2014 Predictions : E-commerce in Africa,Slow Growth

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In the Latest News…

MTN,Rocket and Millicom(Tigo) have jumped into bed together to ensure increase e-commerce penetration increases in Africa

Let me Explain that a little Bit ….

Rocket Internet  is a German private company specializing in Online services.In 2012, Millicom invested in Rocket’s two subsidiaries the Latin America Internet Holdings (LIH) and Africa Internet Holdings (AIH) at 20% each.

MTN not to be out done jumped on board  creating a joint venture with Rocket on a Middle East Internet Holding (MEIH)  and buying into Africa Internet Holdings(AIH) ,the new partnership see’s 33.3%  Africa Internet Holding  equity for all parties involved.

MTN expects to invest approximately EUR 300million over the next two to four years into AIH and MEIH.

The investment is subject to regulatory approval, and the transaction is expected to close during the second quarter of 2014.

 

My Thoughts on its impact on African e-commerce in 2014….

The Middle East and Africa definitely lag behind in the eCommerce game  and so there is an opportunity there ….

The Good

Millicom/Tigo has about 20 million users in Africa , not a large base but MTN adding its muscle of 203 million subscriber base gives Africa Internet Holding ‘s ventures an enormous boost.

Africa Internet Holding is doing all the right things to support its business ventures

1.Its launching in the African Countries with the highest Internet penetration AKA Nigeria,Egypt,Morocco,Kenya and South Africa , Actually its 9 ventures are in  13 countries on the African  continent including the aforementioned in addition to Ivory Coast and Ghana,Tanzania and Senegal

2. Its thinking Growth First , Returns later which is the only attitude to take  with e-commerce and African market . The returns will come but it will take time.

3. In the case of Jumia( the amazon of Africa ) They are solving the distribution/delivery problem for e-commerce in Africa by using motorbikes and vans

4.Jumia is  dealing with mistrust issues by taking payment  on delivery .

They are taking e-commerce and localizing to the African environment and i believe that is what will enable them win slowly .

The Bad

Even though Africa Internet Holding is doing a good job,However , i don’t think we will see a size-able change in the e-commerce of Africa for another 3-10 years , at least not enough to move the needle move significantly from less than 3% of total e-commerce sales .

They are selling to Africa which a start,but if  significant impact  is to be made, we should be looking at e-commerce where Africa sells to China and Europe .

The Opportunity

1.3 billion people in Africa

15% Internet Penetration (167 million) and rapidly growing at double digit rates.

50 million Facebook subscribers  and growing

( If any company can crack mistrust, distribution  and payment issues with e-commerce in Africa , they will be on the way to gaining the greatest market share and giving Africa a greater share in the e-Commerce space )

Africa Internet Holding has about 220 million subscribers to market to ,i would like to see the MTN and Millicom/Tigo Operations  develop products in country that help push the ventures e.g bundling with data purchase or zero rated access to the eCommerce sites.