E-CommerceInAfrica R WebSingles

E-commerce
in Africa:
Unleashing the
opportunity for
MSMEs
October 2023
Copyright © 2023 GSMA

GSMA Central Insights Unit
The GSMA is a global organisation unifying the The Central Insights Unit (CIU) sits at the core of
mobile ecosystem to discover, develop and deliver GSMA Mobile for Development (M4D) and produces
innovation foundational to positive business in-depth research on the role and impact of mobile
environments and societal change. Our vision is and digital technologies in advancing sustainable
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mobile operators and organisations across the unique insights and analysis on emerging innovations
mobile ecosystem and adjacent industries, the in technology for development. Through our insights,
GSMA delivers for its members across three we support international donors to build expertise
broad pillars: Connectivity for Good, Industry and capacity as they seek to implement digitisation
Services and Solutions, and Outreach. This activity initiatives in low-and middle-income countries
includes advancing policy, tackling today’s biggest through partnerships within the digital ecosystem.
societal challenges, underpinning the technology
and interoperability that make mobile work, and Contact us by email: [email protected]
providing the world’s largest platform to convene
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This report, led by the Central Insights Unit at GSMA Mobile for Development, is the result of a collaboration
between the GSMA and the UK Department for Business and Trade of the UK government. The study
leverages surveys conducted with micro, small and medium enterprises on our behalf by D3 systems.
The UK’s Department for Business and Trade (DBT) Founded in 1985, D3 Systems, Inc. (D3) is an
is a UK Government department for economic international social science research firm that
growth. It aims to secure UK and global prosperity specialises in conducting quantitative and qualitative
by promoting and financing international trade and research for a wide variety of clients. D3 has an
investment, and championing free trade, economic expansive global reach. Their full-time staff of social
security, and resilient supply chains. It works with science researchers and statisticians have successfully
businesses based in the UK to ensure their success conducted research in more than 140 countries.
in international markets and encourages overseas
companies to look to the UK as their global partner
of choice. DBT offers expertise and contacts
through its extensive UK network of specialists,
and international network with global reach in
170 countries. The DBT network helps overseas
businesses to source UK goods and services and This initiative has been funded by UK Aid from the
connects them with the right UK partners. UK Government and is supported by the GSMA and
The Department’s Digital Commerce & Ecommerce its members. The views expressed do not necessarily
team is a group of dedicated professionals and reflect the UK Government’s official policies.
industry experts providing tailored trade and
investment advice to UK and international companies Authors and contributors
on digital commerce. The team also works with
international organisations to create mutually Lead Author: Nigham Shahid
beneficial initiatives that help businesses benefit Contributing authors: Daniele Tricarico, Eugenie
from the opportunities that digital trade offers. Humeau, Lauren White, Tanvi Deshpande
For more information on how DBT can help your We would like to thank our partners, the UK FCDO,
organisation or to discuss strategic partnership the UK Department for Business and Trade and D3 for
opportunities, please contact their valuable contribution to this output.
[email protected]
We would also like to thank the many individuals and
organisations that contributed to the research; these
are listed at the end of the report.
Contents
Table of Figures 2
List of Tables 3
List of Boxes 3
Acronyms 3
Glossary 4
Executive summary 6
1. Evolution of e-commerce in Africa 12
2. Objectives and methodology 14
3. The e-commerce landscape in Africa 17

3.1 Drivers and benefits of e-commerce 18
3.2 Venture capital funding to e-commerce 20
3.3 E-commerce channels 22
4. Business readiness 31
4.1 Connectivity 33
4.2 Business and digital skills 38
4.3 Access to capital 41
5. Building blocks for e-commerce growth 45

5.1 Policy, regulations, and implementation 46
5.2 Digital payments 56
5.3 Logistics and delivery 67
6. Conclusions and recommendations 79
Annex: Survey methodology 82
Acknowledgements 83
Table of Figures
Figure 1: E-commerce as a share of total retail sales in selected African markets, 2020-2021 13
Figure 2: Top three reasons for e-commerce adoption 18
Figure 3: MSMEs reporting an increase in sales after adopting e-commerce, by market 18
Figure 4: MSMEs reporting cost-savings from e-commerce adoption, by market 19
Figure 5: Value of funding raised by e-commerce and retail tech start-ups in Africa (2015-2022) 20
Figure 6: Number of e-commerce start-ups founded, by year 20
Figure 7: Funding to e-commerce sectors, by number of deals 21
Figure 8: Use of e-commerce channels, by market 22
Figure 9: Use of e-commerce channels, by MSME size 23
Figure 10: Use of e-commerce channels, by product categories 23
Figure 11: Social media use for e-commerce, by MSME size 24
Figure 12: Benefits of social commerce via Facebook apps for MSMEs 25
Figure 13: Marketplace fees or commissions as a challenge to e-commerce, by market 27
Figure 14: Use of social media services; women-owned versus men-owned MSMEs 28
Figure 15: Use of e-commerce channels; women-owned versus men-owned MSMEs 29
Figure 16: Key pain points when selling online 32
Figure 17: Mobile network coverage, by market 33
Figure 18: Affordability as a key challenge to e-commerce adoption, by market 34
Figure 19: Price of a smartphone as percentage of average monthly income, by market 35
Figure 20: MSMEs’ interest in training for e-commerce, by business size 38
Figure 21: MSMEs’ perception of customer challenges with e-commerce 42
Figure 22: MSMEs who perceived lack of consumer trust as a barrier to e-commerce, by market 43
Figure 23: MSMEs who indicated their customers preferred in-person interactions,
by e-commerce channel 43
Figure 24: Online purchases made by consumers in 2021, by market 43
Figure 25: Device ownership by men in 2022, by market 44
Figure 26: Device ownership by women in 2022, by market 44
Figure 27: Enabling policy and regulations for e-commerce 46
Figure 28: MSMEs’ understanding of e-commerce laws and regulations, by market 54
Figure 29: MSMEs’ preference for payment method, by market 56
Figure 30: MSMEs’ preferred payment method, by business size 57
Figure 31: MSMEs’ preferred payment method, by e-commerce channel 58
Figure 32: Customer preference for cash as an obstacle to e-commerce growth, as perceived by MSMEs 58
Figure 33: Main drivers of payments preferences 62
Figure 34: Fraudulent or incorrect transactions, by market 63
Figure 35: Pan-African Payments Settlement System and intra-regional trade 64
Figure 36: Delivery methods used by MSMEs, by market 68
Figure 37: Delivery methods, by MSME size 68
Figure 38: Delivery challenges experienced by MSMEs 69
Figure 39: Delivery management, by MSME size 76
Figure 40: Delivery management, by market 76
Figure 41: Third party delivery type, by market 77
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List of Tables
Table 1: Number of formal versus informal MSMEs in survey 16
Table 2: Top two cited barriers to selling online, by market 32
Table 3: Connectivity performance scores, by market 33
Table 4: Cost of mobile services 36
Table 5: Key needs for scaling e-commerce businesses 38
Table 6: Key business and digital skills required for e-commerce 39
Table 7: National e-commerce policies and frameworks in selected markets 48
Table 8: National cybersecurity and personal privacy and data protection laws 49
Table 9: National consumer protection and electronic transactions laws 51
Table 10: National intellectual property laws 52
Table 11: Top two barriers to delivery, by market 69
List of Boxes
Box 1: Women and social commerce 28
Box 2: Cross-border e-commerce 30
Box 3: MSMEs’ perceptions of consumer readiness for e-commerce 42
Box 4: E-commerce and intellectual property rights 52
Box 5: Why regulations matter: The case of Ethiopia 53
Box 6: Multilateral interoperability in Nigeria and Ghana 60
Box 7: PAPSS aims to reduce intra-African payment transaction costs 64
Box 8: Under-reporting of digital e-commerce payments by MSMEs 66
Box 9: Virtual postal address systems 72
Box 10: Emerging GPS-based innovations for addressing systems 73
Box 11: Paps Logistique: Supporting informal e-commerce delivery providers 75
Box 12: Drones for e-commerce delivery 78
Acronyms
API Application Programming Interface NaPA National Postcode and Addressing
B2B Business to Business NFC Near Field Communications
B2C Business to Consumer NIBSS Nigerian Inter-Bank Settlement System
B2G Business to Government NIP Nigerian Interbank Payment
B2P Business to Person NIPOST Nigeria Postal Service
C2C Consumer to Consumer P2B Person to Business
COMESA The Common Market for Eastern and P2P Person to Person
Southern Africa PCK Postal Corporation of Kenya
GDP Gross Domestic Product QR Quick Response
GhIPSS Ghana Interbank Payment and Settlement RTC Real Time Clearing
System
SMEs Small and Medium Enterprises
GIP Ghana Instant Pay
TIPS Tanzania Instant Payment System
IFC International Finance Corporation
UN United Nations
ITU International Trade Union
UNCTAD United Nations Conference on Trade and
KII Key Informant Interview Development
KYC Know Your Customer UPU Universal Postal Union
MMI Mobile Money Interoperability VAT Value Added Tax
MMP Mobile Money Provider VC Venture Capital
MNOs Mobile Network Operators VPAS Virtual Postal Address Systems
MSMEs Micro, Small, and Medium Enterprises 3PL Third-party logistics
Glossary
Ability of two different payment E-commerce The sale or purchase of goods

Bilateral online.
interoperability scheme participants that have
direct connections to one another
to process payments seamlessly. E-commerce A platform where different
marketplace businesses can collectively sell
The process of transmitting, their products or services to a
Clearing pre-established consumer base.
reconciling, and confirming
payment instructions prior to Marketplaces facilitate all aspects
settlement. of an e-commerce sales process
from taking orders to managing
delivery. 3
Connectivity Refers to connection to the
internet or other communication
networks. E-commerce A software that enables the
platform commercial process of buying and
selling over the Internet.4
Digital The use of digital technologies to
commerce interact with consumers, through
buying and selling channels E-money An electronically transactable
including mobile apps, chatbots, currency instrument and claim
and social media platforms.1 against a licensed e-money issuer,
supported by commercial bank
deposits or a direct claim upon a
Digital financial Methods to electronically store
commercial bank. 5
services and transfer funds; to make and
receive payments; to borrow, save,
insure, and invest; and to manage a Instant Credit transfers that make funds
person’s or enterprise’s finances. 2 payments available in a payee’s account
within ten seconds of a payment
order being made.6
Digital payments Any method of transferring
e-money through digital
technologies. Micro-enterprise Businesses that employ one to five
people.
Digital skills/ Skills needed to use digital devices,

communication applications Mobile banking The use of a mobile phone to
digital literacy access financial services provided
and networks to access and
manage information, from basic by financial institutions such as
online searching and emailing banks or microfinance institutions.
to specialist programming and
development. Mobile internet 3G, 4G, or 5G technologies.
Digitalisation Enabling or improving social,

business and government
processes by leveraging digital
technologies and digitised data.
1 Cloudmore. (2023). The Difference Between Digital Commerce and E-Commerce. (accessed 22 September, 2023)
2 International Telecommunication Union. (2018). Digital Financial Services (DFS) – Glossary.
3 WebFx. (2023). What is an Online Marketplace? Learn everything you need to know. (accessed 22 September, 2023)
4 Adobe Experience Cloud Blog. (2021). E-commerce platforms. (accessed 22 September, 2023)
5 AfricaNenda. (2022). The State of Instant and Inclusive Payment Systems in Africa SIIPS 2022.
6 European Central Bank. (2023). What are instant payments?
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Mobile money A service that includes transferring Payment scheme A set of procedures, rules and
money and making and receiving technical standards governing the
payments using a mobile phone. execution of payment orders.
The service must be available
to the unbanked, for example, A technology platform that checks
Payment switch
people who do not have access and routes transactions between
to a formal account at a financial member financial institutions.
institution. The service must offer
a network of physical transactional
Payment system Technical infrastructure used
points, which can include agents to perform payments and other
outside of bank branches and financial transactions between
ATMs, making the service widely financial service providers.
accessible to everyone. The agent
network must be larger than the The process of becoming aware
service’s formal outlets. This does Product
discovery of products sold on e-commerce
not include mobile banking or platforms and marketplaces.
payment services (such as Apple
Pay and Google Pay) or services
Purchasing The amount of goods and services
linked to a traditional banking
power that can be purchased with one
product or credit card.
unit of currency.
Multilateral Ability of payment instruments

Retail The sale of goods or services
interoperability belonging to a given scheme to
transactions directly to individual consumers
be used in platforms developed
for personal use. They are typically
by other schemes, allowing for
carried out in physical stores or on
interoperability across multiple
online platforms.
interconnected payments systems
and platforms.
Settlement Settlement ensures that the funds
from completed transactions are
Payment A channel through which payment
accurately transferred and credited
channel instructions are issued and
to the appropriate accounts,
notifications received, such as
completing the financial obligation
ATMs, POS terminals, agents, or
between the parties involved in the
mobile phones.
transaction.
Payment A technology solution that

facilitates electronic transactions Small enterprise Businesses that employ between
gateway five and 50 people.
between a merchant and a
payment processor, enabling the
Social The selling of goods via social
authorisation, authentication, and
commerce media services.
processing of payments for goods
and services.
Social media Websites or applications which
An instrument enabling the holder service enable users to create and share
Payment
to transfer funds, including cash, content.
instrument
bank transfers, debit or credit
cards, and e-money.
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Executive summary
6 / 84
E-commerce offers micro, small, While improving connectivity
and medium enterprises (MSMEs) and the steady uptake of mobile
the opportunity to operate more phones is spurring e-commerce
efficiently and increase sales and adoption by MSMEs, much of the
profitability. e-commerce opportunity remains
This is critically important in African markets where unexploited.
MSMEs play a central role in generating economic E-commerce adoption is growing, and market
value and creating livelihoods. E-commerce can forecasts suggest that there will be almost 600
support MSMEs to scale by facilitating access to million online shoppers in the region by 2027.
wider markets, lowering barriers to entry for micro However, the number of e-commerce users in the
and small firms, and enabling women to combine region in 2022 was estimated at under 400 million7
economic activity with other responsibilities more out of a total population of over 1.4 billion people,
flexibly and efficiently. a relatively small proportion. In addition, only five
to seven per cent of retail payments were digital
in 2020. There is therefore a vast opportunity for
MSMEs to reach consumers via the trade of goods
There are three prevalent online.
e-commerce channels: social
commerce, the selling of goods
via social media services such as
Facebook, Instagram, X (previously
known as Twitter) and WhatsApp;
e-commerce marketplaces, which
aggregate large numbers of sellers
on a single platform; and own
brand websites.
Each channel offers its own unique set of advantages
and limitations. While social commerce is most
accessible to MSMEs of all sizes due to low barriers
to entry for even informal and micro businesses,
exclusive use of social commerce, especially
informally, limits the professionalisation of the
business. Much of the sales process in informal
social commerce may remain manual, from
arranging payments to delivery offline. E-commerce
marketplaces digitise the entire sales process
for MSMEs, from receiving orders to processing
deliveries, but this comes at the cost of commission
charges as well as decreased visibility with competing
sellers. Meanwhile, company websites create unique
brand identities and trust with customers but require
more capital and digital know-how.
7 Statista. (2023). Number of users of e-commerce in Africa (2017-2027).
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This report highlights the The research identifies several
challenges and opportunities for barriers to scaling e-commerce for
scaling e-commerce adoption by MSMEs in Africa. These include:
MSMEs in Africa. • Limited financial resources and digital skills:
The insights presented in this study are primarily MSMEs lack access to capital and credit, restricting
based on surveys conducted with 1,500 MSMEs their growth, and do not have sufficient business
currently using e-commerce in over six African and digital skills to fully leverage the opportunities
markets, comprising Egypt, Ethiopia, Ghana, e-commerce offers.
Kenya, Nigeria, and South Africa. In addition, we • Regulatory gaps: Where e-commerce related
have conducted an extensive literature review and policies and regulations are absent, dated, or
interviews with over 40 experts in these six markets, fragmented, they are leading to low business and
as well as in three additional markets that form part consumer confidence in online trade. These policies
of this analysis: Rwanda, Senegal, and Tanzania. include cybersecurity laws, personal privacy and
data protection laws, consumer protection laws,
e-transactions laws, and intellectual property laws.
• Implementation of legislation: Weak

The report aims to inform a wide implementation of e-commerce related laws is
range of stakeholders on how contributing to low consumer trust and therefore
MSMEs can be better supported in limited consumer uptake of e-commerce.
adopting e-commerce. • Low uptake of digital payments: Cash on delivery

remains the preferred payment method in many
The report will enable organisations working with
markets, impacting MSMEs’ cash flows, making
MSMES (e.g. industry associations, non-government
them vulnerable to losses and saddled with high
organisations) to support them with better
delivery costs for items returned on delivery.
informed strategies. National ministries of trade and
digitalisation can use the report to inform evidence- • Challenging logistics and delivery: Poor road
based policymaking and address gaps in the enabling infrastructure, lack of national addressing systems,
environment. The findings of this study will also and fragmented delivery solutions make the
help donor organisations and development partners delivery of e-commerce goods both expensive
identify key capacity-building interventions needed and unreliable, reducing the revenue MSMEs can
to support MSMEs in adopting e-commerce. Finally, generate from online sales.
private sector companies involved in e-commerce
• Low consumer confidence and readiness: There
(e.g. tech providers, payment companies,
are limitations to consumer readiness for uptake,
e-commerce marketplaces) should find relevant
such as limited penetration of smartphones,
information to help them tailor their services to local
low digital literacy and digital skills that deter
needs, preferences, and constraints.
consumers from online purchases and transactions,
and low confidence in the quality of goods that
might be received via e-commerce due to lack of
consistency in product quality.
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To address the challenges MSMEs face in adopting and advancing their use of e-commerce, we recommend
the following actions:
Challenge Action Actor
MSMEs are Fintechs, microfinance institutions and • Financial sector regulators

under-financed mobile money providers are well-placed to • Fintechs
offer credit products tailored to the needs
Tailored financial • Mobile money operators
of MSMEs, but enabling financial sector
products are needed regulations are needed. • Microfinance institutions
to address the needs
of MSMEs in adopting
e-commerce. Investments in established MSMEs in the • Governments
form of equity or revenue sharing will • Private investors
facilitate greater access to finance and drive
• Donors
e-commerce expansion.
Investments in e-commerce start-ups and • Private investors

fintechs that provide microcredit products
to informal businesses can facilitate greater
access to financial services, boost the
resilience of micro-enterprises and generate
greater e-commerce adoption.
MSMEs are Partnerships between governments, • Governments

under-skilled e-commerce platforms and marketplaces, • Donors and development
NGOs, and donors are needed to ensure that partners
MSMEs require MSME upskilling programmes for e-commerce
upskilling in both • Non-government
are more targeted, less fragmented and
business and organisations (NGOs)
better coordinated.
e-commerce related • E-commerce services
digital skills. providers
Investments in a more digitally skilled labour • Public and private sector

force are required so that MSMEs can recruit education providers
the right talent for scaling e-commerce and digital upskilling
operations. programme providers
Connectivity is To encourage e-commerce uptake beyond • Mobile operators

unreliable cities, a commercial case for investments in
3G/4G sites is needed in rural and remote
MSMEs need higher areas by scaling the demand for 3G/4G devices
quality and more and broadband services. 8
reliable connectivity,
as do consumers, to
consistently adopt online The upload and download speeds provided • Governments
retail. Rural areas need by mobile networks, and therefore the quality
better connectivity of the network, is linked to the capacity of
infrastructure for spectrum available. More and better spectrum
e-commerce to expand allocation as well as reprioritisation of low-
beyond urban areas. band spectrum is needed to improve internet
quality beyond cities for rural e-commerce
adoption.9
8 GSMA. (2022). The State of Mobile Internet Connectivity Report 2022.

