Any prospects for e-commerce in Africa?

This round-up first appeared at Global Voices.

The past week turned out to be one that came with an interesting debate about the prospects of e-commerce in Africa.

Oluniyi David Ajao started with throwing an insight into the popularity of e-gold (a digital gold currency) in Nigeria. Other online payment systems might indeed follow the same growth pattern, in Africa: Why is e-gold popular in Nigeria?

Not a few Nigerians take part in global commerce via the World Wide Web. According to Internet World Stats, there are about 5 million Internet users in Nigeria. This is only 3.57% of Nigeria’s 140 million people (2007 official census).

These people need to make payment online to facilitate their participation in e-commerce. Aside buying and selling online, others invest in foreign stock markets, foreign currency market (Forex), High Yield Investment Programs (HYIPs), Multi-Level Marketing (MLM) schemes etc.

Erik Hersman blogging for Thought Leader, highlighted what he saw to be the problems with participating in e-commerce, from Africa – especially South Africa: The problem with e-commerce and online payments in Africa.

A lack of true online payment options is crippling African e-commerce, and South Africa is no exception. The inability to accept payments for products and services on equal footing with the rest of the world means that many viable business options are not available for merchants in Africa.

The few options there are for African e-commerce take a certain amount of business history, wealth or contortions to attain.

Erik Hersman makes some suggestion towards the end of his blog post:

I would submit that the solution for Africa needs to be bank and carrier agnostic.

So, the beginnings of possible solutions are being seen, but no one has created the ultimate e-commerce option for Africa. Of course, if PayPal were to just allow us all to go through a little more stringent verification to ensure that we are real people with real businesses in Africa, then it would scoop up most of the online business overnight.

He however got a direct response from Oluniyi David Ajao who is suggesting that it is indeed possible to participate to some extent in e-commerce from Africa, today: Is a common African e-commerce platform possible?

The few options there are for African e-commerce take a certain amount of business history, wealth or contortions to attain. […]

These are also true, but only to some extent. Erik Hersman obviously had the mainstream payment systems that evolve around the major credit/debit card brands in mind. But even with only MasterCard and Visa in mind, it is still possible for an African merchant to participate fully in the global e-commerce arena.

He goes on to list and explain some online payment methods that can enable full e-commerce participation from virtually any African country. He concluded thus:

I believe I have proved beyond reasonable doubt that residents of Africa can indeed participate in global e-commerce, even today! I fully understand the angle you are pushing – Erik Hersman – but I believe your model of an African e-commerce platform would only be feasible, if African countries had a tight economic union. A union with common financial regulations and common economic policies. The European Union is a classic example.

As of today, this is not the case. Not even the regional blocks (at least I am very sure about ECOWAS) are united economically though efforts are being made in this direction. I know of two examples of your e-commerce model that already exist in Europe and work well for Europeans: Moneybookers and ChronoPay.

Is African e-commerce platform possible? Yes it is. However, Africa countries need to unite for this to be possible. Every other thing shall follow. Finito.

Grandiose Parlor joined the conversation by asking: Could Airtime Driven e-Commerce Work in Africa?

There are similar Pan-African driven discussions as Erik-David’s debate on the blogosphere and mainstream media, but I feel given the socio-economic and political state of the continent – beyond their intellectual appeal, many of those conversations are dead on arrival: There are just too many limiting factors that make the realization of the vast majority of Pan-African concepts too difficult – if not impossible. Don’t get me wrong, Pan-Africanism is a great and sweet concept – who wouldn’t want to have access to the second-largest and second most-populous continent in the world?

Even in Nigeria – a country I’m most familiar with, and it’s immediate extension, the West African subregion – the creation of an online payment system that is “bank and carrier agnostic” is still difficult but carries a better chance of happening and succeeding.

Grandiose Parlor has this to ask:

One “common denominator” characteristic of most Nigerians – including those in the informal economy – that I’ve discovered is that they all purchase airtime minutes. Could those minutes be used some how as legal tender for online transactions and e-commerce?

Are you based in an online merchant based in Africa? If yes, what challenges have you been facing? Have you used any of the suggestions from the bloggers? Join the conversation by posting your comments.

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Oluniyi D. Ajao
Oluniyi D. Ajao is an Internet Entrepreneur and Tech Enthusiast based in South Africa. Follow him on twitter @niyyie for more tech updates.

3 Comments

  1. Great post! I personally know Erik (aka WhiteAfrikan, aka HASH). He’s spot on. Africa has many problems and infrastructure is one of them. I think Safaricom’s M-PESA mobile payments option is going to shake up e-payments here in Kenya. Right now, the maximum one can send/receive money via M-PESA is about KSh 50,000. But this is a great start and the fee is only a paltry KSh 30. That’s CHEAP.

    Also see my old blog post, “Is Africa ready for e-Business?” here: http://maxtheitpro.blogspot.com/2006/03/is-africa-ready-for-e-business.html

  2. Pls I need chapter one on how ??o write A???? project starting from chapter one introduction aims and objective methodology based on E commerce prospect and challenges in nigeria…………..

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