The Oban Blog

Africa Mobile

Mobile: the heart of your Africa strategy

Focusing on South Africa, Nigeria and Egypt

The UN estimates that by 2050 the world’s population is expected to top 9.5 billion, with over half of that growth coming from Africa where the number of people is expected to more than double.

There are now 4 billion global internet users and 3.3 billion people on social media.  In Africa alone, there were over 380 million internet users in 2017.  Africa has been slower to adopt digital, primarily due to infrastructure challenges, but is now catching up at speed, and the continent poses an enticing future opportunity for e-commerce businesses, particularly when it comes to mobile.  In April 2018, more than 63% of webpage views in the region were via mobile devices.

When it comes to buying online, Africa and the Middle-East make fewer purchases per person than the rest of the world. The internet contribution to GDP trails other more digitally developed countries. However, by 2025, given the booming young adult population and rapid take up of mobile devices, Africa’s internet GDP is expected to at least match that of leading economies. This potential for growth creates a massive opportunity for organisations wishing to operate in the region.

For 50% of purchases made online in Africa, consumers choose imported products, a much higher proportion than the UK, an indication of the business available to companies from around the world. Along with the rest of the world, Africa prefers to pay by credit card online, but many also rely on cash on delivery. This will be a crucial element for any business planning to infiltrate the market and may limit price and delivery decisions.

Africa as a continent offers considerable opportunity, but the potential hidden within each country varies widely. In this article, we investigate the potential of three African markets: South Africa, Nigeria and Egypt.

South Africa: 54% of the population use the internet

South Africa poses a compelling proposition for retailers. 54% of South Africa’s 56 million people use the internet, which is the highest penetration rate of the four countries. It also has the highest level of mobile phone usage with a recorded 147 mobile phone subscriptions per 100 people. It is common for customers to have several SIM cards covering different areas and offering different data pricing plans. The cost of data is a key consumer focus and one for marketers to keep in mind.

E-commerce revenue amounts to an estimated £2,481m in 2018.  A decent starting point, especially when the retail e-commerce sales compound annual growth rate is projected to be 13.7% from 2018 to 2022, much higher than the global growth rate of 9.6%.

While just over half of the population only shop domestically, the remaining 50% purchase a mixture of domestic and imported products, giving international suppliers a large target market, particularly for those supplying electronics and media, the country’s largest market segment in 2018.

If you are going to step into the South African market, it is worth considering that 65% of online purchases occur via e-tailers as opposed to brand sites, and even though there is high mobile phone ownership, only 18% of those buying online used mobile phones to complete their purchases.

Nigeria: 7th largest internet using population in the world

Nigeria has a much larger population than South Africa with 193 million citizens. 44% of them use the internet or 84.3m people, making Nigeria the 7th largest internet market in the world by the number of users.

Several electronic infrastructure programmes are strengthening opportunities in Nigeria. Using responsive websites will be vital in reaching this audience as 89% of those with internet access use smartphones, 54% use a laptop and a third use a tablet.

For successful businesses, the effort will be worth it. Incentives are in place for online retailers, and Nigerians are open to purchasing imported products. Additionally, e-commerce spending in Nigeria is projected to reach £60 billion per annum by 2025.

Nigeria presents a long-term opportunity for brands targeting younger customers. A little over 2.5% of the world’s population currently live in Nigeria with a median age of just under 18. By 2050 Nigeria is expected to have the 3rd highest population in the world, more people than the US.

Egypt: plenty of potential for growth

Nearly half (41%) of the Egyptian population have access to the internet (39m people). Smartphone ownership is rising rapidly with an estimated 26m smartphone owners in 2018.

E-commerce was worth 1.4billion USD in 2014. Historically, growth has been slow as the result of a highly regulated media marketplace and limited access to online finances. However, it is now predicted to increase to 2.7 billion USD by 2020, fuelled by a young population with a preference for branded products and increased government support for technology.

With high internet use and high levels of television viewing, analysts expect online shopping to explode. The growth of online retailer Jumia, which was founded in Lagos but has grown sales in Egypt by 190% in 2017, shows that there is plenty of potential. Jumia plans to increase the number of products offered to 12 million by 2021.

Businesses operating in this market will need to be particularly aware of the preference for cash on delivery, a key feature in a nation where few have bank accounts and credit cards.