9 Tech Africa News. (2023). GSMA: Closing Africa’s Rural-Urban 5G Divide with low band spectrum expansion. (accessed 21 September 2023)
9 / 84
Mobile phones are The price of handsets needs to be reduced; • Original equipment
expensive one strategy is to improve efficiencies in the manufacturers
supply chain.
Consumers, who
primarily use mobile
devices to make online Handset financing, such as buy now, pay later • Partnerships between
purchases, need (BNPL) models can facilitate consumer access fintechs, micro-credit
affordable smartphones. to devices. providers, and device sellers
Micro-enterprises, which
form the bulk of African
businesses, also conduct Local manufacturing of lower cost smart • Regional and national
e-commerce primarily feature phones offers an opportunity to enable technology manufacturers
on mobile handsets. access.
The affordability of mobile data can also be • Governments

improved by balanced fiscal policy and a
reduction in sector-specific taxes on mobile
operators.
E-commerce- Formulation of a unified e-commerce law • Governments

related regulations tackling consumer protection, personal
are absent, dated, data privacy and protection, cybersecurity,
fragmented, or electronic transactions, and intellectual
poorly implemented property rights will provide clarity to MSMEs
and build consumer confidence.
Updated policies
and laws related to
e-commerce are needed Dated regulations need updating, and gaps • Governments
to provide MSMEs in regulations linked to e-commerce need to
with regulatory clarity be addressed so that MSMEs have clarity on
and provide adequate regulations linked to online transactions.
consumer protection for
online transactions as
consumer confidence in The implementation of regulations, especially • Governments
online purchases is low. cybersecurity laws and redress mechanisms,
needs strengthening due to the increasing
number of cyber-attacks and persistent risk of
financial fraud in the region, which deters the
use of e-commerce.
Educating and guiding MSMEs on the • Government Departments

legislation as well as implementation of of Trade
relevant cybersecurity, consumer protection • Private sector e-commerce
and data privacy laws will improve consumer services providers
protection measures and help build trust in
• NGOs
e-commerce.
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Uptake of digital Reassessment of taxation on mobile money • Governments

payments for online services and digital transactions to reduce the
sales is low costs of digital payments for consumers and
businesses will encourage uptake.
MSMEs need a shift
from cash on delivery
as a prominent payment Scaling the adoption of innovative payment • Financial sector innovators
method to digital channels such as digital cards, QR codes and in partnership with central
payments to improve NFCs will help make digital payments more banks
cash flow, reduce convenient for merchants and customers.
revenue losses and ease
financial management,
as well as enable data- Improving interoperability for instant • Payment system providers
driven business planning. settlements from a range of payment methods, in partnership with
and supporting the development of fintechs technology providers
such as payment aggregators and gateways
will facilitate instant and reliable digital
payments.
Delivery Investment via public-private partnerships in • Public and private sector

infrastructure needs transportation infrastructure will improve both investors
improving; logistics safety and access as well as reduce delivery
and delivery services costs and times.
are inadequate
MSMEs need reliable, Reducing fragmentation, improving the • Third party logistics (3PL)
accessible, and reliability and quality of third-party delivery and delivery companies
affordable logistics and services providers, and facilitating integration in partnership with
delivery services and between e-commerce businesses and delivery e-commerce businesses and
transport infrastructure providers will ease delivery challenges. technology companies
to deliver e-commerce
purchases to buyers.
Scaling national addressing systems will enable • Governments
accurate, timely and more cost-effective • National posts
delivery.
• Public-private partnerships
with support from
technology providers
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1. Evolution of e-commerce
in Africa
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In many low- and middle-income countries, MSMEs and 2020.14 As a result of the pandemic, the share
play a critical role in providing livelihoods and of consumers that reported shopping more online in
generating economic value. This is particularly true some of the largest African markets in 2021 was 81
in Africa. The World Bank estimated that in 2018, per cent in Nigeria, 79 per cent in Kenya and Ghana,
there were over 44 million formal MSMEs in sub- 72 per cent in Egypt and Tanzania, and 68 per cent in
Saharan Africa alone. Over 90 per cent of these South Africa.15
were micro and small, and only a third of them were
Despite this increase in e-commerce uptake in Africa
women-owned. The number of MSMEs in the region
during COVID-19, African MSMEs have not shifted as
is much higher when including informal businesses.
rapidly to e-commerce as MSMEs in other regions,
MSMEs create almost 80 per cent of employment in
and overall adoption has remained comparatively low
Africa, and in markets such as Ghana, for example,
(Figure 1).
contribute as much as 70 per cent of the total gross
domestic product (GDP).
Despite their relative importance to the economy, Figure 1

MSMEs in Africa face several challenges to growth, E-commerce as a share of total retail
including insufficient financing and digitalisation. sales in selected African markets,
Furthermore, in 2021, the International Finance 2020-2021
Corporation (IFC) reported that the COVID-19
pandemic had negatively impacted over 90 per cent
of MSMEs in sub-Saharan Africa, with women-led 4%
Egypt
MSMEs particularly impacted by revenue losses due 3%
to their informal status, small size, and concentration
in sectors that were disproportionately affected.10 2%
Kenya
E-commerce offers many benefits to MSMEs,
11
4%
including reducing barriers to entry by lowering the
capital needed to launch enterprises, enhancing 3%
productivity by easing the procurement of quality South Africa
4%
supplies, making the sale of goods easier, and
increasing productivity.12 It can improve the economic
7%
inclusion of women by offering more flexibility in Nigeria
running an enterprise while juggling caring and 7%
household responsibilities. It can also improve
access to goods and the quality and value of
2022 2021
products purchased by consumers, due to increased
competition.
Source: Statista16
Globally, the share of goods purchased online is
increasing, creating incremental value for MSMEs
While e-commerce is expected to grow globally due
from increased productivity and innovation. It was
to improved connectivity and internet use, African
estimated that in 2021, retail e-commerce sales
MSMEs risk being left behind if they do not accelerate
amounted to approximately $5.2 trillion worldwide,
the use of e-commerce to sustain and expand their
and are expected to grow by 56 per cent to over
businesses. With increasing internet penetration and
$8 trillion by 2026.13 E-commerce saw a sharp
mobile adoption in Africa, MSMEs have a notable
increase during the COVID-19 pandemic, when
opportunity to leverage online sales to build more
social distancing measures necessitated a shift from
profitable enterprises, generate employment, and
in-person to online shopping. As MSMEs around
create more economic value. According to the United
the world struggled to survive under lockdown
Nations Conference on Trade and Development
conditions, many pivoted to e-commerce to sell their
(UNCTAD), digital commerce in Africa could add
goods. E-commerce sales increased significantly
$180 billion to the region’s GDP by 2025 if leveraged
from 16 per cent to 19 per cent of retail between 2019
effectively.
10 IFC. (2021). COVID-19 and Women-Led MSMEs in sub-Saharan Africa.

11 According to the OECD, e-commerce refers to “the sale or purchase of goods or services, conducted over computer networks by methods specifically designed
for the purpose of receiving or placing orders.” Therefore, whether a commercial transaction qualifies as e-commerce depends on the ordering method rather than
the characteristics of the product purchased, the parties involved, the mode of payment or the delivery channel (e.g., the payment and delivery of goods do not
necessarily have to be conducted online. See OECD.(2021): Unpacking e-commerce: Business models, trends and policies.
12 World Bank. (2023). Boosting small businesses through E-Commerce and integration into value chains.
13 Statista. (2022). Retail e-commerce sales worldwide from 2014 to 2026.
14 UN News. (2021). Global e-commerce jumps to $26.7 trillion, fuelled by COVID-19. (accessed 21 September 2023)
15 Statista. (2023). Share of consumers shopping more online since the beginning of the coronavirus (COVID-19) pandemic in selected African countries in 2021.
16 Statista. (2023). E-commerce retail as share of total retail in selected African countries from 2020 to 2021.
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2. Objectives and
methodology
14 / 84
The main objective of this report, which is the • Capture the experience of MSMEs currently using
result of a collaboration with the UK Department e-commerce and highlight opportunities to better
for Business and Trade, is to provide insights on support them in selling online; and
MSMEs’ experience with e-commerce in selected
• Provide recommendations on how MSMEs using
African markets and offer recommendations to
e-commerce can build effective partnerships to
scale its adoption to improve their productivity and
scale their businesses.
profitability.
Specifically, the report aims to:
• Identify the enablers and barriers to e-commerce

and assess MSMEs’ readiness to adopt and
leverage it more effectively;
Methodology
The research takes a mixed-methods approach, conducted to determine the sampling strata for this
including: study. Through this process, our survey partners, D3,
• A literature review of resources such as industry identified e-commerce use by MSME size and sector
reports, academic articles, and market research to to designate a sample allocation in each of the six
evaluate the current state of play of e-commerce in markets in the study. The goal was to survey at least
the region; 250 qualifying businesses in every country across key
e-commerce sectors, including fashion and apparel,
• Key informant interviews with 40 experts including electronics, toys and DIY, furniture and appliances,
regulators, payments and logistics players, delivery food and beverage, personal care, agricultural
solutions providers and e-commerce marketplaces products, and automotive industries.
based in the region to understand e-commerce
trends, challenges, and emerging solutions; and Local field teams identified qualifying businesses
in the target urban and peri-urban zones that
• A survey conducted with over 1,500 MSMEs across corresponded to the sample allocation for their
six African markets to understand pain points and market, using online searches, existing contacts from
opportunities from the MSMEs’ perspective. previous studies, and snowball sampling methods
The survey (henceforth referred to as the GSMA to identify and recruit participants. The teams then
e-commerce survey 2023) was carried out between scheduled and conducted survey interviews with a
February and April 2023. It consisted of 1,591 survey representative from each participating business.
interviews conducted with MSMEs in Egypt, Ethiopia, Reflective of the composition of micro versus
Ghana, Kenya, Nigeria, and South Africa. Local field small versus medium-sized businesses in the
teams working in local languages administered the markets, over 70 per cent of surveyed MSMEs
questionnaire. were micro, approximately 20 per cent were small,
The markets in the study represent the wide and 10 per cent were medium-sized. The survey
variety of e-commerce use and availability across includes some unregistered, and therefore informal
the continent. Based on GSMA’s research into MSMEs (Table 1).
e-commerce in Africa, the countries in this study For this research, micro-businesses are defined
include examples of comparatively more and less as those that employ one to five people, small
advanced adoption of e-commerce channels as well businesses as those that employ between five and 50
as varying levels of e-commerce regulation. people, and medium businesses as those that employ
Deep-dive desk research on the technological, between 50-250 people (see Annex for further
regulatory, and business environments was details on methodology).
15 / 84
Table 1
Number of formal versus informal MSMEs in survey
Is this business 74% 26% <1% <1%

officially registered?
Yes No Refused Don’t know
Nigeria Egypt
66% 34% 0% 0% 58% 41% 1% 0%
Ghana Ethiopia
58% 41% <1% <1% 60% 20% 0% 0%
South Africa Kenya
82% 18% 0% 0% 96% 4% 0% 0%
Yes No Refused Don’t know
Scope
The research focuses primarily our surveyed markets, • The sale of goods mediated by e-commerce
Egypt, Ethiopia, Ghana, Kenya, Nigeria, and South marketplaces and platforms. While both aggregate
Africa, as well as observations from three additional buyers and sellers on a website, marketplaces
markets, Rwanda, Senegal, and Tanzania. facilitate all aspects of an e-commerce sales
process from taking orders to managing delivery,
In this assessment, three types of e-commerce
while platforms simply bring buyers and sellers
prevalent in the selected markets were considered,
together online; and
including:
• Online sales via own company websites.
• Social commerce, which refers to the sale of
goods using popular social media services such E-trade services such as tourism and travel, food
as Facebook, Instagram, X (previously known as delivery and ride-hailing, as well as digital goods
Twitter), TikTok, and WhatsApp. Social commerce such as gaming and entertainment are excluded
may be formal, using the specific e-commerce from this analysis. The report focuses on the trade of
features provided by social media services, or physical goods, which generates the most value from
informal, using online personal and community e-commerce in the selected markets.
forums to promote and sell goods without
Furthermore, while e-commerce can be conducted
deploying e-commerce-specific solutions offered
through a variety of relationships, including business
by the services;
to consumer (B2C), business to business (B2B),
consumer to consumer (C2C) and business to
government (B2G), this assessment focuses on the
most prevalent forms of e-commerce used by MSMEs
in the region, which are B2B and B2C.
16 / 84
3. The e-commerce
landscape in Africa
17 / 84
3.1 Drivers and benefits of e-commerce
Steadily increasing mobile penetration and internet variety of online channels, including e-commerce
connectivity in Africa over the last decade has marketplaces and their own company websites.
increased peer-to-peer social media interactions,
GSMA’s e-commerce survey 2023 found that MSMEs
leading to informal vendors and micro-businesses
of all sizes reported an increase in customers, an
using popular global social media platforms to
increase in revenue, and ease of doing business as
promote their goods, while bigger, more established
their top three motivations for adopting e-commerce
businesses have begun to sell through a wide
(Figure 2).
Figure 2
Top three reasons for e-commerce adoption17
Access to new Increase Make doing

customers revenue business easier
55% 53% 49%

Base: All MSMEs surveyed
Source: GSMA e-commerce survey 2023
The data also shows that MSMEs in all markets saw an

increase in sales due to the adoption of e-commerce, “Selling online has improved my sales,
with over 90 per cent reporting improved sales in all and it has also boosted the awareness of
markets (Figure 3). my brand.”
Micro-enterprise, Nigeria
Figure 3
MSMEs reporting an increase in sales after adopting e-commerce, by market18
99% 97% 96%

94% 95% 92%
Egypt Ethiopia Ghana Kenya Nigeria South Africa

17 Survey Question: Why did you initially decide to go online to sell goods or services?
18 Survey Question: Has selling goods or services online helped increase the sales of your business?
18 / 84
Approximately two-thirds of MSMEs surveyed also indicated that e-commerce had reduced the cost of
running their business (Figure 4).
Figure 4
MSMEs reporting cost-savings from e-commerce adoption, by market19
78% 80%
74% 72% 71%
62%

These statistics suggest that there is a clear Furthermore, a thriving e-commerce ecosystem
opportunity to build the resilience and profitability requires three essential building blocks:
of MSMEs by scaling e-commerce in the region. Yet
• Enabling e-commerce policies, regulations and their
while adoption is growing, the broader environment
implementation;
poses several challenges to e-commerce growth.
MSMEs face challenges related to connectivity • The uptake of digital payments and a mature digital
and affordability of devices and mobile services. payments infrastructure; and
They have low business and digital skills, and they
• The availability of reliable logistics and delivery
need access to capital to scale up and digitise their
infrastructure and services.
operations. These factors also impact consumer
readiness to adopt e-commerce; poor affordability of Section four of this report examines business and
devices and mobile services, low digital literacy and consumer readiness for e-commerce adoption.
limited purchasing power restricts the addressable Section five offers a detailed assessment of the
market size for e-commerce for MSMEs to smaller, status of the above building blocks for e-commerce
more urban, better educated, and higher income in the region, identifying gaps and providing
segments in many African markets. recommendations to address them.
19 Survey Question: Has selling goods or services online helped reduce the costs of running your business?
19 / 84
E-Commerce in Africa 4 / 41
3.2 Venture capital funding
to e-commerce
E-commerce gained visibility in African markets after Between 2015 and 2022, over $4.2 billion was
2010, when marketplaces such as Jumia20 and Konga21 invested in e-commerce and digital retail across
launched with significant investments to enable Africa, 80 per cent of which came from foreign
retailers and consumers to transact goods online investment (Figure 5). 22
under a B2C model.
Figure 5
Value of funding raised by e-commerce and retail tech start-ups in Africa, 2015-2022
(million USD)
600
500
400
300
200
100
2015 2016 2017 2018 2019 2020 2021 2022
Source: Statista (2023)
More than 330 e-commerce and digital retail of products (Figure 7). 24 While fintech remained the
companies have been funded in the region as of 2022 most funded sector, e-commerce was the third most
(Figure 6)23 and over 20 per cent of these were in the funded sector in 2022, accounting for 13 per cent of
retail sector, more than double any other category total funds invested. 25
Figure 6
Number of e-commerce start-ups founded in Africa, by year
40
30
20
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: Briter Bridges (2023)26
20 See Jumia group website.

21 See Konga website.
22 Briter Bridges. (2023).At a glance series: Investment & innovation in digital commerce & retail in Africa.
23 Ibid.
24 Jumia (operating in 12 African markets, including Nigeria, South Africa, Kenya, Egypt, Ghana and Senegal) is the most funded company in Africa as of 2022.
25 Partech. (2022). Africa Tech Venture Capital Report.
26 Briter Bridges. (2023). At a glance series: Investment & innovation in digital commerce & retail in Africa.
20 / 84
Figure 7
Funding to e-commerce sectors, by number of deals
Furniture
Online Retail
6%
DIY Commerce 7%
21%
Food Delivery 7%
8%
Rewards
11% Vehicle Marketplace
8%
B2B Commerce
11%
10% Online Marketplace
11%
Groceries Delivery
Fashion
Source: Briter Bridges (2023)27
The top funded markets in the region in 2022 were

Nigeria, South Africa, Egypt, Kenya, and Ghana.
Senegal and Tanzania ranked eighth and ninth,
respectively. Rwanda ranked 20th and Ethiopia
23rd. 28 While Nigeria secured over $1.2 billion spread
over 190 deals, there was a 36 per cent year-on-year
drop in equity funding.
Of the top funded markets, e-commerce funding

contributed to the largest proportion of investment
in Kenya (35 per cent) and the second largest
proportion of funding in Egypt (26 per cent), which
saw 37 per cent year-on-year funding growth in
2022. 29 In Nigeria and South Africa, fintech dominated
investments and a relatively small proportion was
invested in e-commerce.
Despite the growing investment in e-commerce,

Africa only received one per cent of total global
venture capital funding, and more recently,
investments were concentrated in a few start-ups
rather than spread more widely across companies.
27 Ibid.
28 Partech Partners. (2022). 2022 Africa Tech Venture Capital.
29 Ibid.
21 / 84
3.3 E-commerce channels
Findings from the GSMA e-commerce survey 2023 e-commerce marketplaces and own brand websites
indicated that social commerce was the most widely was predominant (Figure 8). In Egypt, almost a third
used e-commerce channel by MSMEs in all markets of MSMEs surveyed used a combination of social
except South Africa, where the use of multiple media and websites, while in Kenya, a quarter used a
e-commerce channels including social media services, combination of all three channels.
Figure 8
Use of e-commerce channels, by market30
77%
75%
56%
54%
49%
39%
33%
24% 24% 25%

18% 19%
14% 14% 13% 13% 14%
8% 8% 9%
6%
3% 4% 3%
1% 1% 2%
0% 0% 0%
Social Media Social Media Social Media All 3 Channels Other

Only & E-commerce & Website
Marketplaces

This finding was consistent regardless of the size of of medium enterprises relied exclusively on social
the business, although exclusive reliance on social commerce, while only 11 per cent of micro versus
media as a sales channel decreased as businesses almost a quarter of medium-sized MSMEs used all
got larger. 60 per cent of micro versus 33 per cent three channels (Figure 9).
30 Survey Question: Does your website include an online store, meaning that you sell goods or services on your website?
Survey Question: Do you use any of the following e-commerce sites or marketplaces to sell goods or services? (Options provided top five e-commerce sites or
marketplaces by market with the option to provide another response).
Survey Question: Do you use any of the following social media or chat applications to advertise or sell goods or services? (Options provided top five social media and
chat services by market, with the option to provide another response).
22 / 84
Figure 9
Use of e-commerce channels, by MSME size31
Micro Small Medium
Social Media Only 60% 49% 33%
Social Media &

E-commerce Marketplaces
16% 13% 11%
Social Media & Website 13% 16% 29%
All 3 Channels 11% 20% 25%
Other 1% 2% 2%

Across all key e-commerce retail product categories, social commerce was the most prevalent form of
e-commerce (Figure 10).
Figure 10
Use of e-commerce channels, by product categories32
Beauty & Personal Care 66% 11% 11% 11% 1%
Fashion & Apparel 61% 13% 16% 9%
Food & Beverage 58% 13% 16% 12% 1%
Furniture & Home 54% 10% 16% 18% 2%
Others 51% 15% 15% 18% 1%
Consumer Electronics 49% 21% 10% 20%
Agricultural Supplies & Products 48% 18% 10% 24% 1%
Automotive 47% 20% 13% 20%
Social Media Social Media Social Media All 3 Channels Other

