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Extending E-Commerce to the Grassroots in Africa

BACKGROUND

Africans buy a lot of things from the western world, online. From shoes to wristwatches, to cars, furniture and equipment, books, spare parts, computers and electronics, clothing, jewelries, food items, etc.

 

One basic reason we Africans conveniently buy from the western world is our sense of trust that the products are of good quality and that they will certainly be delivered to us as at when due.

The bulk of the items which we Africans order online and get shipped to us from countries in Europe, Asia, America and Oceania are products of artisans, farmers, local manufactures and SMEs in those countries, many of which we have equally good or sometimes better alternatives here in Africa if we only look inwards and harness our own e-commerce potentials. Hence this clarion call for we Africans to power our grassroots and bring about quality in production, processing, packaging and logistics, as well as extremely functional e-commerce platforms and delivery systems that accommodates all those who have something genuine to produce and sell in Africa. This is the way to go as the nearly 1.1 billion Africans re potential market for a wide variety of items that can be sold online here in Africa.

CHALLENGES

The success so far of e-commerce giants like African Internet Group (Owners of Jumia) in Africa shows that Africa has the potential to engage in e-commerce, and profitably too. However, there are a number of barriers to overcome if we must achieve successful e-commerce activities at the grassroots in Africa. The barriers have always been there but their impact is more greatly felt when business transactions are to be conducted and concluded online. These barriers include distrust; poor access to internet facilities (electricity, computers, smartphones, and internet) by the masses who will patronize the e-commerce platforms (this poor access is either because internet is not readily available or because the cost of acquiring the computers and the internet subscription is high and unaffordable for all); poor ICT technical know-how at the grassroots; inadequate electronic banking services to sufficiently capture and process payments online; poor postal system; bad road networks and transportation systems for efficient products supply and delivery; insufficient preservation and storage facilities or warehousing; inadequate agricultural extension services to the local farmers; open market and taxation, and its effects on prices on the e-commerce store; insufficient funding for the small and medium-sized businesses; low literacy rates and preference for traditional methods of transaction; bad government and government policies; war and massive poverty at the grassroots; amongst others. Amidst all these challenges however, we see many e-commerce businesses springing up and flourishing, an indication that with the barriers notwithstanding, Africans can sell their products within Africa and to the world, online.

PRAGMATIC APPROACH

A pragmatic approach to positioning micro, small and medium sized enterprises (MSMEs) in Africa to be able to harness the potentials in e-commerce is to create robust a system that accommodate all those who are ready to succeed with e-commerce, no matter their financial status. The system will have quality of products; excellent storage, preservation and packaging; and efficient delivery system at its core. This system will serve as the link between the buyers and the sellers, and will adequately take care of the issue of trust and the security of funds and financial information. The system may be for only a specific niche market or across various categories of products. The system may cover a province, a state, a region of a country, an entire country, a region of the continent or the entire continent. Such system will create and operate

  1. a system of receiving, packaging and warehousing products from the local MSMEs, producers and manufacturers
  2. a payment system that is secured and easy to access for all. For instance, imagine a payment solution similar to PayPal in Africa, for Africans. That will be a great relief for e-commerce in Africa.
  3. a doorstep delivery system that works for various categories of products, across different distance.

THE GOVERNMENTS IN AFRICA AND THE EASE OF DOING BUSINESS IN AFRICA

The governments in place in African countries also need to be sincere in their effort to make it easier to do business in their respective country and region. Micro, small and medium scale enterprises (MSMEs) need supportive economic policies to be able kick off and run successfully. If empowered, these MSMEs have the potential of producing majority of the everyday essentials that we consume in Africa. When these products are being made by Africans, sold and consumed in Africa and other parts of the world, more jobs are created, prices are driven down, the cost of implementing e-commerce becomes lower and many things thereby fall in place. In a nutshell, working towards creating an enabling environment for e-commerce to strive is one of the smartest ways governments in Africa can help improve the lives of their citizens. So, instead of spending large sums of money on palliative measures, governments in Africa should consult widely and create systems that will help MSMEs and e-commerce to strive in their respective countries. Also, private investors need to realise that there is no better time than now to invest in creating systems and solutions that enhance e-commerce in Africa. One of the urgent needs of e-commerce in Africa today is a unifying electronic payment system that all African citizens can use irrespective of their country of residence – A payment that can work with most local banks in Africa

The ability to produce and sell any products and services online will help Africa reduce the rate of unemployment and poverty a great deal.

