Significant Growth Forecast
The expected exponential growth in African e-commerce over the next few years will primarily be driven by the widespread use of smartphones.
Businesses aiming to expand in Africa should therefore adopt a mobile-first strategy, optimizing user experiences for mobile phones rather than desktop computers.
Market Size Projections
The size of the African e-commerce market is projected to increase from $30.71 billion in 2024 to $45.72 billion by 2028, marking a 48.88% rise in just four years, according to a report released on June 4 by Nikulipe, a Lithuania-based fintech specializing in cross-border payments in emerging markets.
Increased Online Shopping
Titled “Payments and E-commerce in Africa 2024”, the report indicates that 40% of the continent’s population is expected to purchase goods and services online by 2025, up from 24% in 2020 and only 13% in 2017.
The number of African online shoppers is set to reach 519.8 million in 2025, compared to 281 million in 2020, reflecting a compound annual growth rate (CAGR) of about 17%.
Factors Driving Growth
Key factors contributing to the rise of e-commerce in Africa include a young population, increased penetration of smartphones and mobile Internet, and the growing adoption of digital payment methods like mobile money.
Demographic Insights
Currently, around 70% of the population in sub-Saharan Africa is under 30 years old, with a median age of 19.7 years. The continent’s total population exceeds 1.4 billion, which is half the median age and double the population of Europe.
Economic Growth Prospects
Many African countries are expected to experience significant economic growth in the coming years, boosting employment opportunities and increasing incomes.
According to the African Development Bank (AfDB), several African countries are projected to be among the world’s top 10 fastest-growing economies this year: Senegal (9.4%), Niger (9.6%), Rwanda (7.9%), Côte d’Ivoire (7.1%), and Togo (6.3%).
Additionally, six other countries, including Benin, Ethiopia, the Democratic Republic of the Congo, Gambia, Mozambique, and Tanzania, are expected to grow at rates around 5.5% during 2023 and 2024.
Mobile-First Approach
The report further highlights that the most significant factor behind the anticipated e-commerce boom in Africa is the increasing adoption of mobile phones, especially smartphones.
Mobile phone penetration is steadily rising, though it varies significantly between regions and even neighboring countries. Mobile adoption was nearly 100% in Gabon, Morocco, Côte d’Ivoire, Mauritius, and Eswatini in 2021.
Smartphone Adoption Trends
As smartphone prices become more affordable, hundreds of millions of Africans are expected to switch from basic mobile phones to smartphones.
The Global System for Mobile Communications Association (GSMA) predicts that there will be over 1.2 billion smartphones in sub-Saharan Africa by 2030, representing an 88% adoption rate.
Internet Usage Growth
Meanwhile, Internet cafes across the continent are bustling with millions of tech-savvy youths eager to find the best deals and shop online.
The number of active Internet users in Africa is projected to grow from 570 million in 2022 to over 890 million by 2028. Africa already leads the world in mobile Internet usage.
Mobile Internet and Payment Growth
In 2021, 69% of the continent’s total web traffic came from mobile Internet users, while mobile payments are experiencing substantial growth in regions with low banking penetration.
Therefore, any business looking to tap into the vast opportunities offered by the African online market must adopt a mobile-first approach, optimizing the user experience for mobile phones rather than computers.
Regional Payment Preferences
The report also notes that each region of the continent has unique characteristics shaped by factors such as digital infrastructure, economic strength, and payment preferences.
In sub-Saharan Africa, mobile payment solutions and digital wallets generally dominate online payments due to the high number of unbanked individuals. In North Africa, cash on delivery remains prevalent, though digital wallets and phone payments are gaining traction.