Addis Ababa, Ethiopia, March 20, 2021 (ECA) - A new report launched by the Economic Commission for Africa (ECA) on the impact of COVID-19 on e-commerce in Africa, shows that the sector and the digital economy grew considerably throughout the decade ending in 2019. The report shows that the COVID-19 pandemic, bad as it is with the associated health and economic impacts, has opened up new opportunities for the continent’s digital economy.
According to authors of the report, launched March 20, 2021 at a side event at the ECA’s annual Conference of African Ministers of Finance, Planning and Economic Development, the growth of the sector was made possible by improved Internet penetration rates, reduced Internet costs and growth of mobile telephony.
One of the authors, Guy Futi, said in a presentation that by 2019 Africa had registered unprecedented growth in digitalization with some 290 million people connected to the Internet, an investment of US$1.4 billion in venture capital and more than 30 per cent of adults in South Africa, Nigeria, Egypt and Kenya reporting owning mobile phones.
While the report pointed out that Africa’s regulatory regime was yet to catch up with the speed with which the digital sector was growing, in general, it remained patchy and characterized by poor enforceability. The growth of mobile technology, among the other factors, built a fertile foundation that could be buttressed by developments in venture capital and funding, online payments, and logistics.
“We arrive at the conclusion that the digital economy can be a powerful catalyst for Africa’s economy with the potential to alleviate many of the economic burdens of COVID-19. But more importantly, e-commerce and digital trade can serve as a powerful engine for the economic recovery now required,” the authors of the report said.
The authors believe that unprecedented socio-economic factors such as Africa’s demographic dividends - 50 per cent of its citizens under the age of 35 - with 500 million mobile money accounts, there could be US$500 billion worth of digital commerce by 2030.
One of the authors, Jamie McLeod, said the report was based on interviews with tech companies in Africa.
Some of the highlights of the report covered the range from the growth of venture capital funding in Africa to advances made in mobile and Internet penetration. This part of the report demonstrates a rapidly changing digital environment that still has much to accomplish.
The report notes that cheaper mobile handsets have played a significant role in the region’s Internet penetration.
“Transsion and Samsung, who control the bulk of the market share on smartphones sold in Africa, have produced handhelds specifically targeted for the limited spending power of Africans. More than 83 per cent of smartphones sold in Africa during the last quarter of 2019 had a price tag of US$200 or less,” the report said.
It said the largest mobile operators on the continent have continued to experience sustained revenue growth.
Safaricom, one of East and Central Africa’s largest operators, grew its revenues from US$1.63 billion in 2016 to US$2.20 billion in 2019. The MTN Group in 2019 generated US$2.75 billion of revenue from its Nigerian subsidiary, and US$2.67 billion from its South African subsidiary.
Airtel Africa, with a presence in more than 14 countries on the continent, recorded US$3.01 billion in revenue in 2019. Maroc Telecom, operating out of North Africa, grew its revenues from US$2.77 billion in 2016 to US$3.99 billion in 2019.
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