to provide an alternate way of shopping in the face of Covid-19 lockdowns, online commerce is gaining more footing in Nigeria.
With the rise in the adoption of mobile devices, growth of eCommerce companies and payment companies, Nigeria and sub-Saharan Africa are poised to add to the growth of eCommerce globally.
If you’d like to get featured on our Entrepreneur Spotlight, click here to share your startup story with us.
Get latest Technology news, reviews, business-related content with a deliberate emphasis on the African narrative and insightful analysis in Nigeria – straight to your inbox.