Only & E-commerce & Website
Marketplaces

31 Survey Question: Do you use any of the following e-commerce sites or marketplaces to sell goods or services? (Options provided top five e-commerce sites or
marketplaces by market with the option to include another response).
Survey Question: Do you use any of the following social media or chat applications to advertise or sell goods or services? (Options provided top five social media
services and chat apps by market, with the option to include another response).
Survey Question: Does your website include an online store, meaning that you sell goods or services on your website?
32 Survey Questions: As above.
23 / 84
Social commerce
Social commerce may be conducted entirely However, convenience and efficiency remain limited
informally, whereby users of social media services as the seller must then arrange payment and delivery
primarily use them to advertise their products on for each individual sale via non-digital channels.
personal accounts or shared interest and community
The social messaging app WhatsApp and social
groups, and then negotiate and arrange prices,
media platforms Facebook and Instagram are the
payments, and exchange offline. There are several
leading social commerce options in the region (Figure
benefits to MSMEs of selling goods via informal social
11). While Facebook and Instagram offer dedicated
commerce. Unregistered businesses, which from the
social commerce tools in other regions, these are not
bulk of African MSMEs, can sell online on social media
yet supported in Africa and social media services are
without undertaking potentially complex registration
generally used informally, though WhatsApp business
processes. In Nigeria, for example, there were over 38
tools are more readily available. The social messaging
million informal enterprises in 2020, with 80 per cent
app Telegram is also popular, specifically in Ethiopia,
of people working in the informal economy. Kenya is
reportedly because it requires less data to upload and
estimated to have five million informal MSMEs versus
download and enables better encryption and auto-
1.5 million formal ones. 33 Similarly, it is estimated that
deletion of messages, making users feel secure about
of approximately 5.78 million MSMEs in South Africa,
their privacy. Approximately a quarter of MSMEs
only 14 per cent are formalised. 34
also reported using TikTok, a primarily mobile-based
Micro-enterprises can leverage the sense of trust video-sharing app for short-form videos. While
stemming from being either personally known within TikTok Shop is a dedicated e-commerce service that
the social media network or being a trusted member facilitates purchases and payments within the app
of the online community, to extend their customer for registered e-commerce businesses, TikTok is also
base. frequently used informally to market products.
Some of these services also offer opportunities

for paid advertising and event marketing to boost
MSMEs’ reach.
Figure 11
Social media use for e-commerce, by MSME size35
Facebook Whatsapp Instagram Telegram Messenger Tiktok Twitter/X
Micro
��
84% 72% 51% 30% 26% 25% 12%
Small
��
90% 80% 47% 30% 24% 25% 15%
Medium
��
95% 75% 63% 29% 33% 32% 23%
Base: MSMEs using social commerce

33 USAID. (2023). Kenya Small Business Development Centers.

34 IFC. (2018). The Unseen Sector: A Report on the MSME Opportunity in South Africa.
35 Survey Question: Do you use any of the following social media or chat applications to advertise or sell goods or services? (Options provided top five social media
services and chat apps. by market, with the option of another response).
24 / 84
Key informant interviews conducted for this report such as WhatsApp to finalise payments and delivery
indicate that MSMEs tend to use several social media arrangements. Figure 12 highlights how Facebook
apps in tandem to advertise goods and complete apps enable MSMEs to establish brand presence,
sales, starting with advertising on Facebook and interact with customers and even conduct basic
Instagram, for instance, and then interacting with business data analytics.
customers through social media messaging apps
Figure 12
Benefits of social commerce via Facebook apps for MSMEs
Medium
Business
Paid
• Post text, photo or video advertisements on
Advertising
Facebook or Instagram
• Target specific audiences for posts based on
demographics, interests or behaviours
• Reach international markets with paid advertising
Market • View account insights (e.g. post views, page

Business Growth
Research following) via Facebook, Instagram or WhatsApp

• Conduct brand surveys on Facebook’s test and learn
feature
• Post question polls for customers via Instagram
stories
• Encourage customers to leave reviews on the
Facebook page
Recruitment • Publicly post job listings and monitor applications

via Jobs on Facebook
• Join Facebook groups to find potential applicants
• Use direct messaging on Facebook Messenger,
Instagram and WhatsApp to communicate with
applicants and onboard new recruits Small
Business
Sales and • Share content via Facebook/Instagram posts and

Communication stories
• Directly message customers and suppliers on
Facebook Messenger, Instagram and WhatsApp
• Post product/service listings on Facebook
Marketplace
Networking
Business Growth
• Join Facebook groups to learn from and connect

and Learning with other people and businesses
• Follow other Facebook and Instagram pages
• Invite quests and/or live-stream events via
Facebook
Brand
• Create Facebook page, Instagram profile or
Presence
WhatsApp account
• Publicly share company information description,
location, contact details, products, business
hours, website link
Micro
Business
Source: Genesis Analytics (2021)36
36 Genesis Analytics. (2021). Unlocking Africa’s Potential: How social media is powering small business in Africa.
25 / 84
Numerous recent studies corroborate findings that based traders before allowing them to participate in
social commerce has enabled a majority of MSMEs to the WhatsApp community, connecting them to online
expand their market reach and is the most accessible buyers. The administrator also provides basic training
channel for product advertising. Most importantly, on how to market products and hosts in-person
social commerce lowers the barriers to retail, allowing trade fairs to promote traders in the community.
more micro and small businesses to compete. More than 60 per cent of the traders participating in
informal social commerce via the Asaba WhatsApp
Innovative approaches in social commerce are
community are women.
emerging, such as community-based social
commerce. In one such example, the Asaba business Though offering increased market access is a notable
community in Nigeria was brought together by a local advantage, businesses using social commerce
resident via a WhatsApp community. The community informally and exclusively may struggle to formalise
administrator carries out an initial vetting of locally their operations, limiting their growth and investment
opportunities.
Own brand websites

Own brand websites offer more opportunity to approximately $120 in 2020, putting the construction,
MSMES to build a unique brand identity and gain the launch and maintenance of a website out of reach. 37
trust of their customers. There is a paucity of data Similarly, according to the Central Bank of Kenya, the
on the number of MSMEs with their own websites average size of loan obtained by a micro-enterprise
in African markets, though the trend of adopting in Kenya from a micro-finance institution in 2022 was
websites is increasing as markets digitalise. In our just under $200.
surveyed markets, only a negligible number of MSMEs
Building and maintaining a website also requires
sold exclusively on websites (Figure 8).
a high level of digital skills and without adequate
There are numerous reasons for low adoption of search engine optimisation, may not pay dividends.
own brand websites, including the relatively high Therefore, while selling through own brand websites
capital cost to set them up, compared to selling via is desirable in terms of the professionalisation and
social commerce. Informal enterprises tend to be growth of a business, it also presents the most
smaller and significantly more capital constrained. challenges in terms of skills and investment, with
To put these capital constraints in context, most relatively more unpredictable outcomes.
informal Nigerian MSMEs had a start-up funding of
E-commerce marketplaces
As noted earlier, the rise of B2C e-commerce These B2C e-commerce marketplaces were followed
marketplaces and platforms in Africa, supported by by B2B start-ups, that facilitated the supply of fast-
venture capital investments over the last 10 years, moving consumer goods from manufacturers to
has brought attention to the potential of Africa as small merchants and mom-and-pop shops. Wasoko38
an e-commerce market. E-commerce marketplaces (previously Sokowatch), launched in Kenya in 2015,
Jumia and Konga set out to onboard Nigeria’s and has expanded to six markets, while Twiga Foods,
MSMEs, drive customers to their websites, facilitating another B2B start-up linking food retailers with
each element of the sales process for registered agricultural producers, launched in 2014 and currently
merchants, from taking orders to processing serves 140,000 retailers in Kenya and Uganda.
payments, and arranging delivery. These were the
Despite notable investments, these e-commerce
first e-commerce marketplaces in the region, catering
marketplaces, as relatively new entrants into the retail
to the needs of informal, micro, and small vendors in
landscape a decade ago and offering an unfamiliar
enabling better market access while providing value
digital retail model, have needed to invest significant
to the customer by eliminating middlemen in the
resources in gaining the trust of enterprises,
sales process.
onboarding them via field staff, providing training on
how to use the platforms effectively and providing
ongoing support.
37 Statista. (2023). Number of informal micro enterprises (MEs) in Nigeria in 2017 and 2020.
38 See Wasoko website.
26 / 84
E-commerce marketplaces and platforms increase the
“Uptake of platforms is low because the reach of and simplify the sales process for MSMEs.
technology is novel. When you bring However, for small and in particular micro-enterprises
something new to a country it needs to be that might be subsistence businesses, the cost of
relevant, you need to raise awareness and selling online can act as a deterrent. On average,
run campaigns to show its benefits.” half of MSMEs surveyed that sell on e-commerce
Key Informant Interview, Tanzania marketplaces indicated that fees or commissions
charged served as a deterrent to selling online. This
finding was consistent across countries (Figure 13).
Figure 13
Marketplace fees or commissions as a challenge to e-commerce, by market39
62%
57% 56%
47%
36%
33%
Base: MSMEs that sell on e-commerce marketplaces

E-commerce marketplaces have expanded into markets, such as low uptake of digital payments
offering MSMEs adjacent services, in particular and under-developed payment systems, as well
enabling access to financing through micro-credit. as poor transport infrastructure and insufficient
Marketplaces can carry out credit risk assessments delivery solutions to deliver goods ordered online,
for MSMEs selling on their website to offer tailored impacting their operational costs. B2B e-commerce
loan products. These loans can be acquired quickly marketplaces have been better able to overcome
and without collateral, making them a much more these challenges than B2C, because they can
accessible short-term financing option than banks undertake bulk payments and deliveries, reducing
for subsistence enterprises and small retailers. effort and cost;40 however, the B2C market size is
much larger, presenting a greater opportunity for
E-commerce marketplaces have had to contend
growth. These challenges also impact MSMEs selling
with several ecosystem challenges in African
via social media and via own brand websites.
39 Survey Question: Have fees or commissions charged by e-commerce marketplaces been a big problem, a small problem, or not a problem at all for you when selling
online?
40 Churn on B2B platforms is also much lower than B2C e-commerce, at approximately 40 per cent versus 80 per cent, which means B2B platforms are much better able
to retain their sellers.
27 / 84
BOX 1
Women and social commerce

Women-owned businesses play a key role in many African economies. For example, women own 41 per
cent of micro-businesses in Nigeria and over 37 per cent of all businesses in Ghana.41 More women-led
enterprises are likely to be informal; for example, 61 per cent of Kenya’s informal enterprises are led by
women.
While men and women sell on social media services at a similar rate (Figure 14), more women sell
exclusively using social commerce than men, indicating that fewer women-owned enterprises are
maximising online sales channels for revenue generation (Figure 15).
Figure 14
Use of social media services; women-owned versus men-owned MSMEs
86% 86%
77%
70%
57%
47%
32%
26% 26% 26% 27% 28%
18%
9%
Twitter/ X Tiktok Messenger Telegram Instagram Whatsapp Facebook
Men-owned Women-owned

41 Mastercard. (2021). Mastercard Index of Women Entrepreneurs 2021. The index ranks Ghana as one of the top countries for female-owned businesses and also ranks
Nigeria and Ghana at the top in women’s entrepreneurial activity.
28 / 84
Figure 15
Use of e-commerce channels; women-owned versus men-owned MSMEs
63%
50%
18% 18%
12% 13% 13% 12%
1% 0%
Social media Social media Social media and All three Other
only and e-commerce websites channels
marketplaces
Men-owned Women-owned

Previous research by the GSMA shows that social media have better business performance
women tend to use ‘low-stakes’ tools for their than those that are not. In Nigeria, for example,
businesses that are affordable and easy to use, the use of social media marketing for business
for example WhatsApp for communication or by women’s micro and small enterprises was
social media services for marketing.42 We found associated with higher enterprise performance,
that in Ghana, for example, informal women wider market reach and more sales.45
micro-entrepreneurs primarily used social
Social commerce, however, does not offer the
media on their mobile phones for marketing
seller any protection should buyers refuse to
and connecting with customers, followed by
complete the sale, or if goods are damaged
calling and messaging customers.43 The use of
in the delivery process. There is also greater
social commerce has low barriers to entry and
susceptibility to online harassment versus other
allows for greater flexibility in arranging sales
online sales channels.46 In addition, when women
and payments, as well as enabling ongoing
heavily rely on social commerce to sell their
communication between
goods, they forgo the gains that selling via a
buyer and seller.44
wider range of channels is likely to bring. Women
The use of social media for business, which need to use more channels to further scale their
accelerated further during COVID-19, has led to businesses. The adoption of these channels
business growth for women. Previous research requires targeted strategies to support and
by GSMA indicates that women-led MSMEs using upskill women-led MSMEs.47
42 GSMA. (2023). Empowering women micro-entrepreneurs through mobile.

43 Ibid.
44 Ibid.
45 Ibid.
46 Ibid.
47 Ibid.
E-Commerce in Africa 1529/ /4184

BOX 2
Cross-border e-commerce
MSMEs engaging in cross-border e-commerce However, cross-border e-commerce remains

have a significant opportunity to expand their low. In our survey only 12 per cent of MSMEs
customer base, increase sales and profits, reported selling to buyers in other countries.
create employment, and build resilience. Interviews with MSMEs and e-commerce market
African governments have supported the marketplaces suggest that when MSMEs sell
growth of cross-border e-commerce through products abroad, they either sell to neighbouring
the establishment of regional economic African countries or export outside the region
communities, such as the Common Market for rather than within it. According to the survey, 12
Eastern and Southern Africa (COMESA), which per cent of MSMEs selling abroad from Kenya
has 19 member states, the Economic Community reported making sales to Tanzania and 15 per
of West African States (ECOWAS), which has cent to Uganda. Of MSMEs selling abroad
15 members, the East African Community from Nigeria, 17 per cent reported making
(EAC), which has seven members, the South sales to buyers in Ghana while 23 per cent sold
African Development Community (SADC) with products to buyers in the UK, 13 per cent to
16 members, and the Economic Community of buyers in the US and nine per cent to buyers in
Central African States (ECCAS), with 11 members. Canada. Key informant interviews with MSMEs
engaging in e-commerce also indicated that
The African Union has established the African
most international sales are generated from the
Continental Free Trade Area (AfCFTA) as the
diaspora in other continents.
largest free trade area in the world, aimed at
enhancing cross-border trade within Africa for Challenges to cross-border e-commerce are
the growth of African economies, leveraging related to the regulatory environment, digital
the common markets already in the region are payments, and delivery infrastructure, and are
working towards adopting AfCFTA protocols as such not dissimilar to the barriers MSMEs face
for cross-border trade. AfCFTA has a specific in domestic e-commerce, but are significantly
protocol on e-commerce and the African Union more complex to address. These are discussed in
is currently drafting a regional e-commerce section five.
policy.
30 / 84
4. Business readiness
31 / 84
MSMEs in African markets are impacted by several many markets remain unconnected and the quality
constraints at the firm level, related to connectivity, of connections and internet speeds can be poor,
skills gaps, and access to capital, that limit their slowing down online trade and transactions. Between
ability to adopt e-commerce and leverage it a quarter and 30 per cent of MSMEs surveyed in all
effectively. six markets identified an unreliable or slow internet
connection and over a third identified electricity
Reliable mobile internet and affordable handsets and
challenges as a barrier. The costs of devices and
mobile services are a prerequisite for MSMEs to adopt
access to the internet were also identified as
and scale the use of e-commerce. While connectivity
considerable pain points by approximately a fifth of
across Africa is improving, challenges continue to
MSMEs when selling online (Figure 16; Table 2).
persist in most markets. Rural and remote areas in
Figure 16
Key pain points when selling online48
Cost of internet Cost of hardware Unreliable access Slow or unreliable
��
access or devices to electricity internet connection
20% 18% 33% 28%

Table 2
Top two cited barriers to selling online, by market49
Slow or Slow or Slow or Slow or Slow or Unreliable

unreliable unreliable unreliable unreliable unreliable access to
internet internet internet internet internet electricity
connection connection connection connection connection
Unreliable Cost of Cost of internet Unreliable Unreliable Slow or

access to hardware or access/cost of access to access to unreliable
electricity devices hardware or electricity electricity internet
devices connection

48 Survey Question: Has slow or unreliable internet connection been a big problem, a small problem, or not a problem at all for you when selling online?
Survey Question: Has unreliable access to electricity been a big problem, a small problem, or not a problem at all for you when selling online?
Survey Question: Has the cost of internet access been a big problem, a small problem, or not a problem at all for you when selling online?
Survey Question: Has the cost of hardware or devices you use for business been a big problem, a small problem, or not a problem at all for you when selling online?
49 Survey Questions: As above.
32 / 84
4.1 Connectivity
Across Africa, mobile operators have invested a 3G network. In some countries, including Kenya,
heavily to expand digital infrastructure to improve Rwanda, Egypt, South Africa, and Senegal, 4G
connectivity. Between 83 and 100 per cent of the coverage is almost equal to that of 3G (Figure 17). 50
population in the selected markets are covered by
Figure 17
Mobile network coverage, by market
99% 98% 99% 99% 99% 99% 99% 99% 100% 100% 99% 100%
95%
93%
83%
79%
55%
30%
Ethiopia Kenya Rwanda Tanzania Egypt South Africa Ghana Nigeria Senegal
3G 4G
Source: GSMA Intelligence
However, as Figure 16 indicates, over a quarter of Table 3

surveyed MSMEs reported that a slow or unreliable Connectivity performance scores, by
internet connection was a key pain point in using
market
e-commerce, compounded by lack of reliable
electricity provision. Egypt 51
The GSMA Mobile Connectivity Index measures South Africa 48
the performance of 170 countries against four key
enablers of mobile internet adoption, including Senegal 41
infrastructure, affordability, consumer readiness
Ethiopia 40
and content and services. Five of the six countries
included in this study scored below 50 out of 100, Kenya 37
which means they perform somewhat well on only
Nigeria 36
one or two of the enablers but require significant
improvement in others (Table 3). 51 Ghana 35
Given that reliable connectivity is a prerequisite to Rwanda 35
e-commerce, poor network significantly limits the
e-commerce opportunity in Africa.
Tanzania 33
Source: GSMA Mobile Connectivity Index 2022
50 Several countries, including South Africa, Kenya, Nigeria, and Tanzania, have also launched commercial 5G in recent months.
51 GSMA. (2022). GSMA Mobile Connectivity Index 2022. In the GSMA Mobile Connectivity Index, markets are ranked as leaders if they score above 80 points, advanced,
with scores above 65 points, transitioners, with scores above 50 points, emerging, with scores above 35 points and discoverers, with scores below 35 points. Leaders
generally perform very well across all enablers and have very high levels of mobile internet penetration. Advanced countries perform well on three enablers and usually
have high penetration rates. Transitioners perform well on at least two enablers. Emerging countries perform fairly well on one or two enablers but show room for
improvement on others. Discoverers show room for improvement across all four enablers and have correspondingly low levels of mobile internet penetration.
33 / 84
Affordability of handsets and mobile services
Between 25 and 30 per cent of MSMEs in Ghana and number in South Africa reported the cost of internet
Ethiopia noted the high cost of devices, and over as a challenge to e-commerce adoption (Figure 18).
30 per cent of MSMEs in Ghana and just under that
Figure 18
Affordability as a key challenge to e-commerce adoption, by market
32%
29% 29%
27%
25%
24%
18%
17%
16% 16%
13%
12% 12%
10%
9% 9% 9% 9%
Cost of internet access Cost of software Cost of hardware or devices

34 / 84
Affordability of devices
E-commerce across Africa is conducted primarily the price being as much as almost 80 per cent
using mobile phones. While smart feature phones of the average monthly income in Ethiopia52, for
may enable social commerce, smartphones and example, while in Tanzania and Rwanda, the cost of a
other devices are needed for platform e-commerce smartphone represents approximately 50 per cent of
and direct sales via websites. Affordability of the average monthly income, respectively.
smartphones is a concern in many markets, with
Figure 19
Price of a smartphone as a percentage of average monthly income, by market
77%
53% 51%
47%
37%
28% 26%
23%
8%
Egypt Ethiopia Ghana Kenya Nigeria Rwanda Senegal South Africa Tanzania
Source: A4AI53
Despite this affordability challenge, smartphone provision of more affordable smart feature phones,
penetration in the region is expected to rise from 51 and local production of mobile devices on the
per cent in 2022 to 87 per cent by 2030, as average continent. 54 Mobile handset manufacturers can also
selling prices for smartphones continue to decline. seek to increase efficiencies in the supply chain to
Some strategies that can help to make smartphones reduce the costs of manufacturing, albeit to a limited
more accessible include device financing, the extent. 55
52 Alliance for Affordable Internet. (2021). The Affordability Report 2021.

