China’s e-commerce a role model for Africa

By Mark Kapchanga Source:Global Times Published: 2019/12/1 20:13:40

An employee packages goods at a warehouse of e-commerce platform Kilimall in Nairobi, capital of Kenya, November 1, 2019. Photo: Xinhua

Looking at Africa from the perspective of most international media outlets, one gets the picture of a desperate continent. 

From claims that it is clouded by poverty, illiteracy, insecurity and diseases, one would hardly think of investing in Africa, because in the continent, everything appears hard to crack.

There is little doubt that Africa's infrastructure has been ailing. It has an inadequate road network that offers poor connectivity, there is paucity of electricity which is costly and ever erratic, while communication networks are still concentrated in urban areas.

The continent's social infrastructure is no better as its water supply is limited and sanitation and sewerage coverage is poor. However, significant progress is being made in education and healthcare sectors.

The challenges have ended up hurting Africa's growth prospects.

Acknowledging infrastructure is a vital ingredient in its transformation and an enabler for productivity and sustainable economic growth, Africa is investing a huge part of its resources into roads, power connections, water, sewerage lines, and communications.

For example, Ethiopia is building one of Africa's largest hydroelectricity plants that promises the continent affordable, reliable and adequate supplies for its industrial needs.

By putting significant amount of resources in sustainable infrastructure, Africa knows too well it would get value for money through greater economic activity, enhanced efficiency and increased competitiveness.

As a result, more countries would be eager to do business with the continent.

It is worth noting that many African countries have already fixed their infrastructure, while others are speedily working on theirs.

South Africa, Kenya, Ethiopia, Rwanda, Tanzania, Ghana, Nigeria, among others, are some of the countries in Africa that have set up stable and friendly platforms for foreign investors to operate from.

No wonder these countries have turned out to be Africa's business and investment hubs.

Initially, Africa lagged globally in the buying or selling of products on the internet, famously referred to as electronic commerce, due to lack of internet access, poverty, illiteracy and poor logistics. However, technological advances, which have given millions of Africans access to internet and mobile payment systems, have made it possible for the continent to shed the beggar tag and embrace e-commerce.

Even with its sluggish growth, e-commerce continues to perform reasonably well. In 2017, Africa did online business worth about $16.5 billion. This is forecast to go up to $29 billion by 2022, generating millions of jobs for youth.

But it is the recent coming into force of the African Continental Free Trade Agreement that is likely to turn Africa into an economic nerve center through online shopping. The trade pact, which was signed in Rwanda in March 2018, brings together 54 countries and over 1.25 billion people.

It is in this context that China is boosting its economic cooperation in Africa, aided by the high number of mobile devices and mobile-friendly payment systems such as M-Pesa in Kenya.

So as to make it easy for Africans to conduct business on their mobile phones, some Chinese firms have come up with handsets that match the needs of the continent. 

Transsion, the maker of Tecno mobile phones, for instance, has developed affordable, smart gadgets that seldom experience network fluctuations and have a longer battery life in a region where electricity supply is erratic. 

Huawei and ZTE have also not been left behind in this quest to turn Africa into a technology and communications superhighway with the invention of various communications equipment and software.

The ultimate goal, it appears, is to see Africa follow China's footsteps in the e-commerce world. Today, more than 40 percent of the globe's e-commerce transactions take place in China as compared to 1 percent about a decade ago.

This growth has been attributed to China's mobile payments revolution. However, there were at least 21 million online shoppers in Africa in 2017 or less than two percent of the world total, according to reports. There is hope though, as the continent recorded approximately 21 million online shopping transactions two years ago.

Beyond the setting up of a fertile environment for e-commerce, players in the sector are drawing inspiration from their Chinese counterparts such as Alibaba.

Already, Jumia, Africa's upcoming online shopping giant, is seeking commercial cooperation with China to expand sales as recently announced by its management.

Such an engagement and partnership would hasten the digital economy revolution dream in Africa besides enhancing competition that would inspire innovation and lure more Africans to online shopping. 

The growth of e-commerce would help African countries fight over-reliance on commodities whose prices are prone to market dynamics, generate jobs, help check poverty and ultimately translate to economic growth. 

The author is a researcher and expert on China-Africa cooperation based in Nairobi, Kenya. Follow him on Twitter @kapchanga.

Posted in: VIEWPOINT

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