E-commerce in Africa is set to reach over $40 billion by 2024: Africa is becoming the next home of the Internet giants, and more specifically those involved in E-commerce. As smartphones and the Internet become more and more within everyone’s reach, E-commerce is evolving, particularly among young people.
E-commerce in Africa is set to exceed $40 billion by 2024
According to statistics, the African e-commerce industry is expected to reach an annual growth rate of 24.7% in 2024. Whereas in 2017, the industry’s annual sales were just $7.7 billion. It is expected to reach $42.3 billion in 2024. Annual revenue is thus expected to achieve cumulative growth of almost 500% in 7 years.
Over the past two years (2020-2021), the Covid-19 pandemic has also helped the e-commerce industry, as elsewhere in the world. On the other hand, the short-term effects of inflation could cause a slowdown in growth on the African continent.
In 2021, the African e-commerce industry brought in $28 billion in revenues. It recorded growth of 31% on 2020 ($21.4 billion). “The annual growth rate is expected to gradually decline to 9% by 2025”, says the Statista report.
In 2022, the African e-commerce industry is expected to generate $33.3 billion in revenues, following an increase of 19%. For 2023, the report forecasts growth of 14.7% to $38.2 billion. In 2024, the annual growth rate will fall further to 11%, with revenues of $42.3 billion.In 2025, annual sales will reach $46.1 billion, thanks to an annual increase of 9%.
Net growth in the number of users
The growth of the e-commerce industry in Africa is mainly due to the continent’s expanding e-commerce user base.
In 2017, just 138.9 million people shopped online in Africa. This figure is expected to rise to 519.8 million by 2024, representing a compound annual growth rate (CAGR) of 17.9%. It should be noted that the growth rate of revenues is higher than that of the user base.
Furthermore, e-commerce penetration among the African population in 2024 is expected to be 40%. Thus, the revenue growth rate could record a more attractive rate than that forecast.
Challenges and opportunities for trade on the continent
Despite the growing popularity of e-commerce, the industry faces obstacles.
UNCTAD’s 2018 E-Commerce Index, which measures an economy’s readiness to support online shopping, covers 151 global economies, including 44 African countries. Mauritius is ranked 55th, the best position in Africa. Nigeria and South Africa rank 75th and 77th respectively. Nine of the bottom ten countries are African.
Challenges include slow and expensive Internet connectivity, poor infrastructure, weak logistics and little or no consumer protection.
Although payment by cell phone is on the rise, payment on delivery remains popular in Africa, making cross-border e-commerce difficult. Policies are often not adapted to complex payment chains, and merchants have fewer options for connecting their local e-payment systems to the services used by global customers.
By promoting greater interoperability between payment systems, policymakers can help strengthen Africa’s position as a global leader in mobile payments.
Scheduled for 2024, the new Free Trade Area of the African Continent (ZLEC) aims to create the world’s largest trading bloc, with a market of 1.27 billion consumers, set to grow to 1.7 billion by 2030. Bridging the digital divide and creating an enabling environment would help entrepreneurs win over new customers, and offer numerous opportunities for innovation.
The role that e-commerce can play in the realization of the ZLEC is essential. “E-commerce can boost intra-African trade, which accounts for 18% of trade, and boost Africa’s share of world trade, estimated at less than 3%,” said Ajay Kumar Bramdeo, AU Ambassador to the UN in Geneva, during E-Commerce Week.