53 Alliance for Affordable Internet. (2022). 2022 prices and affordability of smartphones and feature phones.
54 GSMA. (2022). Making internet-enabled phones more affordable in low- and middle-income countries.
55 Ibid.
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Affordability of mobile services
20 per cent of MSMEs surveyed indicated the Table 4 shows the cost of mobile services by
cost of mobile internet as a challenge (Figure 16). market. 56 Egypt has the most affordable data, with
Data consumption requirements for e-commerce the International Telecommunication Union (ITU)
are high, as MSMEs need to manage and execute placing the cost of 500MB of data at less than one
most business processes online, such as uploading per cent of the average monthly income. 57 Tanzania
product images and descriptions, tracking purchases, and Rwanda have the least affordable data, with
processing payments, carrying out fulfilment 500MB of data equating to seven per cent and eight
processes and customer engagement. per cent of the average monthly income, respectively.
For the remaining six markets, the cost of data
lies between one per cent and five per cent of the
average monthly income.
Table 4
Cost of mobile services
Low consumption basket High consumption basket
Market Tax (%)
($ PPP) ($ PPP)
Egypt 10.05 18.6 43
Ethiopia 4.44 9.72 15
Ghana 4.98 19.88 26.5
Kenya 11.4 23.21 31
Nigeria 9.94 14.07 7.5
Rwanda 16.03 16.03 28
South Africa 19.29 42.32 15
Tanzania 8.8 18.85 35
Mobile Cellular Mobile data and voice Mobile data and voice
Region low usage basket low consumption basket high-consumption basket
(70 min + 20 SMS) (70 min + 20 SMS + 500 MB) (140 min + 70 SMS + 2 GB)
Africa 3.3 6.2 9.3
Europe 0.4 0.5 06
Asia and Pacific 0.8 1.5 2.2
Source: ITU (2022). 58
The higher price baskets range from just under 1.5 per than in any other region. To scale e-commerce for
cent of the gross national income/capital in Egypt, MSMEs, especially micro-enterprises for whom the
to over 17 per cent of the gross national income proportional cost of mobile services can be difficult
in Rwanda. While there is a wide variation in cost to absorb, regulators and mobile network operators
between markets, mobile services prices in Africa are (MNOs) need to work together to offer services that
on average much higher as a percentage of income are both commercially viable and socially beneficial.
56 Mobile data packages specifically for businesses vary widely between markets and service providers and are difficult to compare; hence we have used the cost of
mobile services for individuals rather than businesses as an indicator.
57 ITU. (2021). Policy Brief – The affordability of ICT services 2021.
58 Ibid. Baskets based on bundles by leading operators in the market.
36 / 84
Key insights
Connectivity
The commercial case for investment in upgrades to 3G and 4G sites in Africa to improve
connectivity, especially in rural and remote areas, remains low as operators generate revenue
primarily from 2G enabled voice/SMS and mobile money. Investments in network infrastructure
would make commercial sense once uptake of 3G/4G devices and broadband services increases. 59
The upload and download speeds provided by mobile networks are also linked to the capacity of
spectrum available. While cities can use mid-band spectrum, which has good capacity, signals have
limited reach and rural areas require low-band spectrum, which has good reach but lower capacity.
Governments in Africa need to rethink and reprioritise low-band spectrum allocation to improve
internet quality beyond cities to expand the reach of e-commerce.60
Handset affordability
The cost of smartphones continues to be one of the biggest challenges in the region. GSMA research
identifies two strategies to make handsets more affordable for consumers: reducing the price of
handsets by improving efficiencies in the supply chain, and improving customer access to financing,
such as BNPL.61 Local manufacturing of lower cost smart feature phones offers another opportunity
to enable access.
Affordability of mobile services

While the region has seen consistent reduction in data costs, the cost of mobile services remains
one of the biggest barriers to internet use and therefore to effectively leverage e-commerce
opportunities. Mobile services can be made more affordable by balanced fiscal policy and a
reduction in sector-specific taxes on mobile operators that impact mobile service prices.
59 GSMA. (2022). The State of Mobile Internet Connectivity 2022.

61 GSMA. (2022). Making internet-enabled phones more affordable in low- and middle-income countries.
37 / 84
4.2 Business and digital skills
A notable challenge to scaling the use of e-commerce Table 5
by MSMEs in the region is a lack of skills to leverage Key needs for scaling e-commerce
e-commerce effectively. When asked to identify one
business62
obstacle to business growth, approximately 10 per
cent of MSMEs identified a need for training on the
More skilled workers 14%
use e-commerce channels and 14 per cent identified a
need for more skilled employees. (Table 5).
Training to use e-commerce marketplaces 12%
Between 20 and 35 per cent of MSMEs indicated an
interest in training on the use of social commerce, Training to market products 11%
e-commerce marketplaces and websites (Figure
20). Interestingly, the need for training did not Training to own and run website 10%
vary significantly by business size, indicating that
all sizes of businesses feel the need for training on Training to sell on social media 9%
e-commerce use.
Figure 20
MSMEs’ interest in training for e-commerce, by business size63
35% 34%
32%
30% 30%
25% 26%
23% 23%
Training to sell on Training to have Training to use

social media a website e-commerce marketplaces
Micro Small Medium

62 Survey Question: If you could name one thing that is an obstacle to your business growing, what would it be? You can say anything.
63 Survey Question: On which of the following topics are you most interested in receiving training. Are there any other topics you would like training on?
a) How to use mobile money
b) How to use data from digital payments to improve business processes
c) How to apply for a loan, credit or attract investments
d) How to set prices to maximize profits
e) How to market on social media or websites
f) How to manage sales of goods on an e-commerce marketplace
g) How to set up and manage an e-commerce website
h) How to use digital tools to manage tasks such as payroll, supply chain and customer relationships
i) Other
38 / 84
Table 6 lists some of the key business and digital website. However, MSMEs are not a homogenous
skills needed to effectively utilise the three different group and upskilling strategies need to be tailored to
channels for e-commerce: social, marketplace and the needs of different types of businesses.
Table 6
Key business and digital skills required for e-commerce
Basic
Digital: Business:
• Using the internet • Basic accounting
• Using WhatsApp, Facebook, Instagram and • Stock management
TikTok for peer-to-peer interactions
• Creating social media content (e.g., Facebook
posts)
Intermediate
Digital: Business:
• Using a variety of social media apps and their • Knowing how to register for a business license
e-commerce related features, such as Facebook • Understanding and being able to meet Know
Marketplace, Facebook Shop, Instagram Shop Your Customer (KYC) requirements for
and Facebook Messenger for advertising and e-commerce marketplaces and platforms
marketing purposes
• Understanding e-commerce business and tax
• Using email marketing regulations
• Being aware of and able to comply with personal • Understanding product demand and pricing
data protection regulations
• Advanced accounting
• Marketing (e.g. packaging, photography)
• Product standardisation and quality control
• Copywriting
Advanced
Digital: Business:
• Understanding key functionalities needed for a • Understanding how to establish a recognisable
brand website brand
• Integrating/using integrated digital payments • Strategising to drive repeat customers
and delivery solutions • Scaling via investments
• Understanding search engine optimisation (SEO) • Understanding regulations related to and
• Knowing how to maximise digital sales channels expanding to cross-border trade
• Conducting business data analytics/ using data • Complying with personal data protection and
analytics for business planning consumer protection laws
• Understanding and implementing cybersecurity
measures
Source: GSMA Mobile for Development
39 / 84
A wide range of stakeholders have been delivering
digital upskilling programs to MSMEs; these include
governments, donors, social media services Key insights
and e-commerce marketplaces, and third-party
A wide digital and business skills gap means
e-commerce services providers such as digital
that MSMEs are unable to maximise the
marketing agencies and fintechs facilitating
e-commerce opportunity. Low digital literacy
e-commerce payments. However, the gap in digital
leads to a preference for social commerce
and business skills is large and needs a concerted and
versus selling on e-commerce marketplaces
coordinated effort driven by public-private sector
and own brand websites at the cost of
partnerships. In addition, to reach wider populations,
formalisation, professionalisation and growth
trainings need to be delivered in local languages to
of the business.
improve accessibility; initiatives to deliver digital skills
training in local languages remain limited. If MSMEs continue to use e-commerce
primarily via social media services, and in
Many MSMEs choose to remain on social commerce
informal ways, consumer mistrust is also
due to a lack of higher level digital skills. Low digital
likely to persist. Governments, e-commerce
literacy also reflects the lack of uptake of own
marketplaces, NGOs, and donors need
brand websites, which requires more digital know-
to collaborate on providing upskilling
how. As noted earlier, the skills gap has meant that
programmes for MSMEs that are less
e-commerce marketplaces, especially in nascent
fragmented and better coordinated, that can
markets such as Ethiopia and Tanzania, frequently
help them scale and professionalise. Similarly,
use a network of field agents to onboard and train
investments in a more digitally skilled labour
merchants, at high cost. In more mature e-commerce
force would enable MSMEs to recruit the
markets such as Nigeria, where large e-commerce
right talent for e-commerce growth.
companies have established a reliable presence,
digital onboarding, and self-registration by MSMEs is
growing.
40 / 84
4.3 Access to capital
MSMEs need capital to expand operations, employ banks have tended to not prioritise credit provision
more digitally skilled resources, manage bigger to MSMEs due to their small scale, less robust record-
product orders and growing demand, and adopt keeping, and lack of assets for collateral. In a risk-
more automated business solutions. Limited access averse strategy, banks prefer to lend to corporates.
to financing is one of the most notable challenges For example, in Rwanda, small and medium
identified by MSMEs in our survey across all surveyed enterprises (SMEs), which comprise 98 per cent of all
markets. businesses in the country, only received 17 per cent
of all loans disbursed in 2022, versus corporates, that
23%
received 60 per cent. 65 In South Africa, Nigeria and
Kenya, banks tend to lend to governments rather than
to MSMEs.66
of surveyed MSMEs using
e-commerce identified capital E-commerce start-ups and MSMEs interviewed for
constraints as the key obstacle this report all indicated that generating financing
to business growth for business growth was a challenge. In response to
capital limitations, apart from an increasing number
of e-commerce marketplaces offering micro-credit
40%
of surveyed MSMEs using
and BNPL options, fintechs are trying to bridge
the gap by developing more targeted financial
products for MSMEs. While fintechs are better placed
e-commerce indicated capital than banks to develop such solutions, regulatory
as their most critical need for hurdles, lack of digital identities, complex Know
growth Your Customer (KYC) processes and lack of data
for credit risk assessments are challenges they need
Lack of financial resources deters investments in to overcome. For example, a rising fintech sector in
digital business tools and optimised online brand Egypt is technologically ready to cater to the MSME
presence, limiting MSME growth via e-commerce.64 financing gap, but KYC is complex as businesses
Estimates by the World Bank/AfDB from 2019 do not have unique identities or easily accessible
indicated that of 44 million formal MSMEs in Africa, company information for credit risk assessments;
almost half faced a financing deficit. Traditional therefore, few fintechs are addressing the MSME
financing gap.
Key insights
MSMEs in the region are significantly under-funded, and even when they have the ambition and skills to
leverage e-commerce effectively, struggle to obtain the credit and investment needed to scale adoption.
Innovative financing mechanisms and better financial support for MSMEs is needed.
While governments and traditional financial institutions should look to address the MSME financing
gap, fintechs are best placed to leverage digitalisation of credit risk assessments and develop financial
products specifically devised to cater to the needs of MSMEs.
64 Some digital marketing agencies in the region are offering MSMEs tailored digital marketing solutions via low-cost, affordable subscription models. GSMA grantee
Africa118 is one such example; it builds and manages the online presence of MSMEs for a relatively affordable monthly charge.
65 See: Can hybrid finance unburden Africa’s shaky SME sector? (accessed 19 September 2023)
66 Ibid.
41 / 84
BOX 3
MSMEs’ perceptions of consumer readiness for e-commerce
For MSMEs to have an incentive to adopt MSMEs surveyed perceived customers’ lack of
e-commerce, customer demand is essential. A trust in online businesses as a challenge to online
growing youth population that is digitally savvier67 sales. Forty-three per cent of MSMEs also felt
and an increasing GDP leading to a growing that customers preferred in-person purchases,
middle class with more purchasing power offer an while an equal number perceived a preference
opportunity for e-commerce uptake in markets by customers for cash payments as a challenge
such as Kenya, Ghana, South Africa and Rwanda.68 to e-commerce adoption. Over a third of MSMEs
indicated that customer uncertainty over the
However, MSMEs in our surveyed markets
correct use of online purchasing and returns
perceived that many customers are hesitant to
processes limited e-commerce adoption.
adopt e-commerce (Figure 21). Over half of all
Figure 21
MSMEs’ perception of customer challenges with e-commerce69
Customers do not trust e-commerce

marketplaces and websites 48%
Customers prefer to interact with

merchants in person 43%
Customers prefer to
use cash 43%
Customers do not understand how

to use marketplaces 35%
Customers think returning items

is difficult 35%
Customers do not understand how

to use websites 33%
Customers do not have reliable

access to the Internet 23%
Customers do not have a bank or

mobile money account 18%
Customers do not own

necessary devices 16%

67 McKinsey & Company. (2023) Reimagining economic growth in Africa: Turning diversity into opportunity.
68 AFR-IX Telecom. (2022). African Growth and the Rising of African Middle Class.
69 Survey Question: Based on what you know, or what customers have told you, is [ITEM] a reason that limits your customers use of e-commerce to make
purchases from your business?
a) Customers do not understand how to use the marketplaces
b) Customers do not understand how to use websites
c) Customers do not trust e-commerce platforms and websites to keep their money and/ or personal data secure
d) Customers prefer to use cash
e) Customers do not have a bank or mobile money account for digital payments
f) Customers do not own devices needed to buy online
g) Customers do not have reliable access to the Internet
h) Customers prefer to interact with the merchant in person
i) Customers think returning items purchased online is difficult
j) Another problem, please specify
42 / 84
MSMEs’ surveyed in each market indicated that Linked to the challenges of consumer uptake due
low trust in e-commerce is one of the biggest to lack of trust, 43 per cent of MSMEs using social
barriers to consumer uptake (Figure 22). commerce and 39 per cent of MSMEs using all
three e-commerce channels felt that customers
continue to prefer in-person retail (Figure 23).
Figure 22
MSMEs who perceived lack of
Figure 23
consumer trust as a barrier to
e-commerce, by market MSMEs who indicated that their
customers preferred in-person
interactions, by e-commerce channel
Kenya 68%
Social media
South Africa 61% and e-commerce 49%
marketplaces
Ghana 45%
Social media only 43%
Nigeria 42%
All three channels 39%
Egypt 40% Social media
and website 38%
Ethiopia 33%
Base: All MSMEs surveyed Base: All MSMEs surveyed

Source: GSMA e-commerce survey 2023 Source: GSMA e-commerce survey 2023
Recent data from Findex (2021)70 corroborates the low uptake of online purchases in the region
(Figure 24). While 16 per cent of the surveyed population in Kenya had made an online purchase in 2021,
in Egypt, Ethiopia, Nigeria and Tanzania, a negligible percentage of the population had done so.
Figure 24
Online purchases made by consumers in 2021, by market
16%
14%
12%
9%
6%
3% 3%
2%
Egypt Ethiopia Ghana Kenya Nigeria Senegal South Africa Tanzania
Base: Total population aged 15 and above

Source: World Bank Global Findex Database, 2021
Note: The data for Ethiopia was added to the database in 2022.
70 The World Bank. (2021). The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19.
43 / 84
Sixteen per cent of MSMEs perceived customers’ lack of devices as a constraint to e-commerce
adoption. While mobile penetration is growing and over half of the male adult population in all
markets own a smartphone, indicating the growing opportunity for e-commerce, smartphone
ownership in Ethiopia remains exceptionally low.
There is also a notable gender gap in smartphone ownership, which is less significant in Egypt but
high in all other markets, which means fewer women can utilise e-commerce to make purchases
more efficiently and conveniently (Figures 25 and 26). While the demand for online purchases is
growing, low trust is likely to continue to perpetuate a preference for in-person, cash purchases,
constraining demand.
Figure 25 Figure 26
Device ownership by men in 2022, Device ownership by women in
by market 2022, by market
61% 53%
51% 65%
66% 38% 36%
59% 46%
12% 49%
22%
47% 40% 47%

38%
36% 37%
34%
31%
23% 24%
19%
15%
Egypt Ethiopia Ghana Kenya Nigeria Senegal Egypt Ethiopia Ghana Kenya Nigeria Senegal
Basic feature phone Smartphone Basic feature phone Smartphone
Base: All MSMEs surveyed Base: All MSMEs surveyed

Source: GSMA e-commerce survey 2023 Source: GSMA e-commerce survey 2023
44 / 84
5. Building blocks for
e-commerce growth
45 / 84
An enabling environment for e-commerce will • Enabling e-commerce policies and legislation and
improve customer trust as well as encourage MSMEs their strong implementation;
to adopt e-commerce at scale. To create one, three
• Wide uptake of digital payments that are secure,
key building blocks are needed, including:
instant, and convenient; and
• Efficient and reliable logistics and delivery

infrastructure and services.
5.1 Policy, regulations, and implementation

Policies, regulations, and their effective range of business, financial and transport-related
implementation have a key role to play in enabling policies and regulations impact e-commerce, Figure
e-commerce by building consumer confidence, 27 summarises the key policies and regulations that
protecting customers, and clarifying procedures directly impact adoption.
related to online trading for MSMEs. While a wide
Figure 27
Enabling policy and regulations for e-commerce
National
e-commerce
policy/framework
Unified
Cybersecurity
e-commerce
legislation
law
Policy and regulations

for e-commerce
Personal data
Intellectual
protection and
property law
privacy law
Electronic
transactions and
consumer protection
legislation
Source: GSMA Mobile for Development
46 / 84
E-commerce regulations set out the rules of online Data privacy and protection laws clarify how
trading, providing clarity to MSMEs selling online, businesses must collect, store, manage and process
rather than them having to second-guess the personal data. These laws help guide businesses on
implications of broader, less relevant, and potentially data protection measures, reassure consumers that
dated trade laws. there is legal recourse should their data be wrongfully
used and governments take action where personal
By laying out the legal terms for online transactions,
data is being compromised.
electronic transactions legislation also plays an
important role in enabling e-commerce at a national With the increasing prevalence and use of
and cross-border level. Electronic transactions personal data online, updated cybersecurity laws
regulations define what qualifies as an electronic and standards ensure that businesses have clear
exchange and establish the legality of e-signatures guidelines on the measures to take to safeguard
and online contracts. They also establish parties’ customers and prevent fraudulent activity.
rights to, and processes for recourse mechanisms
Finally, with regards to e-trade, copyright laws also
to resolve disputes related to electronic exchanges.
play an important role in safeguarding entrepreneurs
Where these laws are lacking or dated, contracting
selling unique products online to protect their
parties may be left unprotected because the
intellectual property, which may otherwise be easily
exchange is not legally recognised and therefore not
duplicated.
protected.
Where e-commerce and e-transactions, personal
In 2012, SADC members adopted a draft document
data privacy and protection, cybersecurity and
of the Southern African Development Community
intellectual property laws are lacking, outdated, have
e-transactions and e-commerce model law, with the
gaps or are fragmented, they create an environment
objective to have it serve as a guide for member
of mistrust and uncertainty. In addition, to boost
states to create a secure legal environment for
regional e-commerce, countries need to prioritise
electronic transactions and e-commerce, and improve
some harmonisation of national e-commerce
regional e-commerce.71
related policies to facilitate MSMEs in trading online
across borders with a relatively unified rather than
conflicting sets of rules.
71 ITU. (2013). Establishment of Harmonized Policies for the ICT Market in the ACP Countries; Electronic Transactions and Electronic Commerce: Southern African
Development Community (SADC) Model Law. The model law encapsulates legal requirements for e-communications, e-signatures, e-contracts, the protection of
online consumers and the responsibilities of service providers. In its implementation at the national level, however, key informant interviews revealed that instead of
offering robust consumer protection, the legislation is sometimes more heavily used for surveillance of online communications.
47 / 84
E-commerce policies Table 7
National e-commerce policies and
and frameworks frameworks in selected markets
Egypt National e-commerce strategy 201773
E-commerce strategies have been devised or are
Ethiopia National e-commerce strategy 202374
being drafted in almost all markets in this study, with
South Africa being the only exception (Table 7).72 Ghana Lacking75
These policies have helped lay out key priorities and
Kenya Forthcoming76
roadmaps to action based on identified gaps in the
market and institutional environment. Nigeria Forthcoming77
Rwanda Proposed National e-commerce strategy 202378
Senegal National e-commerce strategy 201979
South Africa –
Tanzania Lacking 80
Launched in 2017, Egypt’s e-commerce strategy has National e-commerce strategies have helped develop
six themes that guide its strategic direction in scaling the institutional environment for e-commerce,
e-commerce, while Rwanda’s policy has nine priority allowing different government stakeholders to work
areas, listed below for an interesting comparison collaboratively to support MSMEs and creating a
on priorities to support e-commerce adoption for more enabling ecosystem for adoption and scale.
MSMEs in the two markets. Rwanda is currently considered one of the most
enabling regulatory environments for doing business.
Egypt’s e-commerce strategy: Rwanda’s e-commerce strategy:

