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Kenya among top drivers of eCommerce volumes in Sub-Saharan Africa, Visa research

Story Highlights
  • In SSA cross-border transactions make up half of all ecommerce transaction volumes.
  • eCommerce is also driven by retail goods and professional services while mobile phones are the main source of digital access.
  • The report also found out that payment facilitators are a critical catalyst for digital payments

Kenya, South Africa, and Nigeria are the top drivers of eCommerce volumes in Sub-Saharan Africa. This is according to a recent report by digital payments firm Visa.

Ghana is also showing growth, having replaced Kenya in the top three contributors in 2020, the report notes.

SSA may be one of the smallest regions of eCommerce globally, but it shows steady growth potential. During lockdown the region saw new eCommerce users rise by 5% when compared to the active base in SSA the previous year.

“The three leading markets in SSA are starting to mature, providing the region with an established foundation and, when twinned with the growing penetration of eCommerce, it offers players in the payment space an opportunity they can capitalise on while helping to further accelerate the expansion of eCommerce in the region,” Lineshree Moodley, Head of Visa Consulting and Analytics (VCA) in Sub-Saharan Africa says.

The report confirmed that, as the world becomes increasingly digital, eCommerce has been driving the acceleration of digital commerce. It has experienced phenomenal growth rates around the world, and even recent setbacks as a result of the continuing COVID-19 pandemic haven’t stopped its rise. In fact, according to recent GroupM estimates, eCommerce sales are projected to grow to $7 trillion across the globe by 2024.

In terms of the merchant categories driving eCommerce, for Kenya and Nigeria, there is a steady dedication to service-based merchants with a strong spread across services categories such as professional services, education, government, and business-to-business merchants. In South Africa, professional services and telecom/utilities merchants were the top drivers of eCommerce in 2020.

The most important eCommerce enablers – the ability to access financial services, digital payment channels and digital infrastructure – are starting to take hold across SSA. Although cash may remain the dominant payment instrument in the region for now, there are signs that this will eventually change. In Nigeria, for example, cash is still particularly prevalent, while in Kenya mobile money is most popular and many South Africans choose cards as their main payment methods.

The Covid-19 pandemic has pushed consumers towards digital payments in the key eCommerce markets for SSA. At a primary level of cash versus digital payment instruments, there has been a strong move away from the use of cash across the board. This is due to a shift to eCommerce behaviour that is mostly enabled by digital payments and a reduced preference for face-to-face interactions that involve handling common surfaces, such as cash.

When exploring digital payments usage, the use of cards has increased across the continent, with the highest uptick taking place in Kenya. However, the nature of this usage is interesting. There has been a strong preference for contactless payments, a notable point for enabling safe card payments on delivery, as well as in the use of e-wallet services, as cash is seen as a vector for the virus.)

The report also found out that in SSA cross-border transactions make up half of all eCommerce transaction volumes, eCommerce is also driven by retail goods and professional services while mobile phones are the main source of digital access.

It also found out that payment facilitators are a critical catalyst for digital payments. It noted that fraud protection is key to maintaining customer trust.

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Nixon Kanali

Tech journalist based in Nairobi. I write about tech, business and African startups. Founder and Editor For TechTrendsKE. Nixon is also the East African tech editor for Africa Business Communities. Send tips to nkanali@techtrendske.co.ke.

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