Disrupting Africa: Improving market access and ease of doing business

Technological disruption is transforming markets and societies across Africa. In previous articles I’ve covered the implications of technological disruption for mainstream and disruptor businesses, for policymakers and for strengthening trust and combatting corruption. But how can technology improve market access and ease of doing business in Africa?

E-commerce: waiting to take off? 

Nigeria’s experience highlights the opportunities and challenges in Africa’s e-commerce sector. With around two thirds of Nigeria’s internet users having shopped online at least once, the e-customer base is almost 60 million Nigerians, who have at 47% in 2015, one of Africa’s highest rates of internet usage. This has fuelled predictions of the sector’s growth, with the Nigerian government expecting it to reach US$10 billion in the next decade and 300,000 orders per day.

Challenges including widespread internet scams and fraud remain despite Nigeria’s many e-commerce start-ups. Many have no payment card or bank account, leaving cash or mobile payment the only option. While younger Africans are more receptive to e-payment, with PayPal having made significant inroads in Nigeria, it’s likely to be some years before online payments are universally accepted. Most e-commerce therefore involves cash-on-delivery, raising risks of theft, fraud or inability to pay. This creates opportunities for third-party payment service providers, sitting between buyers and sellers. 

Digital infrastructure challenges are also hampering e-commerce development: the lack of laptops and smartphones means that advertising quality and product variety suffer due to the simple devices they need to be displayed on. It also makes selling online streaming services difficult due to the cost of downloads. Though the impending upgrade to 4G should improve this, until data download costs drop significantly these services will remain the preserve of the richest Nigerians. 

Physical infrastructure problems such as the limited postal system all create delays and extra costs. Even local couriers can struggle to find addresses with many informal settlements and no national address system, though crowd shipping through social network aggregation of deliveries to the same pick-up point shows some promise through using strategically-located hubs. 

Huge competition, with global and multinational giants operating across Nigeria, also challenges e-commerce. Their huge market dominance, branch network and deep pockets make them formidable opponents, while the vast informal sector’s cut-price goods and services undercut the market, often not paying sales tax or import duties; the combination of these two parts of the sector stacks the balance of power against online retailers. 

E-commerce opportunities and priorities for business

• Secure and trusted payment systems (mobile and online) are likely to be very appealing
• Payment and delivery intermediation 
• Closer integration between high street and online retail: using stores to market and collect payment for goods available online. 

E-commerce opportunities for policymakers

• Step up development of address system and registration of informal settlements.

Seeing the world in 3D

3D printing is tackling issues in sectors from agriculture to healthcare through for example creating malaria diagnostic toolkits, labour-saving tools and designing prosthetics. It also allows for rapid prototyping and on-site custom printing of items, taking advantage of open-sourcing and user-led design. 

3D printing opportunities and priorities for business

• One of our technologies to watch in our recent publication on tech breakthrough megatrends, 3D printing opens exciting opportunities to leapfrog existing technologies and offer vital services at a fraction of the cost. 

3D printing opportunities and priorities for policymakers

• Energy access is vital – adequate supply to run printers is simply crucial. 
• Connectivity is important if users want to use open-source designs or need assistance in modifying their blueprint. 

The way forward

Digital connectivity is in many ways only the start: fundamentals such as secure payment and sufficient infrastructure for moving goods need to be established, underlining the importance of moving beyond narrow digital strategies to comprehensive business and economic strategies for the digital age. Infrastructure and e-payment development investment, as well as readiness to embrace digital and fully integrate it to boost revenues across the board are clearly all vital.

Case Study: Drones in Rwanda

Rwanda is home to a trial scheme delivering parcels to remote areas using drones: with many post-natal haemorrhage fatalities, a robotics firm has been working to deliver blood anywhere and cheaply on demand for transfusion. A text from a healthcare worker requesting blood triggers a drone to travel on a set flight plan to designated co-ordinates, where it drops the package in a small clearing. Successful implementation of e-commerce applications could disrupt retail, enabling rapid and efficient despatch of high-value or urgent items – though drones will not address underlying physical infrastructure problems. For more on this exciting new development, see my recent blog post, Africa - more than just a resources story – drones in healthcare.

Case study: Prosthetics

Amputees typically need over 15 different (expensive to replace and maintain) prosthetics over a lifetime. Scarcity of trained domestic personnel to produce them and the unsuitability of imported components presents significant challenges. 3D printing dramatically slashes production costs by up to 90%, even in its infancy – vital when in Gambia a prosthetic leg can cost 139% of the average annual wage. For more on this, see our recent blog, Disruptive Technology - 3D printing prosthetics are only the beginning in Africa.

In my next article I'll consider how disruptive technologies can help to strengthen healthcare and crisis prevention. If you'd like to read more on these topics, please read PwC's report Disrupting Africa: riding the wave of the digital revolution.