Key themes Key themes
• Empowering businesses through • Awareness, capacity, and skills
e-commerce development
• Incentivising formalisation of MSMEs • ICT infrastructure and services
through e-commerce • E-commerce platforms and marketplaces
• Boosting the logistics sector • Financial services and digital payment
• Accelerating growth of the payments solutions
sector • Transport and logistics
• Enabling legal and regulatory environment • Trade facilitation
• Leveraging e-commerce to grow the ICT • Legal and regulatory frameworks
sector and ICT services
• Entrepreneurship, innovation, and access
to finance
• The use of data for informed decision-
making
72 In markets where e-commerce strategies are not yet in place, national digital development strategies that identify e-commerce as an important component of MSME
development have also been an enabler.
73 UNCTAD. (2017). ICT Policy Review: National E-Commerce Strategy for Egypt.
74 Ethiopia’s national e-commerce strategy (2023) has been developed with support from the Tony Blair Institute for Global Change.
75 UNCTAD is currently undertaking an e-trade readiness assessment in Ghana which may result in a national e-commerce policy.
76 In October 2022, UNCTAD undertook an e-commerce strategy validation workshop in partnership with Kenya’s Ministry of ICT. An official e-commerce policy has not
yet been published but is expected.
77 NITDA in Nigeria announced in July 2023 that the National ecommerce strategy is forthcoming. See: National e-commerce policy to support MSMEs, says NITDA
(accessed 19 September 2023)
78 UNCTAD. (2023). Towards an e-commerce Strategy for Rwanda.
79 Strategy published in 2019 facilitated by UNCTAD.
80 Key informants report that an e-commerce strategy is under discussion.
48 / 84
Cybersecurity
It is estimated that $3.5 billion is lost annually in poor, fragmented implementation by organisations.
Africa due to cyber-attacks, and even more due to According to Interpol, 90 per cent of organisations in
the risk of cyber-attacks, creating hesitation for online Africa operate without any cybersecurity measures. 81
trading of goods. While all surveyed markets have a The threat of cyber-attacks is highest in the most
cybersecurity law (Table 8), most markets suffer from advanced e-commerce markets of Nigeria, South
insufficient digital cybersecurity infrastructure, policy Africa, and Kenya, despite clear cybersecurity
preparedness and lack of institutional oversight. regulations.
This results in either no cybersecurity protocols or
Table 8
National cybersecurity and personal privacy and data protection laws
Country Cybersecurity laws Personal privacy and data protection
Egypt Law No. 175 of 2018 on Anti-Cyber and Personal Data Protection Law, 2020
Information Technology Crimes
Ethiopia Computer Crime Proclamation, 2016 Data Protection Proclamation (Draft), 2020
Ghana Cybersecurity Act, 2020 Data Protection Act, 2012
Kenya Computer Misuse and Cybercrimes Act, Data Protection Act, 2019 & Data Protection
2018 Regulations, 2021
Nigeria Cybercrimes Act, 2015 Data Protection Act, 2023
Nigeria Data Protection Regulation, 2019
Rwanda Regulation of cybercrimes for regulated Data Protection Law, 2021

institutions, 2022
Law Nº60/2018 of 22/8/2018

on prevention and punishment of
cyber crimes
Senegal National Cybersecurity Strategy, 2022 Personal Data Protection Act, 2008
South Africa Cybercrimes Act, 2021 Protection of Personal Information Act, 2020
Tanzania Cybercrimes Act, 2015 Personal Data Protection Act, 2022
In the context of cross-border e-commerce, Concerted efforts have been made by common
cybersecurity features prominently in the markets to prioritise cybersecurity, but a number
African Union’s agenda 2063 as well as its digital of challenges have emerged. Prioritisation and
transformation strategy. 82 ECOWAS has recently coordination between countries is needed to
launched the joint platform for advancement implement robust measures to protect national
of cybersecurity in West Africa, with an eye to infrastructure. 84 There is also a need for investment
developing alignment on regional cybersecurity and at the regional level to upgrade cybersecurity, and
data sovereignty. 83 public-private partnerships are also required for
improved cybersecurity. A lack of cybersecurity
professionals in the region exacerbates
implementation challenges.
81 African Business. (2023). Africa’s cybersecurity threat.

82 On 8 June 2023, the African Union’s convention on cybersecurity and personal data protection, the Malabo convention, came into force providing a framework to
harmonise policies regionally across personal data protection, electronic commerce, and cybersecurity. The convention serves as an opportunity to push forward
the AfCFTA agenda for establishing a common free trade market, because e-commerce is reliant on cross-border data flows, which the convention helps facilitate by
laying out a shared framework for data protection and management.
83 ECOWAS. (2023). Official launch of the joint Platform for Advancing Cybersecurity in West Africa.
84 Kearney. (2023). Cybersecurity in Africa-a call to action.
49 / 84
Personal data privacy and protection
To build confidence in e-commerce, it is essential Cybersecurity and the upholding of data protection
that personal data privacy and protection laws are also requires a collaborative approach between
in place. All surveyed markets have a personal data the public and private sector. Businesses need to
protection law except Ethiopia, where it is in draft understand and invest in cybersecurity and data
stage. protection measures, just as governments must guide
and oversee implementation, and they need to work
At the national level, Egypt has one of the strictest
together to educate consumers on their rights and
cybersecurity and data protection laws. Kenya
how to protect their data from attacks.
not only has a clear cybersecurity strategy that
elaborates all elements of cybersecurity from In terms of cross-border trade, in a study conducted
governance, implementation, risk assessments by the Overseas Development Institute, only 23 per
and capacity building, but also has updated cent of digital trade agreements between low- and
regulations on the use of data for commercial middle-income countries had a data protection
purposes, marketing, data localisation and cross- component, less than two per cent of these
border transfers of data. 85 Ghana also has strong commitments were binding87 and most agreements
cybersecurity and data protection laws, and the did not have commitments on free cross-border
Cybercrimes Act 2020 establishes a Cybersecurity data flows, which simplifies trading online across
Authority to oversee implementation of the law. borders. 88 There is an opportunity with AfCFTA for
South Africa has been drafting updated regulations member states to work towards a shared personal
for public consultation, such as an amendment to the data protection standard as well as align on the
Protection of Personal Information Act and a notice of movement of data between borders.
code of conduct linked to the Protection of Personal
Finally, it is important that legislation is proportional.
Information Act. Nigeria has strong and clear data
Exceptionally strict laws can act as a deterrent by
protection laws while Tanzania passed a long-awaited
creating fear and concern over surveillance.
personal data protection act in 2022. Senegal’s data
protection act is dated, though some elements of the
act were amended in 2022. 86
While robust and updated cybersecurity and data

protection regulations are essential for advancing
e-commerce to protect consumers and build trust,
implementation and cybersecurity infrastructure
are critically important. In all markets, the threat of
cyber-attacks is growing. Key gaps in the region are
the lack of cybersecurity skills, lack of cybersecurity
infrastructure and absence of dedicated institutions
mandated to oversee implementation of
cybersecurity measures.
85 Ministry of ICT. (2022). National Cybersecurity Strategy. Republic of Kenya.

86 Senegalese Data Protection Authority. (2022). General Deliberation No. 2022-00591/CDP [in French].
87 ODI. (2021). Digital trade provisions in the AfCFTA; what can we learn from South-South trade agreements?
88 Ibid.
50 / 84
Consumer protection and electronics transaction laws
Consumer protection and electronics transactions fragmented, and elements are overseen by various
acts serve to govern e-commerce transactions regulators. A single comprehensive consumer
and protect customers. In 2021, only 25 African protection law, overseen by a single regulatory body,
countries had a consumer protection and electronic would in this case be enabling. In addition, where
transactions regulation. 89 Egypt, South Africa and these laws are dated, they need updating to address
Nigeria have strong and relatively well-implemented the existing and rapidly changing e-commerce
consumer protection and electronics transactions landscape.
laws in place. Ghana’s consumer protection laws are
Table 9
National consumer protection and electronic transactions regulations
Market Consumer protection Electronic transactions act
Egypt Consumer Protection Law, 2018 Usage of the non-cash payments’

methods law (Law no.18) for year 2019
Ethiopia Fragmented laws Electronic Transactions Proclamation

No. 1205/2020
Ghana Fragmented laws Electronic Transactions Act, 2008
Unified draft bill in process
Kenya Consumer protection Act, 2012 National Electronic Single Window

System Act, 2022
Nigeria Federal Competition and Consumer Central Bank of Nigeria’s Guidelines

Protection Act, 2018 on Operations of Electronic Payment
Channels in Nigeria
Rwanda Financial Service Consumer Protection Electronic Transactions Act, 2010

Law, 2021
Senegal Code of consumption Act No. 2008-08 of January 25, 2008, on

electronic transactions
South Africa Consumer Protection Act, 2008 Electronic Communications and

Transactions Act, 2002
Tanzania Fair Competition Act 2003 Copyright and Neighbouring Rights Act,
Revised Edition, 2002
Bank of Tanzania (Financial Consumer
Protection) Regulations, 2019
89 CIPESA. (2021). Advancing Consumer Protection across Africa in the Digital Age.
51 / 84
BOX 4
E-commerce and intellectual property rights

A recurring theme in key informant interviews conducted is a worry over intellectual property rights, with
entrepreneurs and MSMEs expressing concern about counterfeits of their unique products, even though
all surveyed markets have intellectual property protection legislation. In the Property Rights Alliance’s
Intellectual Property Rights index, which scores countries on four factors, the protection of intellectual
property rights, patent protection, trademark protection and copyright protection, all selected markets
score below the average score of 5.4 for 2022, with Nigeria and Ethiopia receiving some of the lowest
regional scores.
Table 10
National intellectual property laws
Protection of Intellectual
Market Intellectual property law Property Rights Index score
(2022)90
South Africa Copyright Act No. 98 of 1978 6.28

Rwanda Revised policy on intellectual property 2018 5.40
Egypt Intellectual property law 2002 5.12
Tanzania Copyright and Neighbouring Rights Act No. 7 of 1999 5.04
Ghana National Intellectual Property Policy and Strategy 4.93
(NIPPS 2016)
Kenya Intellectual Property Bill 2020 4.77
Senegal Weak copyright protection 4.08
Nigeria Copyright Act 2022 3.39
Ethiopia Fragmented/dated 3.31
A 2019 assessment of intellectual property On e-commerce platforms and marketplaces,

protection in Nigeria by PwC indicated that the platform owners bear as much responsibility
Nigeria’s consumer goods market is flooded with as merchants for any breaches in consumer
both grey and counterfeit products, and there protection or intellectual property. For enhanced
is little enforcement of intellectual property consumer protection, the law demands that all
laws.91 This is due to the level of informality in online merchants have a business registration,
the economy, outdated legislation, and weak pay taxes, and display their licenses on their
enforcement mechanisms. Ethiopia’s patent laws websites. Platform operators need to have
are also weakly implemented.92 constant oversight over vendors and ensure they
are registered, report violations to authorities,
A best practice example of strong implementation
monitor products sold, and take action against any
of consumer protection and intellectual property
infringement. The platform bears equal liability for
law embedded specifically in e-commerce laws is
breaches as vendors. Platforms are also expected
the China e-commerce law, amended in 2019 to
to work with intellectual property rights holders.
enhance intellectual property rights. To effectively
regulate platform commerce, the legislative One challenge however is upholding the same level
process for China’s e-commerce law took six years of enforcement on social commerce platforms.
with multiple stakeholder consultations. The law Social platform owners are not held liable, and
covers consumer protection and competition, as merchants selling counterfeit products sell on
well as intellectual property law. The law covers closed groups, making surveillance difficult.
platform operators, any merchant on a platform,
and any online seller.
90 The International Property Rights Index provides a global assessment of both physical and intellectual property rights by country. The average intellectual property
rights score globally remains at 5.24 in 2022.
91 PWC. (2019). Impact of Intellectual Property Infringement on Businesses and the Nigerian Economy.
92 In addition, Ethiopia is not a signatory to a number of international intellectual property rights treaties.
52 / 84
Unified e-commerce law
Currently, none of the markets in this research study consumers using online platforms for purchases
have a unified e-commerce law, although Ethiopia has are not protected in the same way as users of other
one in draft stage. This can act as a barrier to building services identified in the act as electronic services.93
confidence in consumers and online businesses. For
Ethiopia’s recent categorisation specifically for
example, in Kenya, online trade platforms are not
e-commerce businesses enables them to register
regulated by the Information and Communication
under a business category most suited to their
Act, as they do not fulfil the criteria of an electronic
operations and follow the most relevant business
service as conceived in the act; and therefore,
guidelines.
BOX 5
Why regulations matter: The case of Ethiopia
Undergoing market liberalisation and driving Before 2020, when an e-transactions law was
its growth forward through a digital agenda passed, Ethiopia did not recognise digital
under the digital Ethiopia 2025 plan, Ethiopia signatures, and electronic transactions were
has recently drafted an e-commerce policy therefore operating in a legal vacuum. The 2020
framework as well as creating an e-trade e-transactions law recognised e-commerce
business license category. MSMEs trading online businesses and platforms, and put in place
can now register for an e-commerce license. legal requirements for consumer protection
Prior to this, MSMEs conducting e-commerce and dispute resolution for goods traded online,
were registering under multiple business licence providing clarity to MSMEs.
categories, such as a commission licence (to
Similarly, there was no regulation for payment
trade goods) and a business delivery licence (to
system operators before 2020. Chapa, a fintech
deliver goods) and dealing with laws not tailored
based in Ethiopia that acts as a payment
or applicable to their service.
gateway to facilitate international payments for
merchants, could not launch its product until
“When you go to the government the Payment System Operators’ directive was
established in 2020, as the regulations to enable
office to get a license, there isn’t
it to launch its service did not exist.
any e-commerce license. You
need a license as a technology While Ethiopia has made notable strides
company, a warehousing license, in creating an enabling environment for
e-commerce, value added tax (VAT) regulations
licenses related to driving, etc.
are outdated and recognise only transactions
It’s not efficient.” conducted in a physical location and not those
KII, Ethiopia (prior to the creation of an through digital platforms. As such, e-commerce
e-commerce licencing business category) businesses face significant bureaucratic hurdles
to pay VAT.
93 Communications Authority of Kenya. (2023). The Development of E-commerce in Kenya.
53 / 84
In Egypt there is no specific legislation for in other countries where between half and two
e-commerce businesses, which means that MSMEs thirds indicated that they understood e-commerce
engaged in e-commerce must comply with more regulations, only 29 per cent of Ghana’s MSMEs said
fragmented, wider range of laws. they understood e-commerce regulations, partly
reflecting the uncertainty created by the absence
Ghana’s laws applying to e-commerce businesses
of an e-commerce framework and legislation
are outdated and there is no e-commerce policy
(Figure 28).
framework. In comparison to MSMEs surveyed
Figure 28
MSMEs understanding of e-commerce laws and regulations, by market94
75% 70% 76%
62%
54%
29%
Base: Total MSMEs surveyed

In Tanzania, the lack of an over-arching e-commerce A unified e-commerce legislation that combines
framework and legislation has restricted the growth personal data privacy and protection, consumer
of e-commerce adoption by MSMEs in the country.95 protection, cybersecurity, and electronic transactions
South Africa is the only country among surveyed laws specifically for e-commerce would help provide
markets that provides an enabling environment more clarity to MSMEs in African markets and enable
for e-commerce without a specified e-commerce them to follow a set of regulations that are consistent
framework, attributable primarily to strong and relevant for their businesses, as well as help
regulations linked to consumer protection as well as a boost consumer confidence.
more mature ecosystem.
94 Survey Question: Would you say that you understand the laws and regulations that apply to running an online business, or are the laws and regulations unclear?
95 An e-commerce framework is reportedly currently under development in Tanzania.
54 / 84
Regulatory evolution based on market conditions
As e-commerce grows in African markets, business registration requirements. However, some
governments are reassessing how to regulate online governments, such as Egypt, have imposed taxes
businesses, e-commerce platforms and marketplaces on social media influencers and content creators
and social commerce. The recent case of Jumia is an generating an income past a certain threshold, and
interesting case in point. In February 2023, COMESA income generated through social commerce may
declared that Jumia - who had previously declared be next. While not a regional market, Indonesia
that they would not be liable for third party sales on in an interesting case - the country was planning
their platform - now take responsibility for products to introduce taxes on sales made via social media
sold by third parties on its websites, as customers services but has recently banned e-commerce sales
deal with Jumia and not the third parties directly. on social media altogether.97
The company would have to ensure the accuracy of
Similarly, sales on own brand websites can only be
seller and product information, and establish conflict
regulated if updated regulations related to online
resolution mechanisms.96
transactions are in place. As noted earlier, in the case
Social commerce is much more challenging to of Ethiopia, lack of updated VAT regulations means
regulate, in particular informal social commerce. e-commerce businesses struggle to pay tax.
As peer-to-peer digital social networks and not
It is important that regulations be consultative,
e-commerce sites, social media platforms are not
involve public-private sector engagement, and reflect
held liable for goods traded on their apps. They
market conditions so that they are enabling and
serve as the optimal channel for informal MSMEs
proportional, and serve to protect businesses and
to trade without meeting challenging KYC and
consumers rather than restrict them.
Key insights
All markets in this study have electronic transactions laws and most have a personal data protection and
consumer protection law as well. In some markets, these regulations are either dated or fragmented.
In this case revised single policies are needed, enforced by a single agency mandated specifically to
oversee implementation.
Implementation challenges include a lack of digital cybersecurity infrastructure and digitally skilled
labour to embed effective cybersecurity measures in organisations. Most organisations are not clear
on the law and do not have sufficient guidance on implementing robust cybersecurity measures. More
public-private collaboration is needed for effective implementation of consumer protection measures as
well as education for consumers on how to protect themselves.
Finally, balancing harmonisation of regulations with national development priorities is necessary to

facilitate cross-border trade so that MSMEs selling to other countries can adhere to a more unified set
of regulations for online trade. Agreements on cross-border data flows are also needed to facilitate
regional trade.
96 TechCrunch. (2023). African watchdog forces Jumia to review its terms in push to protect consumers. (accessed 21 September 2023)
97 The Guardian. (2023). Indonesia bans e-commerce sales on social media platforms like TikTok.
55 / 84
5.2 Digital payments
Digital payments are a key component of a fully cash on delivery persists as the preferred method of
digitised online exchange process. While the uptake payment for many MSMEs (Figure 29).
of digital payments is growing steadily in the region,
Figure 29
MSMEs’ preference for payment method, by market98
76%
67% 67%
61%
41%
39%
34%
32%
29% 29%
25% 26% 25%
14%
6% 6% 7% 7%
4%
2% 2%
0% 1% 0%
Cash Credit/Debit card Mobile money/banking Bank transfer/EFT

98 Survey Question: Thinking about the different ways that you make and receive payments, which one do you prefer?
56 / 84
In all countries surveyed, at least a quarter of MSMEs The wide adoption of mobile money in Kenya means
indicated a preference for cash payments. 76 per cent that more than 60 per cent of MSMEs indicated
of MSMEs in Egypt indicated cash as their preferred a preference for mobile money payments.100
method of payment, followed by Ghana, where 67 per Unsurprisingly, 67 and 39 per cent of MSMEs
cent of MSMEs indicated cash as a preferred method. surveyed in Nigeria and South Africa expressed a
Egypt has a strong banking sector and mobile money preference for payments via bank transfers; both
is ubiquitous in Ghana. These findings may be linked markets have strong banking sectors.101
to the high number of informal enterprises in our
The uptake of card payments remains low across
sample in both these markets, who are more likely
the region. Less than 10 per cent of MSMEs reported
to prefer cash. Ghana also imposed a tax on
a preference for card payments in all core markets
P2P mobile money transactions in 2022, which
except South Africa, where the preference of bank
subsequently led to a 25 per cent drop in P2P
cards for payments was higher.102 Card penetration in
transfers and could be acting as a deterrent, as
South Africa is the highest in the region, with almost
P2P transfers can frequently include commercial
60 per cent of the population having a debit card,
payments for goods (see Box 8).99 The lack of an
and 10 per cent a credit card.
e-commerce policy and dated laws relating to
e-commerce may also be contributing to risk-aversion Despite the steady growth in digital payments
related to digital e-commerce payments in the across the region, a notable number of surveyed
country. MSMEs also indicated a preference for cash
irrespective of their size (Figure 30). 46 per cent
In Ethiopia, formal financial inclusion remains low,
of micro, 42 per cent of small and 33 per cent of
the population is heavily rural and mobile money
medium businesses indicated cash as a preferred
uptake has been limited up until 2020, when market
method of payment. However, the preferences of
liberalisation allowed mobile operators to offer the
medium sized businesses were more widely split,
service, explaining the preference for cash by over
indicating the exposure of larger businesses to a
40 per cent of MSMEs.
wider variety of payment methods.
Figure 30
MSMEs’ preferred payment method, by business size103
46%
42%
33%
30% 31%
24% 24% 22%
21%
14%
6% 5%
Cash on delivery Credit and debit card Mobile money/banking Bank transfer/EFT
Micro Small Medium