POSTAL SYSTEM

A simple e-commerce model that works well in developed countries like USA and UK is to receive payments from customers online; drop the item in the post office and within the scheduled time, the postal system delivers the items bought to the customer’s doorstep. Only few African countries can boast of an efficient postal system. If the postal systems across the continent are working fine and linked to each other, e-commerce in Africa will be lots easier. This is an area in which MSMEs in Africa really need the government to help out. Government itself will earn revenue because MSMEs at the grassroots will patronize the postal system every single day to deliver products within and across national boundaries.

ELECTRONIC PAYMENT SYSTEM

Africa needs an electronic payment system that works like PayPal for e-commerce to flourish at the grassroots in Africa. For example, the security of account information and refunds in case of dispute in transactions is well covered with PayPal. Also, it is quite easy to link the PayPal account to your bank account so that you can make payments online directly from your account as well as receive payment directly into your bank account from your website with just your email address. With an online account like that, every African entrepreneur can link their online account to their local bank and then conveniently and securely make and receive payments online, from their e-commerce website. Banks in Africa need to also gear up their commitment to providing efficient e-payment system to help enhance e-commerce in Africa.

If such an electronic payment is in place in Africa, even without a centralized e-commerce system, individuals can easily put up mini websites to display and sell their merchandise at minimal cost. Individuals and entrepreneurs who are service providers can also sell their services if they are guaranteed that they will receive their pay after the service has been provided, like we have in www.fiverr.com. We do not know if PayPal has intention to have a service dedicated to Africa; but if not, investing in such a project is for Africa is one of the continent’s dire needs today, for e-commerce to strive.

CASE STUDY

THE ETHIOPIAN COMMODITY EXCHANGE (ECX)

An excellent case study is that of the Ethiopia Commodity Exchange – www.ecx.com.et. The Ethiopia Commodity Exchange which is promoted by the government of Ethiopia serves as a warehouse for coffee, grains and other agricultural produce by the local farmers in Ethiopia. These products are then processed and stored using global standard of inventory management. From there, traders, processors, exporters and consumers are able to buy good quality farm produce and are assured of quality delivery of their items. So, all that the local farmer in Ethiopia needs to do is to locate an ECX warehouse closest to him/her and sell his farm produce to them. This encourages more local production. This helps the farmer to prosper. This makes it possible and easy for someone to sit in his home and buy that farmer’s produce without ever having the need to meet the farmer physically. This makes it possible for a local farmer’s produce to be exported from Ethiopia with minimum effort from the farmer himself. This is an excellent system. This practically brings about development to the rural, farming communities. This is the type of solution we advocate for, to boost e-commerce in Africa. The Ethiopia Commodity Exchange – www.ecx.com.et was founded by Eleni Gebre Medhin in 2012.

Similar to the ECX is AgriProFocus.

AGRIPROFOCUS

http://agriprofocus.com

Although this is not a strictly e-commerce platform, part of their core services is online platform with member profiles and resource databases from where you can access inventory of agricultural products online. They link farmers to customers. Agriprofocus is active in 13 countries in Africa and South-East Asia

TRAINING

Of course, there is a need for practical training and consulting services for the promoters of micro, small and medium scale business enterprises across the various African countries in other for their businesses to benefit from e-commerce. Business Finders Magazines team hopes to work with international organisations, governments, corporate bodies and individual entrepreneurs across Africa to train and support MSMEs on e-commerce. For all enquiries, send us an email at sales@ypco.com.ng

SUMMARY

Within Africa, let us

  1. Sit down and look inwards to identify e-commerce opportunities at the niche market, state, national, regional and continental level.
  2. Develop a secured and accessible electronic payment solution that can be linked to local banks across all African countries.
  3. Create workable models (considering all the existing constraints) for the collection, warehousing and logistics of “made in Africa products”, for Africans and global market.
  4. Create a central, robust e-commerce portal. The portal will operate in every state in Africa. The portal will also be a multi-vendor system to sell items submitted by the different MSMEs in each country. OR
    1. Train and encourage individual MSMEs to participate in e-commerce via their own website; and
    2. Create a central directory that makes it easy for interested buyers to access available products and service online.
  5. Evolve efficient delivery systems for both local and international purchase. Preferably though, national postal systems should be worked on to function properly.

Successful e-commerce implementation will help many struggling businesses in Africa to stand and grow. It will help to attract patronage from the developed world if the quality, pricing and delivery system can be trusted. It will help the economy of Africa. Hence, we advocate for the extension of e-commerce to the grassroots in Africa.

yemipidan

Author yemipidan

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