This article is taken directly from the source cited and does not necessarily reflect the position or opinion of AmCham Kenya
Published July 28, 2021
Kenya has been reported as one of the top e-commerce markets in Sub Saharan Africa, enabled by easy access to financial services , a new report shows.
In the report by Visa, entitled 'E-trade advancements across Sub Saharan Africa (SSA)', Kenya ranks third in total volume of eCommerce in 2019 and 2020.
South Africa sits in first place of total volume, while Nigeria sits in second place, Ghana ranked in joint third with Kenya.
They are followed by Mauritius in fourth, and Zambia in fifth, showing the relevance of e-Commerce spreading across East, South and West Africa.
In Kenya, e-Commerce transactions are mainly driven by cross-border merchants.
The report notes that this shows potential for the local e-Commerce market to develop and presents a need to examine if sufficient acquiring infrastructure exists domestically to enable these players
“E-Commerce 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,” said the report.
According to the report, eCommerce sales are projected to grow to $7 trillion across the globe by 2024
The report noted the growth in e-commerce has been driven, in part, by the ongoing Covid-19 pandemic, with the implementation of lockdown restrictions across the world to curb the spread of disease as face-to-face retail was shut down, and customers had to turn to eCommerce to fill the void its closure left behind.
The report also adds that in SSA alone, the lockdown saw new eCommerce users rise by 5 per cent when compared to the active base in SSA the previous year.
According to the report, the most important eCommerce enablers are; the ability to access financial services, digital payment channels and digital infrastructure.
Data from the report showed bank accounts drove financial access in Nigeria and South Africa while in Kenya, financial access is largely driven by Mobile Money.
Another finding was that cash was prevalent in Nigeria, but Kenya and South Africa match their top drivers of access with electronic payment instruments mobile money in Kenya and cards in South Africa.
“Digital access is primarily enabled by mobile phones across all three markets. Internet penetration is highest in South Africa at just under two-thirds of the population, while Kenya and Nigeria each have just over one-third of the population with digital access through the internet.
According to the report, card usage for digital payments in eCommerce is observed across all card types: debit, credit and prepaid. Credit and debit show almost equal usage for eCommerce transactions of volume, respectively, and card preference appears to be strongly driven by general market preferences.
For instance, in South Africa, credit is favoured, whereas, in Nigeria, debit remains top for domestic transactions and credit for cross-border.
While spending power has reduced over the continent due to numerous lockdowns, the report notes that spending on eCommerce hasn’t reduced to the same extent as face-to-face spend, in fact, the closure of face-to-face environments has attracted new users and increased the frequency of spend in the eCommerce space.
When exploring digital payments usage, cards have increased across the continent, with the highest uptick taking place in Kenya.
However, the nature of this usage is also interesting as there has been a strong preference for contactless, a notable point for enabling safe card payments on delivery and the use of e-wallet services (often enabled by card-on-file).
Source: The Star Kenya