99 GSMA. (2023). The E-levy in Ghana: Economic Impact Assessment.

100 69 per cent of adults in Kenya had a mobile money account in 2021. See World Bank. (2021). The Global Findex Database 2021: Financial Inclusion, Digital Payments,
and Resilience in the Afe of COVID-19.
101 Nine per cent and 37 per cent of adults have a mobile money account in Nigeria and South Africa respectively, compared with 45 per cent and 84 per cent at a
financial institution.
102 The World Bank. (2021). The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. 84 per cent of adults in South
Africa had an account at a formal financial institution.
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Similarly, cash was preferred by businesses across all distributed their payment preferences were, likely due
combinations of methods used to sell online, although to experience of more types of payments (Figure 31).
the more channels MSMEs used, the more evenly
Figure 31
MSMEs’ preferred payment method, by e-commerce channel104
48%
45%
42%
31%
27% 27% 27%
25% 24%
22% 21% 22%
20%
11%
7%
1%
Cash on delivery Credit and debit card Mobile money/banking Bank transfer/EFT
Social media only Social media & e-commerce Social media & website All 3 platforms
marketplaces

While many MSMEs preferred the use of cash for

payments, this may in part be driven by customer Figure 32
preference for cash payments, which between a Customer preference for cash as an
third and half of MSMEs identified as a demand-side
obstacle to e-commerce, as perceived
obstacle to e-commerce growth (Figure 32).
by MSMEs105
There are a range of reasons for the persisting
preference for cash. At the macro level, formal
financial inclusion, and level of informality in the
economy impacts how people pay for goods and 44% 44%
services. Where formal financial inclusion is low and
informality is high, cash is likely to be the most widely
used payment method. Furthermore, challenges 32%
with unreliable internet quality, poor electricity
infrastructure, and the cost of handsets and mobile
services all act as deterrents to the uptake of digital
payments.
However, three key determinants of the uptake of

digital transactions for e-commerce include:
Micro Small Medium
• The affordability of digital payments;
• The convenience of digital payments, based on
payments system interoperability; and Base: All MSMEs surveyed
• Trust in payment methods
105 Survey Question: Based on what you know, or what customers have told you, is [ITEM] a reason that limits your customers use of e-commerce to make purchases from
your business?
a) Customers do not understand how to use the marketplaces
b) Customers do not understand how to use websites
c) Customers do not trust e-commerce platforms and websites to keep their money and/ or personal data secure
d) Customers prefer to use cash
e) Customers do not have a bank or mobile money account for digital payments
f) Customers do not own devices needed to buy online
g) Customers do not have reliable access to the Internet
h) Customers prefer to interact with the merchant in person
i) Customers think returning items purchased online is difficult
j) Another problem, please specify
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Affordability of digital payments
Key informant interviews suggest that cash payments • Charges by payment systems: Payment systems
are perceived as no cost, compared to banking across countries have different financing models,
and digital transactions that incur charges. The use with different implications for affordability. For
of cash has its challenges; it is resource heavy to instance, the Ghana Instant Pay (GIP) payment
manage and prone to theft. Cash on delivery also system—a real-time interbank payment transfer
makes cash flow management more difficult for service—operates on a strict cost-recovery model.
MSMEs, who must fulfil orders before they are paid, Banks charge consumers a one per cent fee on
and items returned on delivery incur delivery charges all transactions, with 30 per cent of these fees
borne by MSMEs. being routed to the Ghana Interbank Payment and
Settlement System (GhIPSS) and the remaining
Digital payments are quick, efficient, and safe and
70 per cent retained by the sending financial
a key enabler of e-commerce. However, in markets
institution.107 The Nigerian Interbank Payment
where the purchasing power of a large segment of
(NIP) settlement system also operates on a cost-
the population is limited, and consumers tend to buy
recovery model but with moderated profit for
low-ticket items, transaction costs are a deterrent.
shareholders.108 PesaLink,109 which allows instant
The commercial pricing of digital transactions is
transfers between bank accounts in Kenya,
impacted by a number of factors beyond profitability,
operates on a for-profit basis. The governance of
including:
payment systems determines the costs charged
• Tax regulations: Governments may use levies on to financial services providers and passed on to
digital transactions as a proxy to tax the informal customers.
economy and expand the tax base. Taxation
on digital payments, such as on mobile money
transactions, levied by some governments,
including Kenya and Ghana, has raised the
cost, discouraging use, in particular for low-
value transactions where the proportional tax is
higher.106 For the majority of African MSMEs, these
transaction charges are significant enough to act as
a deterrent, despite the efficiency and safety they
may offer. Enabling affordable low-value payments
by balancing fiscal policy with digitalisation of the
economy is essential for supporting e-commerce
for micro and small businesses.
106 GSMA. (2023). State of the Industry Report on Mobile Money.

108 The Central Bank of Nigeria recently reduced the charge to banks for using NIP, it was agreed that the reduction would not be passed onto consumers to support the
banking sector.
109 PesaLink is the bank-led system in Kenya.
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Real-time and interoperable payments
In the financial system, payments interoperability can be accepted, and processed instantly. In
refers to the ability to make digital payments addition, payment gateways act as a key enabler for
between two accounts held at different institutions. interoperability and are a crucial building block for
Instant and interoperable payment systems are retail e-commerce. They enable secure online transactions
payment systems that can process retail transactions by encrypting sensitive payment information and
digitally in real-time across providers, at all times.110 facilitating communication between online businesses
and digital payment service providers. Across our
For e-commerce to prosper, there needs to be a
core markets, both Nigeria and Ghana provide
well-functioning interoperable payments system
multilateral interoperability, allowing transactions
so that different types of digital payments, ranging
between different payment systems (Box 6). 111
from mobile money to bank transfers and cards,
BOX 6
Multilateral interoperability in Nigeria and Ghana
The Nigerian Inter-Bank Settlement System (NIBSS) launched NIP in 2011 to enable real-time interbank
payments and facilitate high volumes of retail transactions.112 It gradually integrated mobile wallets
and card networks and now operates a central processing hub—the Nigerian Central Switch—which
connects directly to all commercial banks, microfinance banks, and mobile money operators in Nigeria,
supported by payment gateways to enable secure and real-time online transactions. Considered one of
the most robust interoperable payments systems globally, NIP processes transactions on an average of
10 seconds or less.113
In Ghana, the Ghana Interbank Payment and Settlement Systems (GhIPSS), a subsidiary of the Central
Bank, launched its real-time payment service, GhIPSS Instant Pay (GIP), in 2015 to enable the real-time
clearing and settlement of low-value interbank transactions. In parallel, GhIPSS launched the Mobile
Money Interoperability (MMI) service to foster real-time transactions between mobile money providers
(MMPs). The two platforms, GIP and MMI, are connected to allow interoperability between mobile
money wallets and bank accounts. By connecting different systems together, GhIPSS has created a
payment ecosystem that allows for multilateral interoperability between all supported channels and
platforms.114 The maximum processing time is 40 seconds, but in practice, a transaction is completed
between five and 10 seconds.115
110 There are various types of Interoperability: between mobile money wallets from different providers, or between payment instruments, for example between mobile
money wallets and bank accounts.
111 Multilateral interoperability is the most enabling form of interoperability, allowing transactions between providers from different payments systems.
112 Payments Afrika. (2021). FSS I TechFin: The New Challenge of the Banking World.
114 Mastercard. (2021). Customers can now pay small businesses via WhatsApp.
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Most other selected markets provide some degree of Rwanda is making improvements in terms of
interoperability, although there are still opportunities interoperability. While real-time payments were
to address gaps. In Kenya, for example, although mostly provided by mobile money players without
digital financial services, mobile money in particular, efficient interoperability with other systems, banks
are widely adopted and used, interoperability is are progressively integrating with the mobile money-
based on bilateral agreements between financial led system.
services providers. Insights from interviews with
Open Application Programming Interfaces (APIs)
key informants highlight that competition and
constitute an emerging opportunity to enable
lack of infrastructure sharing prevents the optimal
interoperability between digital financial service
integration of services and creates inefficiencies.
providers without the need to change underlying
In Ethiopia, the national switch now provides a
technical infrastructure at high expense.119 By
well-functioning national payment system, but
allowing different payment platforms to execute
the ecosystem could benefit from more payment
transactions with each other, APIs enable a payment
gateways.116
service provider to integrate with a variety of other
financial service providers’ networks, as well as
“Because of bilateral interoperability, e-commerce sites.120 Integration of financial services
most people in Kenya have multiple SIM via open APIs in markets such as Kenya and South
cards linked to different mobile money Africa, where interoperability remains limited,
accounts to make sure they can easily make could enable more adoption of digital payments for
transactions with a wide range of providers. e-commerce. Africa is seeing some growth of open
This is also the case with merchants to banking via open APIs, whereby banks are enabling
receive transactions.” mobile operators and fintechs to connect with their
infrastructure to expand financial services and reach
Key Informant Interview, Kenya
wider market segments they have not traditionally
reached, including small merchants and MSMEs.
In East Africa, Tanzania has been very successful The pan-African bank, Ecobank has opened up its
in driving best practices regarding interoperability. infrastructure to third parties while in other markets
Tanzania was one of the first markets to allow people such as Nigeria, regulators have moved to regulate
using different mobile money services to make the sharing of financial data under open banking.121
seamless transactions between their accounts.117
In 2022, Tanzania launched the Tanzania Instant
Payment System (TIPS), which builds on its successful
mobile money system to enable multilateral
interoperability. However, payment gateways remain
limited and are needed to support e-commerce.118
116 GSMA. (2023). Mobile Money in Ethiopia: Advancing financial inclusion and driving growth.
117 CGAP. (2015). How Tanzania Established Mobile Money Interoperability.
118 International Trade Administration. (2022). Tanzania- Country Commercial Guide: eCommerce.
120 Ibid.
121 PYMNTS. (2022). Open banking APIs help Africa’s mobile money fintechs expand services.
61 / 84
Trust in payment methods
Trust is a key component of MSMEs’ preferences for that preferred cash felt it was fast and efficient, while
payment method (Figure 33). Almost 50 per cent of 42 per cent of MSMEs that preferred digital payments
MSMEs that preferred cash as the payment method cited speed and efficiency as the primary reason.
said that they trusted it the most, while 30 per cent Familiarity with the payment method was the third
of MSMEs that preferred digital payments indicated most important determinant of payment preferences.
trust as the primary reason. 16 per cent of MSMEs
Figure 33
Main drivers of payment preferences122
49%
Trust it the most
30%
16%
Fast and efficient
42%
23%
Most familiar with it
18%
4%
Not prone to cancellation or failure
3%
6%
Low cost
3%
Cash Digital payments
Base: MSMEs who specified a payment preference

Strong implementation of cybersecurity laws, marketplaces tend to provide return and refund
electronic transactions acts, and consumer protection mechanisms, as do MSMEs selling on own brand
acts for online trade are key regulatory enablers of websites, the level of consumer protection depends
trust in digital payments and, as noted earlier, need to on the enforcement of consumer protection laws.
be communicated widely and clearly to consumers.
In the case of informal social commerce, cash
Lack of product standardisation for retail goods sold is likely to remain the predominant method of
in many African markets means that products often payment for the foreseeable future in most markets.
differ from the advertised items, creating distrust However, digital payments solutions for formal social
in consumers and leading to frequent returns due commerce are growing. Social media services such
to poor quality assurance. With cash on delivery, as WhatsApp and Facebook are actively investing
items varying in quality can be returned at the time and working with financial service providers to enable
of delivery without the customer making a payment, e-commerce payments in Africa.123 In South Africa,
alleviating concerns over digital refunds. for instance, a version of WhatsApp payment, Money
Message, was launched in 2021 in collaboration with
For digital payments made at the point of sale,
Nedbank, Mastercard and Ukheshe, which enabled
having a simple, robust, and trustworthy
even unregistered small businesses to invoice
refund/recourse mechanism is essential to
customers and collect payments.124
building consumer confidence. While e-commerce
122 Survey Question: Why do you prefer this payment method over the others?
1. Most familiar with it
2. Trust is the most
3. Low cost
4. Fast and efficient
5. Not prone to cancellation or failure
6. Other
123 Payments Afrika. (2021). FSS I TechFin: The New Challenge of the Banking World. (accessed 21 September 23)
124 Mastercard. (2021). Customers can now pay small businesses via WhatsApp. (accessed 21 September 2023). The service was discontinued as of June 2023. See
Nedbank website.
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Where recourse mechanisms and refund processes payments are not immune to transaction errors,
exist, they also need to be clearly articulated to especially among consumers with lower digital skills.
consumers, and uncomplicated, to build trust. Over Recourse mechanisms can be time-intensive and
one third of MSMEs surveyed for this study reported costly for consumers. When resolving transaction
that their consumers found it difficult to return items. issues in informal social commerce, there is a high
dependency on a merchant’s goodwill to refund
Instant settlement and interoperable systems make
products. Cash on delivery, therefore, remains the
refunds faster and are a key enabler. However, digital
most trusted method in such transactions.
Figure 34
Fraudulent or incorrect transactions, by market125
45%
34%
32%
29%
19% 19%

Cross-border payments
Around one fifth of MSMEs selling to buyers in Multi-country systems have emerged to improve
other countries mentioned the lack of cross-border cross-border payment processes and reduce the
payment options as a challenge to cross-border complexities and multiple currency conversion layers.
commerce. Enabling instant and affordable cross- For example, in Southern Africa, SADC has created
border payments is essential for MSMEs seeking to the Transactions Cleared on an Immediate Basis
sell internationally. (TCIB) system, which allows both bank and non-
bank financial institutions to connect directly and
Payment transaction costs between markets within
indirectly to a payments system to process regional
Africa remain very high at eight per cent, compared
payments requests instantly. TCIB shows promise
to less than two per cent in the US and Europe.
in terms of inclusivity and enables transfers and
High transaction costs for intra-African payments
remittances (P2P). Similarly, the Pan-African Payment
are driven partly by the lack of clearing processes
and Settlement System (PAPSS) was launched
within the continent. Most payments are routed
in 2022 to support the development of AfCFTA,
through overseas banks, mostly in Europe and North
following a successful pilot, to centralise payment and
America. As a result, an African currency must first
settlements for intra-African commerce (Box 7).
be exchanged for dollars, pounds or euros and
then converted a second time to a different African
currency. This adds an estimated $5 billion a year to
the cost of intra-African currency transactions.126
125 Survey Question: Which of the following have you experienced regarding processing payments digitally?
1. Customer lack of willingness to use them
2. Monetary cost of adopting digital payments
3. Time and effort required to start accepting digital payments
4. Too many options to choose from
5. Too complicated and hard to understand
6. Delay in transfer from buyer to seller for a purchase, or vice versa for a refund
7. Requirement for bank account to receive payment
8. Fraudulent or incorrect transactions
9. Other
126 IMF. (2022). Freeing Foreign Exchange in Africa.
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BOX 7
PAPSS aims to reduce intra-African payment

transaction costs
PAPSS aims to offer cross-border solutions for transfers and remittances, as well as for merchant
payments and business-to-business transactions. It enables the efficient flow of money securely across
African borders, minimising risk and contributing to financial integration across the region. An initial
pilot of PAPSS was rolled out in 2021 in six countries (the Gambia, Ghana, Guinea, Liberia, Nigeria, and
Sierra Leone). After successful completion of the pilot, PAPSS began commercial rollout in January
2022 with the vision of eventually being operational across Africa.
Figure 35
Pan-African Payment and Settlement System (PAPSS) and
intra-regional trade
1 An originator issues a payment instruction in their local currency to their bank or payment service
provider.
2 The payment instruction is sent to PAPSS.
3 PAPSS carries out all necessary validation checks on the payment instruction.
4 The payment instruction is forwarded to the beneficiary’s bank or payment service provider.
5 The beneficiary’s bank clears the funds to the beneficiary in their local currency.
Source: PAPSS 127
Cross-border digital payments solutions are expected to grow and mature in the region, but consumer trust
remains a fundamental stumbling block, linked to the safety of online payments, fear of scams, and clear,
efficient recourse mechanisms for erroneous transactions or returned goods.
127 See PAPSS website.
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Emerging opportunities in digital payments
While it is estimated that only five to seven per cent provider Pesapal, digital payments for e-commerce
of total payment transactions in Africa in 2020 were basket values are expected to increase by 18 per cent
digital, Africa’s domestic e-payments market is due to a growing acceptance of such payments by
expected to grow by 20 per cent per year to 2025.128 both buyers and sellers.129 The integration of payment
In East Africa, retailers and merchants are driving innovations such as digital cards, quick response (QR)
this trend. According to regional payments service codes, and near field communications is also growing.
Digital cards
New partnerships between MMPs and global payment make purchases on global platforms. In 2021, MTN
processing systems, such as Visa and Mastercard, are Mobile Money partnered with Mastercard to make
driving integration of the financial ecosystem. They digital cards available in all 16 countries of operation,
are enabling mobile money users to access a digital including Ghana, Nigeria, Rwanda, and South Africa.
card in addition to a physical one, which allows users In 2022, Safaricom M-PESA and Visa launched
to make or receive instant payments for e-commerce. the M-PESA Global Pay Visa digital card, enabling
They can also enable microentrepreneurs who do millions of M-PESA users to make digital payments
not own a bank account to use a digital card to globally.130
QR codes
QR codes are increasingly integrated as part of widely use Wave Mobile Money and Orange Money
merchant payment use cases to streamline the QR code solutions. Wave also enables remote QR
transaction process. From the payer’s perspective, code payments through API integration. A rising
QR codes can be scanned, displayed on a number of bank systems, including Ghana’s GIP,
smartphone, or entered as an alphanumeric code on Nigeria’s NIP and Egypt’s Instant Payment Network,
a feature phone. For merchants, QR codes remove are also developing or integrating these QR code
the need for costly POS devices and can validate the solutions. Ghana has developed its own QR code
receipt of funds through a mobile phone. Fintechs solution, GhQR, which enables payments from bank
and MMPs are leading the way in terms of developing accounts, mobile money, and digital cards.131
QR code solutions. In Senegal for instance, merchants
Near Field Communications (NFC)

NFC enable simple and safe two-way interactions through MoMoPay. The NFC tag is linked to the
between electronic devices, allowing consumers to customer’s mobile wallet, mirroring the process of a
perform contactless transactions. NFC tags do not contactless debit or credit card. Following payment
rely on network activity and low-tech phones can initiation via close contact between the MTN point of
support NFC-enabled payments if equipped with interaction and the NFC tag, payment is validated and
an NFC chip.132 MTN provides mobile money users processed. These solutions can be used on lower-tech
in some countries, including Rwanda, with an NFC devices and in the absence of internet connection or
tag to facilitate person to business (P2B) purchases data.
128 McKinsey & Company. (2022). The future of payments in Africa.

