New frontiers and opportunities have been shaped by the COVID-19 pandemic in various facets of business in Africa.
Worthy of mention is the increase in online shopping and purchases by consumers in developing economies in Africa. However, many digital businesses in these nations have seen a slump in sales, according to a recent UNCTAD study.
Based on data collected from 23 countries, with many in Africa and Asia, the research shows a stark contrast between the pandemic’s impact on different actors of the digital economy.
The participating countries in Africa captured in the survey include; Benin, Burkina Faso, Cote d’Ivoire, Madagascar, Mali, Niger, Rwanda, Senegal, Tanzania, Uganda and Zambia.
“Even with growing demand for e-commerce, most businesses have struggled to adapt and scale-up their operations online.”
Online payments up, but cash on delivery most used
The study further reports that there is a notable increase in digital financial services in the nations surveyed- predominantly least developed countries.
This is the case due to the fact that, as consumers tried to limit exposure to the virus via social and physical distancing, they used online payment schemes to pay for food, medicine, health and hygiene products and other goods.
Moreover, about 64 percent of businesses in the digital economy that took part in the study reported an uptake in payments primarily through mobile money, followed by online and mobile banking, credit cards and other digital payment platforms.
This notwithstanding, cash-on-delivery remains by far the preferred form of payment for e-commerce transactions in LDCs, the survey highlighted.
Diverse challenges faced by digital businesses still need tackling
The study highlights the range of challenges e-commerce businesses have faced during the pandemic, notably disrupted supply chains, logistical problems arising from restrictions on the movement of people, and high broadband costs.
In poor economies of Africa and Asia-Pacific, 19 percent of the population use the internet, as compared to 87 percent in developed economies. Among this low percentage of internet users, only 40% have access to high-speed mobile broad band.
“Digitalization must be placed at the heart of the development debate. The current changes in consumer and business behaviour will have lasting effects,” Shamika N. Sirimanne, Director of technology and logistic, UNCTAD.
Measures to support economic recovery through E-Commerce
Based on the survey, the participants said governments do not prioritize the e-commerce sector, something governments have not sufficiently considered in their response efforts to the Covid-19 as well as recovery plans.
Going forward, the study recommends that governments develop well-defined national e-commerce strategies. Governments of developing countries can learn from one another and thereby adopt measures that have proved workable. For instance, Myanmar implemented an economic stimulus plan- COVID-19 Relief Plan to local businesses.
Also, measures relating to e-commerce were identified including the promotion of mobile money platforms and stimulating online retail, and a launch of an e-commerce website that hosts retail businesses in order to sell products online.