129 Bloomberg. (2023). Retailers Are Driving East Africa’s Adoption of Digital Payments.
130 GSMA. (2023). The State of the Industry Report on Mobile Money 2023.
131 McKinsey & Company. (2022). The future of payments in Africa.
132 BIS. (2020). Payment aspects of financial inclusion in the fintech era.
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BOX 8
Under-representation of digital e-commerce payments
Payment systems that enable P2B and B2B Meanwhile, key informant interviews for this
transactions facilitate the development of research indicate that many MSMEs make P2B
e-commerce by offering digital payment and B2B transactions to and from personal
solutions between businesses and consumers. mobile money wallets, which masks e-commerce
Across surveyed markets, Nigeria’s NIP, Kenya’s transactions as P2P transfers, underestimating
mobile money system, South Africa’s RTC and the use of digital payments for e-commerce.
Ghana’s GIP are all enabling P2B transactions.133
In other countries, mobile money providers “Many P2B transactions are

also often support P2B transactions134 but
hidden. A lot of what accounts
this tends to be restricted to their own mobile
money service, which limits the uptake of digital
for P2P transfers is in fact P2B
payments for e-commerce as both the business transactions.”
and the customer must have the same mobile Key Informant Interview
money service provider. In 2022, to improve
interoperability, Safaricom’s M-PESA began
accepting merchant payments from Airtel As businesses scale and process higher volumes
Money.135 B2B transactions remain limited, with and sizes of payments, the development of
only Ghana and Nigeria offering B2B payments P2B and B2B interoperability is important in
interoperability. facilitating such payments.
Key insights • Mobile phones can act as both a payment

instrument and channel, and eliminate costs for
The speed and efficiency of digital payments is the both MSMEs and consumers. However, charges
main reason why MSMEs prefer their use over cash on mobile money transactions have been
and is essential to build trust in digital financial introduced in some countries recently, posing
services as this drives usage further. affordability challenges and acting as a barrier to
adoption of digital payments.
A significant proportion of MSMEs report
experiencing delays when making digital • The multiplication of payment instruments and
transactions, which highlights the need to make channels that focus on convenience, such as
electronic payment systems more robust to enable digital cards, QR codes, NFCs, and social media
real-time settlement. payments, constitute opportunities to reach
more merchants and customers.
While most countries provide some degree of
interoperability, there is a need to transition from • P2P transactions generally play a pivotal role
bilateral to multilateral interoperability and allow in enabling merchant payments, especially
for better integration between different schemes for smaller businesses and those leveraging
to enable seamless e-commerce payments. social media. However, as businesses grow and
e-commerce becomes more widely adopted,
There is also an opportunity to leverage
enabling P2B and B2B transactions will become
innovations like open APIs to advance ecosystem
essential to scale.
innovation and implement best practices in a cost-
effective manner. • Returns and refund processes remain uncertain
and complex to navigate, while resolving
Beyond cash, MSMEs’ use of digital payments
transaction errors can be time-intensive and
is diverse and reflective of the financial services
costly. More efforts are needed in aftersales
ecosystem in the specific market.
processes and in terms of consumer protection
to build trust in e-commerce.
134 For example, Airtel Money and M-PESA in Kenya, MTN Mobile Money and Airtel Money in Rwanda, Orange Money, Free Money and Wave Mobile Money in Senegal,
Airtel Money, Tigo Pesa, and Vodacom M-Pesa in Tanzania. See: Mobile Money Deployment Tracker.
135 GSMA. (2023). State of the Industry Report on Mobile Money.
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5.3 Logistics and delivery
The ability to deliver goods on time, in full, and To overcome the challenges of inadequate delivery
without damage can be a challenge, and an expensive services in the region, several delivery mechanisms
proposition in African markets due to poor road for e-commerce purchases exist. For example, many
networks and vast distances between cities and buyers pick-up their online purchases from the seller
urban and rural communities. Customers also expect directly. MSMEs in Ghana, Kenya and South Africa
quick delivery, which necessitates the use of more reported this as their primary method for order
expensive private express delivery services. National fulfilment, while in Egypt, Ethiopia, and Nigeria, more
postal services tend to be more affordable and have MSMEs reported delivering products to the buyer
wider reach but are slower and generally much (Figure 36). This finding was consistent across all
less efficient and reliable than private logistics and business sizes.
delivery services providers.
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Figure 36
Delivery methods used by MSMEs, by market136
86% 88%
84%
81% 81% 83% 83% 83%
73%
52%
49%
40%
33% 31%
13% 14% 15%
6%
Delivery to buyers location Store pick-up Distribution points

Other delivery methods such as the use of cent of micro, 24 per cent of small and 32 per cent of
distribution points, for example corner stores or medium enterprises across core markets engaging in
parcel lockers, is considerably less with only 17 per this method (Figure 37).
Figure 37
Delivery methods, by MSME size137
81%
74% 73% 76% 78%
70%
32%
24%
17%
2% 3% 2%
Shipping or delivery to Pick up from your Network of distribution Something else
buyers’ location business location points
Micro Small Medium

136 Survey Question: Which of the following do you use to get purchases to buyers?
1. Shipping or delivery to buyers’ location
2. Pick up from your business location
3. Network of distribution points, like corner stores or parcel lockers
4. Something else?
137 Survey Question: Which of the following do you use to get purchases to buyers?
1 .Shipping or delivery to buyers’ location
2. Pick up from your business location
3. Network of distribution points, like corner stores or parcel lockers
4. Something else?
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While delivery to the buyer’s location is a key benefit These include a lack of delivery capacity when
of e-commerce to customers, collection from the needed, high costs of shipping and delivery, goods
seller’s location limits the benefit that e-commerce lost and/or damaged during delivery, slow delivery
brings as buyers need to be in proximity to sellers. time, the cost to bring goods to shippers for onward
MSMEs across core markets face numerous delivery, and delayed pick-up of shipments from
challenges associated with delivery (Figure 38). business locations.
Figure 38
Delivery challenges experienced by MSMEs
Goods lost or damaged during delivery 26%

Lack of delivery capacity
when you need it
24%
Slow delivery to customer 23%
Cost of shipping and delivery 22%

Delayed pickup of shipment from your
place of business
21%
Time or money spent to bring goods to
shipper for onward delivery
21%

Table 11
Top two barriers to delivery, by market138
Goods lost Cost of Lack of Goods lost Cost of Lack of

or damaged shipping and delivery or damaged shipping and delivery
during delivery delivery capacity when during delivery delivery capacity when
you need it you need it
Slow delivery Slow delivery Cost of Cost of Goods lost Delayed

to customer to customer shipping and shipping and or damaged pick-up of
delivery delivery during delivery shipment from
your place of
business

Source: 2023 GSMA e-commerce survey
138 Survey Question: Have the following been a big problem, a small problem or not a problem at all for your business?
a) Lack of delivery capacity when you need it
b) Cost of shipping and delivery
c) Goods lost or damaged during delivery
d) Slow delivery to customer
e) Time or money spent to bring goods to shipper for onward delivery
f) Delayed pickup of shipment from your place of business
g) Difficulty making request for delivery
h) Difficulty communicating delivery details to shipper
i) Problems verifying delivery was completed
j) Lack of shipping and delivery options that accept my payment methods
k) Limited options for delivery to my customers’ locations
l) Limited options for pick-up where my products are located
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Three main logistics and delivery challenges exist These challenges have been compounded by
in the region that make delivery expensive and the economic impacts of rising fuel prices on
particularly challenging: e-commerce businesses. Fluctuation of fuel costs
• Lack of well-developed road infrastructure; has a substantial impact on delivery and logistics.
Not only do high fuel costs contribute to high delivery
• Poor national addressing systems; and costs, but the unpredictable nature makes it difficult
• Expensive in-house delivery solutions versus for MSMEs and platforms to plan how much will be
insufficient and fragmented provision of reliable expensed on delivery.
and affordable third-party delivery services
solutions.
Transport infrastructure
Road congestion, poor road quality and lack of In Ghana, challenges include insufficient delivery
delivery routes underpin many of the delivery solutions, especially to the last mile. In Ethiopia, the
challenges faced by MSMEs as they ultimately challenge of poor road infrastructure is compounded
cause delays and increase costs. The quality of road by extremely low rates of car ownership, which means
infrastructure and transportation challenges vary by that last mile delivery solutions are still emerging,
market, with South Africa having the best density, but while in cities, e-commerce deliveries frequently take
the general condition of road infrastructure across place on foot or public transport.
Africa is poor. Less than 50 per cent of roads are
Egypt has recently invested heavily in transportation
paved, and it is estimated that 85 per cent of rural
infrastructure, including highways, which is expected
feeder roads are in too poor condition to be used in
to improve the uptake of e-commerce in an already
wet seasons.139 It is also estimated that 50 per cent
relatively mature e-commerce market.
of the rural population in the region does not have
access to roads, making rural e-commerce especially Despite having one of the best road infrastructures in
challenging,140 unless it is localised. the region, last mile delivery infrastructure challenges
persist in South Africa. Tanzania has one of the most
In Nigeria, congestion has been the major cause
extensive road networks in the region, but again,
of delivery challenges in the main cities, impacting
last mile delivery challenges remain to be solved. In
delivery costs and causing delays. Nigeria also
an innovative move, the government of Rwanda has
removed fuel subsidies in May 2023, making
partnered with drone delivery company Zipline to
deliveries more expensive. Poor road quality,
accelerate the delivery of medical supplies, which
especially for delivery to the last mile, has not only
may evolve to the delivery of e-commerce purchases.
impacted the time deliveries take, but also raised
It is estimated that only about $5 billion is invested in
vehicle maintenance costs. To tackle congestion
road infrastructure currently, while between $18-25
challenges, local solutions in cities included the
billion is required.142 With insufficient public sector
development of two-wheel ride-hailing companies,
investments available for road infrastructure, public-
which launched in Lagos with heavy foreign
private partnerships for financing are increasing, as
investment but were then restricted by local transit
is foreign investment in infrastructure in the region,
regulations, ostensibly to improve transport safety
which should help reduce delivery costs and increase
but exacerbating mobility and delivery challenges.141
e-commerce beyond major cities.
139 Brickstone Africa. (2022). Facts about Africa’s Road Transport Infrastructure.
140 Wilson Center. (2023). Modernizing Infrastructure Vital to Fulfilling Africa’s promise.
141 Vanguard. (2023). Ban on Okada in restricted areas stays - Lagos reiterates. (accessed 21 September 2023)
142 Brickstone Africa. (2022). Facts about Africa’s Road Transport Infrastructure. (accessed 21 September 2023)
70 / 84
Addressing systems
Inefficient home addressing and postal code systems As there is no clear indication of where a parcel
add to the challenges and costs of delivering goods. should be delivered when there is no addressing
In the absence of clear addressing, delivery providers system, there is a risk that the wrong person will
struggle to locate customers, resulting in both falsely claim a delivery. This poses a challenge for
delayed and failed deliveries, increased costs, and businesses selling via websites or social media as
reducing trust in e-commerce. None of the markets costs for redelivery must be expensed. However,
considered for this research have completed the if an MSME sells via an e-commerce marketplace,
implementation of a national address and postcode the associated costs and risks are absorbed by the
system. Even in markets with relatively good marketplaces. This is an important benefit to MSMEs.
addressing, it remains insufficient. Experts consulted
Delivery services remain largely concentrated in
for this research suggest that addressing may be
urban areas, leaving rural communities increasingly
more important than infrastructure, noting Nigeria
excluded due to large distances between rural
as a key example of a country where, in the presence
regions and urban distribution centres and/or
of an extensive addressing system, e-commerce
businesses, coupled with insufficient resources to
is growing despite a deficit in trade and transport
deliver to rural regions and a lack of addressing and
infrastructure.
backbone infrastructure. These challenges also lead
Addressing formats in Kenya vary between counties to higher costs of both products and delivery for
as no national standard exists, making delivery rural customers.146 Estimates suggest that while last
particularly challenging.143 Postcodes are linked mile delivery on average costs about 28 per cent
to post offices rather than to individual property of a manufactured product globally, in Africa this
addresses and there is a lack of street naming and cost rises to between 35-55 per cent due to poor
signage. However, a draft National Addressing infrastructure and limited delivery options.147
Policy is underway with the growth of e-commerce
While e-commerce delivery partners and
a key consideration in its development. Nairobi will
e-commerce marketplaces have attempted
be the first city in Kenya (and the second in East
standardising delivery costs, this has not proven
Africa following Kigali) to implement the physical
commercially sustainable. Therefore, while rural
addressing system, funded by the World Bank.144
populations, especially in markets such as Ethiopia
The Nairobi addressing system, which will be
which is almost 80 per cent rural, offer tremendous
integrated with Google Maps and includes a postcode
market opportunity for e-commerce MSMEs and
framework of property numbers and street names, is
platforms, until the necessary delivery infrastructure
expected to be gradually implemented in the rest of
is available, this is likely to remain unexploited.
the country.145
Platforms, however, are more likely than individual
E-commerce marketplaces consulted for this report companies to address this market segments’ needs
also raised concerns over the risk of fraud and due to higher likelihood of economies of scale,
incurred costs due to poor addressing systems. especially in B2B e-commerce.
143 UNCTAD. (2022). Kenya eTrade Readiness Assessment.

144 Techweez. (2023). Nairobi County is the First Beneficiary of the National Physical Addressing System. (accessed 21 September 2023)
145 Hivi Punde. (2023). Govt to Unveil First National Addressing System to Facilitate E-Commerce Across the Country. (accessed 21 September 2023)
146 Jumia Blog. (2023). Satisfying Rural Populations through Jumia’s E-Commerce Initiatives. (accessed 21 September 2023)
147 The Baobab Network. (2022). Baobab Briefing: Last-Mile Delivery.
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Agricultural B2B e-commerce via platforms offers an transparency to buyers. Working across various
opportunity to digitalise rural agricultural markets e-commerce challenges in the region to build
and drive e-commerce adoption beyond cities. trust between the agri-business and buyer, Nile
Well-known platforms in this space include Twiga, holds payments in a secure trust until products are
launched in 2014 in Kenya to connect farmers to delivered to the producer in good condition, and vets
small retailers, enabling smallholder farmers to cut its producers to ensure quality. Nile offers a range of
out middlemen in their access to markets and realise delivery options, including farmers shipping directly
greater profits. to buyers through their own delivery methods,
shipping through Nile’s delivery partners, or through
Nile is a regional B2B marketplace that also
Nile’s hubs, where demand from buyers is aggregated
enables fresh food producers to sell directly to
and then consolidated packages are shipped to
buyers, aggregating the supply chain across SADC,
manage costs.148
helping producers boost profits and granting price
BOX 9
Virtual postal address systems
The implementation of physical addressing systems is costly and time consuming for regulators.
Tanzania began the roll out of a National Postcode and Addressing (NaPA) system in 2010, but the
rollout is still incomplete and covers only a handful of cities.149 In addition, rapid urban development
in countries such as Tanzania, Ghana and Kenya contribute to the difficulty in maintaining up-to-date
address and postcode systems as new buildings and streets are built to accommodate ever-growing
populations.
Virtual postal address systems (VPAS) can overcome these challenges. VPAS provide users with an
address, however unlike physical addresses, no tangible infrastructure is required, such as street signs or
door numbers. There are multiple ways in which these can be implemented, and they can be combined
with physical address systems. A key benefit of VPAS is that they allow addressing to be expanded to
rural areas with ease, ensuring that communities living outside cities are not excluded from typically
urban-centred development and thus access to e-commerce. VPAS, however, require internet access
to download addresses, which in areas without network coverage or with unreliable coverage can be
excluding.
Several innovative solutions already exist which have been implemented both in the private sector and
at the national regulatory level. Ghana (AsaaseGPS) and Nigeria (What3Words) have rolled out national
VPAS and start-ups are operating VPAS services in many African countries.
GhanaPostGPS was launched in October 2017 by an emotive public reaction and initial reluctance
AsaaseGPS in partnership with the Ghana Post to engage with the new system.150 Moreover, when
Company. This nationwide Digital Property Address first introduced, users were charged to access their
System uses GPS to divide Ghana into grids of new addresses which raised further concerns over
5x5 metre squares, assigning each with a unique the universality of the system. AsaaseGPS is now
alphanumeric postcode. AsaaseGPS faced substantial free to use and backed by several public campaigns,
criticism following its launch. The lack of public increasing its successful implementation.
consultation during the design phase resulted in
148 Nile website. (accessed 25 September 2023)

149 UNCTAD. (2020). United Republic of Tanzania: Rapid eTrade Readiness Assessment.
150 The Conversation. (2022). Ghana digitised its address system: its failure offers lessons to other African countries creating smart cities. (accessed 21 September 2023)
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BOX 10
Emerging GPS-based innovations for addressing systems
What3words is a GPS-based global solution which enables precise identification of locations through
allocation of unique three-word combinations to three metre squares across the globe. Launched in
2013, the world is now mapped in more than 50 different languages with more added annually. Users
can access their what3words code free of charge either from the what3words mobile app or webpage.
There is a microcharge for the three words to be converted to GPS coordinates.
What3words is already being used by e-commerce in Senegal, Nigeria and South Africa and has been
implemented by the Nigeria Postal Service (NIPOST) as part of Nigeria’s national address system,
making Nigeria the third country in Africa and seventh country globally to do so.
One solution to the challenge of poor addressing allowing customers to collect their orders for a
systems is the use of pick-up points, such as corner reduced delivery fee from designated local shops
shops and parcel lockers, which could allow MSMEs which act as agents for Jumia. The agents provide
using e-commerce with B2C models to access rural customers with face-to-face interaction with Jumia,
populations. Although pick-up points still necessitate they can answer customer queries, and earn income
collection from the buyer, they are a viable option for each delivery picked up from their shop.152 For
where delivery to buyer location is either unavailable enterprises not using e-commerce marketplaces, a
or too expensive. pick-up point established by a third party must be
used. However, these are scarce, with one or two third
Survey results indicate that of all delivery options,
parties at most providing this service in each market.
enterprises across the six markets are using pick-up
points the least. Use is lowest in Egypt (six per cent) For example, Pick-up Mtaani is a third-party pick-
which may be because delivery to buyer location is up point service operating in Nairobi. Over 80 small
used by a high proportion of MSMEs and therefore businesses, including petrol stations, bookshops,
pick-up points do not add value to the e-commerce and small shops, have been recruited as part of
supply chain. There are similar levels of pick-up point Pick-up Mtaani’s agent network. MSMEs signed up
use in Ghana (14 per cent), Nigeria (15 per cent) to the service can offer Pick-Up Mtaani as a delivery
and Ethiopia (13 per cent). Kenya and South Africa option for potential e-commerce customers. When
have the highest rates of pick-up point use with 33 chosen, a preferred delivery location is prompted and
per cent and 31 per cent of businesses using them, between $0.70 and $1.47 is charged to the consumer
respectively. for delivery via M-PESA. This is approximately 70 per
cent cheaper than other options. The seller is then
While e-commerce marketplaces such as Konga,
able to deliver more than one parcel at one time to
Kasha151, and Jumia have been using pick-up points in
a pick-up point, ready for customer collection. The
multiple countries since at least 2016, there is limited
customer receives a code via text message when
provision of pick-up point services for MSMEs not on
the parcel is ready to collect. Pick-up Mtaani reports
e-commerce marketplaces. This may explain the low
to have reduced delivery costs by over 70 per cent
use of pick-up points found in this survey.
through this service.
The prevalence and success of pick-up points used
While payment on delivery is not currently facilitated
by Jumia demonstrates the opportunity they offer for
through Pick-up Mtaani, they are aiming to launch
e-commerce scaling. Jumia has between 77 and 563
a mobile version of their system which will enable a
pick-up points in each of their operating countries,
payment on delivery service. It will also allow tracking
including capital cities, secondary cities, and rural
and tracing.
areas. Pick-up points provide several benefits,
151 See Kasha website. (accessed August 2023)

152 Jumia Blog. (2022). Jumia reduces delivery fee through expansion of pickup station network in Kenya. (accessed 21 September 2023)
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In-house versus third-party delivery
E-commerce businesses can choose to handle Maintenance of in-house delivery solutions allows
deliveries in-house or outsource to third parties, marketplaces a greater measure of control over their
depending on the size and nature of the business. operations, but the costs associated can be high. In
Kenya, Twiga Foods has replaced its in-house delivery
To overcome delivery challenges, many of the
operations supported by leased trucks with a third-
regional e-commerce marketplaces have deployed a
party delivery solution. The company expects to
range of logistics and delivery methods. Operating
decrease logistics costs by 40 per cent through this
models include asset-heavy approaches, such as
change.155
ownership of warehouses and delivery fleets and
direct employment of delivery staff. Marketplaces As e-commerce marketplaces choose more asset-
have integrated third party logistics and delivery light models, an emerging trend is the ‘uberisation’
providers in a franchise model and have the option of e-commerce deliveries, whereby transport and
to partner with independent third-party delivery logistics providers can form a partnership with an
providers who handle the delivery for them.153Jumia e-commerce platform or dedicated logistics provider
Logistics, for example, has hundreds of 3PL partners and accept delivery jobs as they arise.
that manage warehousing and delivery for Jumia
vendors,154 while Konga’s logistics arm, K-Express
has invested extensively in its own fleet of vehicles “The crowd-shipping model of delivery is a
for delivery. It also partners with last-mile delivery great opportunity for e-commerce. The use
providers who can invest in a Konga logistics of technology helps create access to a wide
franchise. source of underutilised assets to create
a powerful and cost-effective logistics
system.”
Key Informant Interview, Rwanda
153 Logistics Update Africa. (2022). Next up - an African decade in e-commerce. (accessed 21 September 2023)
154 See Jumia logistics website.
155 TechCrunch. (2023). Twiga lays off 33% of its staff, disbands in-house delivery and introduces logistics marketplace. (accessed 21 September 2023)
74 / 84
A key reason for the rise of B2B e-commerce models Informal micro-enterprises have the most notable
in the region is to drive down delivery and logistics challenges with delivery, especially when conducting
costs by undertaking fewer deliveries in bulk rather informal social commerce, due to each product being
than a multitude of small orders at dispersed individually delivered at high cost.
addresses, which incur much higher delivery costs
Enterprises selling through e-commerce marketplaces
in general, and are even more expensive when
have the advantage of outsourcing deliveries at the
goods are returned at the point of delivery. Hence,
cost of commissions charged. Due to bulk deliveries,
delivery costs and challenges significantly impact
e-commerce marketplaces can negotiate substantially
small sellers operating as B2C retailers, either on
lower delivery rates with delivery companies, offering
their own websites or via social commerce, who
this advantage to MSMEs registered on the platform.
need to arrange for each separate delivery rather
Delivery costs are also more manageable when
than leverage economies of scale resulting from bulk
customers’ expectations on delivery times can be
deliveries.
managed. When customers are willing to accept
longer delivery times, goods can be delivered much
“Initially we were fulfilling orders in Nairobi more cheaply than when quicker delivery times are
and surrounding areas. That was a bit more expected.
cost effective, but delivery to further areas
such as Kisumi was a real challenge. We
charge a standard rate to the consumer
and sometimes delivering is much more
expensive than this charge.”
Key Informant Interview, Kenya
BOX 11
Paps Logistique: Supporting informal e-commerce delivery

providers
Paps Logistique is a logistics provider operating in Senegal which has aggregated informal delivery and
logistics providers into a single platform. Potential providers must first complete an induction phase
before they become fully operational within Paps.
They are onboarded with existing fleets and provided with the necessary tools and necessary technical
training. Following this they begin completing deliveries under observation. If they pass this stage, then
their induction is complete.
More typically used by large enterprises and e-commerce platforms, Paps’ API is plugged into their
checkout page. Shipments for the week are collated and sorted by delivery location. If designated for
international delivery, shipments are taken through customs together and deconsolidated once through.
Informal delivery providers are then allocated orders to deliver.
75 / 84
Survey results indicate that across the region, most services, followed by Ethiopia (28 per cent), Egypt (41
MSMEs manage deliveries internally, regardless of per cent) and then Kenya (43 per cent). Enterprises
business size (Figure 39). Except for Nigeria and in South Africa use the two management methods at
South Africa, this pattern holds within each country almost equal rates whereas 67 per cent of enterprises
(Figure 40). Of those predominantly managing in Nigeria outsource delivery to a third party
delivery in-house, Ghana (22 per cent) has the lowest compared with 34 per cent managing delivery within
rates of outsourcing delivery to third party delivery the business.
Figure 39
Delivery management, by MSME size156
70%
54% 56%
45%
34%
30%
Outsource delivery to Manage delivery

a third party within business
Micro Small Medium
Base: MSMEs who use delivery or shipping

Figure 40
Delivery management, by market
80%
71%
67%
64% 62% 64%
56%
41% 43%
34%
28%
22%
Ethiopia Egypt Ghana Kenya Nigeria South Africa
Within business Outsource to 3rd party
Base: MSMEs who use delivery or shipping

156 Survey Question: Do you outsource delivery to a 3rd party or is someone who works for your business responsible for deliveries?
76 / 84
These results are explained by several factors: In contrast, delivery solutions in Ethiopia are less
developed. Less than 25 per cent of MSMEs use
1. The majority of MSMEs surveyed are micro-
either contract delivery options or the national post.
enterprises who would not find it viable to
However, over 40 per cent of MSMEs who outsource
contract with a third party but arrange for
delivery do so on-demand, which could include
delivery on an ad hoc basis; and
arranging and paying a courier per delivery and/or
2. There are concerns regarding the reliability of using crowd-shipping (formally or informally). This
national postal and private local delivery services, lack of variability in third party delivery type suggests
which pushes MSMEs to oversee and manage that there are fewer options for MSMEs in Ethiopia.
deliveries in-house despite the resources required
On-demand delivery and contracting with a courier
to keep control of the process.
are used by approximately 80 per cent of MSMEs
In terms of market variation, the vast majority (91 per in Nigeria and South Africa. On-demand delivery is
cent) of MSMEs in Egypt opting to outsource delivery most popular in Kenya where it is used substantially
utilise contracts with shipping delivery companies. more than other third-party delivery options (Figure
This suggests that Egypt has a better developed 41).
delivery services sector which MSMEs can rely on.
Figure 41
Third party delivery type, by market157
91%
87%
85%
82%
76%
73%
68%
61% 63%
57%
51%
47%
41% 40%
39%
36%
21%
18% 19%
15%
11% 12%
7%
2%
Contract with courier Contract with shipper delivery On demand National post
Base: MSMEs outsourcing delivery to a third party

The national postal services are used by less than the national post has in facilitating e-commerce both
50 per cent of MSMEs in all countries except South domestically and internationally, and the role it has in
Africa. Experts consulted for this research suggest wider development initiatives. The Universal Postal
that this is due to a history of underfunding of Union (UPU) is currently working with its member
national post services across Africa. More recently, countries to develop their national post systems.
governments have begun to recognise the role that
157 Survey Question asked to MSMEs who used third party delivery services: Do you [ITEM a-d]?
a) Contract with a courier
b) Contract with a shipper delivery service?
c) Make ad hoc or on-demand arrangements with a courier or delivery service?
d) Use the national postal service?
Is there another way you deliver goods that I haven’t mentioned?
77 / 84
BOX 12
Drones for e-commerce delivery
A number of start-ups across Africa have delivery, showcasing the benefit of combining
begun deploying innovative technologies to different innovations. This is currently being
provide e-commerce delivery services to reach trialled in the UK to support Royal Mail in its
rural areas typically excluded from traditional delivery of parcels to rural and disconnected
delivery solutions. Among these are Swift Lab communities.160 The results so far are promising.
Technologies158 (operating in Kenya) and Zipline159 Drones have already proved successful in
(operating in Rwanda, Ghana, Kenya, and Nigeria), transporting emergency medical supplies to rural
which use drones for on-demand e-commerce areas across Africa161 and we are beginning to
deliveries. According to Zipline, the use of drones see use cases in e-commerce. For instance, Swift
is faster, cheaper, and more sustainable than using Lab Technologies have partnered with The Postal
cars or motorbikes for delivery and allows for Corporation of Kenya (PCK) and Zipline has
second-by-second tracking of delivery location partnered with e-commerce giant Jumia.
and estimated time of arrival.
Zipline launched in Rwanda in 2016, using drones
As drones do not rely on trade infrastructure, they to deliver blood and medical supplies. It has
do not face the same challenges of traditional since expanded into the e-commerce industry,
delivery services, such as dependency on well- delivering food, retail, and agricultural products in
connected road infrastructure, rail services, a number of markets. Zipline drones reach speeds
or traffic, making them a good option for of 70mph and can deliver goods of up to three
e-commerce delivery, particularly for rural areas. kilograms in weight and 60 miles away from the
docking station. Zipline drones are approximately
Drones can be used in conjunction with
seven times faster than automobile delivery and
addressing services such as what3words to aid in
produce 97 per cent fewer emissions than ground
the navigation of optimal routes for
delivery.
Key insights
Delivery challenges are one of the major hurdles to scaling domestic e-commerce in African markets,
due to long distances between locations, poor road infrastructure and weakly developed addressing
systems, and can be as high as 60 per cent of total product cost in many cases, acting as a major barrier
to e-commerce.
Third party e-commerce delivery solutions providers vary in availability, quality and reliability, and
in-house solutions are labour as well as capital-intensive for MSMEs to manage. Third party delivery
solutions providers need to be less fragmented and more reliable, as well as better integrated with
e-commerce businesses to ease delivery challenges.
While e-commerce platforms simplify delivery for MSMEs, the cost to platforms can be unsustainable
despite economies of scale, leading to a preference for B2B rather than B2C e-commerce.
Solutions to these challenges are emerging. However, investment in road infrastructure is urgently
needed to improve e-commerce to penetrate rural and remote areas and make deliveries more efficient.
158 Swiftlab Limited website. (accessed 21 September 2023)

159 Zipline website. (accessed 21 September 2023)
160 See: Drones: Connecting remote communities across the UK (accessed 20 September 2023)
161 Logistics Update Africa. (2022). Next up – an African decade in e-commerce. (accessed 21 September 2023)
78 / 84
6. Conclusions and
recommendations
According to UNCTAD, digital commerce, if leveraged A significant opportunity for MSMEs to reach
effectively, could add $180 billion to Africa’s GDP consumers via the trade of goods online to improve
by 2025. Improving connectivity and the steady their profitability, create livelihoods and contribute
uptake of mobile phones is spurring e-commerce more effectively to economic development therefore
adoption by MSMEs in the region. The uptake of remains largely untapped. With the advancement
digital payments is steadily increasing, supporting the of AfCFTA, there is an even greater opportunity to
growth of e-commerce, although delivery challenges leverage e-commerce for regional gains.
persist due to poor infrastructure and insufficient
This report has highlighted some of the main barriers
delivery providers.
to scaling e-commerce adoption, including MSMEs’
On the demand side, a growing youth population limited access to capital and digital skills, gaps in
that is more digitally savvy, and a growing middle legislation or implementation of e-commerce related
class in some markets means Africa’s MSMEs have policies and regulations, a persisting preference
a ready market for online retail. But e-commerce for cash payments in the region and lower trust in
remains limited in urban areas and is yet to penetrate digital payments, and poor logistics and delivery
rural areas except for pockets of innovation in agri infrastructure for the reliable and affordable delivery
e-commerce and better last mile penetration in some of online purchases. These in turn impact consumer
markets such as Nigeria. trust in e-commerce, suppressing demand for online
retail.
79 / 84
To overcome these limitations and scale e-commerce for MSMEs in the region, we recommend the following
actions.
MSMEs are Fintechs, microfinance institutions and mobile • Financial sector regulators
under-financed money providers are well-placed to offer credit • Fintechs
products tailored to the needs of MSMEs,
Tailored financial • Mobile money operators
but enabling financial sector regulations are
products are needed needed. • Microfinance institutions
to address the needs
of MSMEs in adopting Investments in established MSMEs in the • Governments
e-commerce. form of equity or revenue sharing will • Private investors
facilitate greater access to finance and drive
• Donors
e-commerce expansion.
Investments in e-commerce start-ups and • Private investors

fintechs that provide microcredit products
to informal businesses can facilitate greater
access to financial services, boost the
resilience of micro-enterprises and generate
greater e-commerce adoption.
MSMEs are Partnerships between governments, • Governments

under-skilled e-commerce platforms and marketplaces, • Donors and development
NGOs, and donors are needed to ensure that partners
MSMEs require upskilling MSME upskilling programmes for e-commerce
in both business and • Non-government
are more targeted, less fragmented and better
e-commerce related organisations (NGOs)
coordinated.
digital skills. • E-commerce services
providers
Investments in a more digitally skilled labour • Public and private sector

force are required so that MSMEs can recruit education providers
the right talent for scaling e-commerce and digital upskilling
operations. programme providers
Connectivity is To encourage e-commerce uptake beyond • Mobile operators

unreliable cities, a commercial case for investments in
3G/4G sites is needed in rural and remote areas
MSMEs need higher by scaling the demand for 3G/4G devices and
quality and more broadband services.162
reliable connectivity,
as do consumers, to The upload and download speeds provided • Governments
consistently adopt online by mobile networks, and therefore the quality
retail. Rural areas need of the network, is linked to the capacity of
better connectivity spectrum available. More and better spectrum
infrastructure for allocation as well as reprioritisation of low-band
e-commerce to expand spectrum is needed to improve internet quality
beyond urban areas. beyond cities for rural e-commerce adoption.163
162 GSMA. (2022). The State of Mobile Internet Connectivity Report 2022.
80 / 84
Mobile phones are The price of handsets needs to be reduced; one • Original equipment
expensive strategy is to improve efficiencies in the supply manufacturers
chain.
Consumers, who primarily
use mobile devices to Handset financing, such as buy now, pay later • Partnerships between
make online purchases, (BNPL) models can facilitate consumer access fintechs, micro-credit
need affordable to devices. providers, and device sellers
smartphones. Micro-
enterprises, which form Local manufacturing of lower cost smart feature • Regional and national
the bulk of African phones offers an opportunity to enable access. technology manufacturers
businesses, also conduct
e-commerce primarily on
mobile handsets. The affordability of mobile data can also be • Governments
improved by balanced fiscal policy and a
reduction in sector-specific taxes on mobile
operators.
E-commerce- Formulation of a unified e-commerce law • Governments

related regulations tackling consumer protection, personal data
are absent, dated, privacy and protection, cybersecurity, electronic
fragmented, or transactions, and intellectual property rights will
poorly implemented provide clarity to MSMEs and build consumer
confidence.
Updated policies
and laws related to Dated regulations need updating, and gaps • Governments
e-commerce are needed in regulations linked to e-commerce need to
to provide MSMEs be addressed so that MSMEs have clarity on
with regulatory clarity regulations linked to online transactions.
and provide adequate
consumer protection for The implementation of regulations, especially • Governments
online transactions as cybersecurity laws and redress mechanisms,
consumer confidence in needs strengthening due to the increasing
online purchases is low. number of cyber-attacks and persistent risk of
financial fraud in the region, which deters the
use of e-commerce.
Educating and guiding MSMEs on the • Government Departments

legislation as well as implementation of relevant of Trade
cybersecurity, consumer protection and data • Private sector e-commerce
privacy laws will improve consumer protection services providers
measures and help build trust in e-commerce.
• NGOs
Uptake of digital Reassessment of taxation on mobile money • Governments

payments for online services and digital transactions to reduce the
sales is low costs of digital payments for consumers and
businesses will encourage uptake.
MSMEs need a shift
from cash on delivery Scaling the adoption of innovative payment • Financial sector innovators
as a prominent payment channels such as digital cards, QR codes and in partnership with central
method to digital NFCs will help make digital payments more banks
payments to improve convenient for merchants and customers.
cash flow, reduce revenue
losses and ease financial Improving interoperability for instant • Payment system providers
management, as well settlements from a range of payment methods, in partnership with
as enable data-driven and supporting the development of fintechs technology providers
business planning. such as payment aggregators and gateways will
facilitate instant and reliable digital payments.
81 / 84
Delivery Investment via public-private partnerships in • Public and private sector

infrastructure needs transportation infrastructure will improve both investors
improving; logistics safety and access as well as reduce delivery
and delivery services costs and times.
are inadequate
Reducing fragmentation, improving the • Third party logistics (3PL)
MSMEs need reliable, reliability and quality of third-party delivery and delivery companies
accessible, and affordable services providers, and facilitating integration in partnership with
logistics and delivery between e-commerce businesses and delivery e-commerce businesses and
services and transport providers will ease delivery challenges. technology companies
infrastructure to deliver
e-commerce purchases Scaling national addressing systems will enable • Governments
to buyers. accurate, timely and more cost-effective • National posts
delivery.
• Public-private partnerships
with support from
technology providers
Annex: Survey methodology

The survey for this research was conducted by D3 was then adjusted to ensure a minimum number of
between 26 February and 4 April 2023. It consisted respondents were interviewed in each stratum of
of 1,591 interviews conducted with micro, small, and the sample. The goal was to interview at least 250
medium enterprises across six countries (Egypt, qualifying businesses in every country across fashion
Ethiopia, Ghana, Kenya, Nigeria, and South Africa). and apparel, electronics, toys and DIY, furniture
Local field teams working in local languages and appliances, food and beverage, personal care,
administered the questionnaire through the Survey agricultural products, and automotive e-commerce
to Go CAPI platform in South Africa and through D3’s industries.
Research Control Solutions (RCS) CAPI platform in all
D3 worked with local field teams to identify qualifying
other locations.
businesses in the target urban and peri-urban zones
To determine the sample strata for this study, that corresponded to the sample allocation for
D3 conducted deep-dive desk research on the their country. The field teams used online searches,
technological, regulatory, and business environments existing contacts from previous studies, and snowball
in each country. Through this process, they sampling methods to identify and recruit participants.
identified national definitions for micro, small, and The teams then scheduled and conducted interviews
medium businesses, and any available statistics on with a representative of each business selected to
e-commerce use by sector. D3 used that information participate. The data was then quality checked and
to designate a sample allocation in each of the six analysed.
countries in the study. If necessary, that allocation
82 / 84
Acknowledgements
We would like to thank the following individuals for their significant contribution to this research via
participation in our knowledge-sharing roundtable on e-commerce in Africa at MWC Barcelona 2023 and
further contributions.
Alicia Levine Jon Ridley Michael Kende

Chipper Cash 4R Digital
Mr. John Omo
Caine Wanjau Josh Raine African Telecoms Union
Twiga Foods Sokowatch (Wasoko)
Sarah Corley
Chris Edwards Juliet Anammah The Alliance of Digital Finance
UK Foreign, Commonwealth Jumia Associations
and Development Office
Karolin Erdmann Stephen Ozoigbo
James Howe Deutsche Gesellschaft für Arm
International Trade Centre Internationale Zusammenarbeit
(GIZ) - German Corporation for Mr Yyes Iradukinda
Jamila Saidi International Cooperation Rwanda Ministry of ICT and
UK Department for Business Innovation
and Trade
We would also like to thank the below individuals and organisations, which include government ministries
and regulators, e-commerce platforms, fintechs and 3PL providers as well as development agencies and
non-government organisations, for their valuable inputs into this research.
• AfricaNenda • E-commerce Forum of Africa • Shemach

• Africa118 • Eze • Shikakope
• African Trade Policy Centre • Egyptian Fintech Association • Sky Garden
• Amr Hashem • Future Systems Consulting • So Just Shop
• Asaba Business Community • iHuzo • Strive Community
• Association Digital Frontiers • Kenzz • Tanzanian Ministry of Trade
Senegal
• Kifiya Financial Technologies • The Central Bank of Kenya
• Association of Ethiopian Digital
• Lioness of Africa • The Lifestyle Unit
Finance Practitioners
• Murukali • United National Conference on
• BankservAfrica
Trade and Development
• PAISHA
• BLNK
• Universal Postal Union
• Professor Olayinka David-West
• Cawee
• Vuleka
• Rwanda Digital Business Institute
• Consumer Advocacy and
• Wave Mobile Money
Empowerment Foundation • Rwanda Ministry of ICT and
Innovation • William Ochola
• DFS Lab
• Sendy • Universal Postal Union
• Digital Finance Association
Tanzania • Shega
83 / 84
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One Angel Lane
London, U.K.
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United Kingdom
Tel: +44 (0)20 7356 0600

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1. Evolution of e-commerce in Africa 12

2. Objectives and methodology 14

3. The e-commerce landscape in Africa 17

5. Building blocks for e-commerce growth 45

6. Conclusions and recommendations 79

Annex: Survey methodology 82

Ability of two different payment E-commerce The sale or purchase of goods

Digital skills/ Skills needed to use digital devices,

Digitalisation Enabling or improving social,

Multilateral Ability of payment instruments

Payment A technology solution that

7 Statista. (2023). Number of users of e-commerce in Africa (2017-2027).

• Implementation of legislation: Weak

adopting e-commerce. • Low uptake of digital payments: Cash on delivery

Challenge Action Actor

MSMEs are Fintechs, microfinance institutions and • Financial sector regulators

Investments in e-commerce start-ups and • Private investors

MSMEs are Partnerships between governments, • Governments

Investments in a more digitally skilled labour • Public and private sector

Connectivity is To encourage e-commerce uptake beyond • Mobile operators

8 GSMA. (2022). The State of Mobile Internet Connectivity Report 2022.

The affordability of mobile data can also be • Governments

E-commerce- Formulation of a unified e-commerce law • Governments

Educating and guiding MSMEs on the • Government Departments

Uptake of digital Reassessment of taxation on mobile money • Governments

Delivery Investment via public-private partnerships in • Public and private sector

Despite their relative importance to the economy, Figure 1

10 IFC. (2021). COVID-19 and Women-Led MSMEs in sub-Saharan Africa.

Specifically, the report aims to:

• Identify the enablers and barriers to e-commerce

Is this business 74% 26% <1% <1%

66% 34% 0% 0% 58% 41% 1% 0%

58% 41% <1% <1% 60% 20% 0% 0%

South Africa Kenya

82% 18% 0% 0% 96% 4% 0% 0%

Yes No Refused Don’t know

Access to new Increase Make doing

55% 53% 49%

The data also shows that MSMEs in all markets saw an

99% 97% 96%

Egypt Ethiopia Ghana Kenya Nigeria South Africa

Base: All MSMEs surveyed

Egypt Ethiopia Ghana Kenya Nigeria South Africa

Base: All MSMEs surveyed

2015 2016 2017 2018 2019 2020 2021 2022

Source: Statista (2023)

Source: Briter Bridges (2023)26

20 See Jumia group website.

Source: Briter Bridges (2023)27

The top funded markets in the region in 2022 were

Of the top funded markets, e-commerce funding

Despite the growing investment in e-commerce,

24% 24% 25%

Egypt Ethiopia Ghana Kenya Nigeria South Africa

Social Media Social Media Social Media All 3 Channels Other

Base: All MSMEs surveyed

Micro Small Medium