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Amazon will Discover e-Commerce in Africa not a Tea Party

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By Tarila Ben-White

Feelers indicate that Amazon may now be ready to explore what the continent has to offer on the e-commerce front but the nous and experience of indigenous giants such as Konga will come in handy if it is not to stumble heavily in Africa’s biggest market.

It is no longer news that global e-commerce giant, Amazon is all but set to extend its tentacles to Africa.

Earlier this month, a South African court ordered a halt on the construction of Amazon’s new African headquarters, a massive 70,000 square metres (17.3 acres) structure. The ruling came after some descendants of the country’s earliest inhabitants said the land it would be built on was sacred.

As reported by Reuters, the Western Cape division of the High Court interdicted the project developer from continuing with works at the Cape Town site until there had been meaningful engagement and consultation with affected indigenous peoples. Among these are the Khoi and the San, two of the earliest inhabitants of South Africa, some of whose descendants had objected to the River Club development, arguing that it lies at the confluence of two rivers considered sacred, the Black and Liesbeek Rivers.

It is important to state, at this juncture, that Amazon has retained a presence in Africa for years. The e-commerce giant has several employees on its payroll working in data hubs located across Cape Town. Notably, the origin of Amazon’s current expansion into Africa began in 2004 when it set up a development centre in Cape Town. Incidentally, that centre eventually went on to build Amazon’s first cloud platform, known as the Amazon Elastic Compute Cloud which heralded its hugely successful cloud computing arm – Amazon Web Services (AWS). Today, AWS is responsible for the lion share of Amazon’s global operating income.

The firm’s adventure in Africa is thus intrinsically tied to its long-standing relationship with the South African city of Cape Town, the oldest and second largest city in that country after Johannesburg. As reported by fDi Intelligence, Amazon, in 2000, had gone ahead with plans to hire 3000 customer support staff in Cape Town. In addition, AWS, its cloud business, had plumped for Cape Town to host its first cloud region in Africa. Furthermore, nine of Amazon’s 19 projects in Africa are located in Cape Town, with five others in Johannesburg. The rest are split between Kenya, Morocco and Egypt.

The foregoing shows Amazon has established its cloud business in parts of the continent. But is it now ready to join the e-commerce race in Africa?

Although still a growing industry, the e-commerce space in Africa has begun to capture the attention and imagination of international investors. Research from Statista indicates that revenue generated via e-commerce in Africa was estimated to be around 27.97 billion U.S dollars in 2020, representing an increase of over $6bn since 2019. Correspondingly, e-commerce revenue in Africa is expected to keep up an upward curve, with estimates projecting the entire e-commerce sector in Africa to reach a value of over $46.1 billion by 2025.

Historically, Amazon is reputed to consider significant expansion into a region only when it becomes commercially viable for its line of business. But despite the fact that the promise of Africa still lies within the realms of potential rather than actuality, e-commerce watchers and analysts are of the view that a budding $46bn market in the next three years or thereabouts is more than enough justification for Amazon to throw its hat into the e-commerce ring.

Stanley Ugboaja, a Ph.D. student and e-commerce enthusiast, captures the prevailing mindset succinctly.

‘‘Africa’s population dynamics naturally makes it a frontier for e-commerce to explode in the next few years. The continent is home to the world’s youngest and second largest population. Digital literacy and numeracy is also on the rise here, same as internet penetration. Many young Africans are gaining useful exposure, either from flocking abroad for further studies or even from working remotely here for foreign firms or multinationals. When you throw in the rise in the number of fintech platforms further expanding the net of the unbanked and under-banked on the continent, you can see that the trends all tilt towards favourable conditions for e-commerce or online shopping to grow.’’

So far, on the e-commerce front, Amazon is only present in a solitary African country. That country is Egypt where Souq, an Amazon subsidiary acquired in 2017 for $580m, operates. Souq, initially founded in Dubai, UAE in 2005, was the largest e-commerce platform in the Arab world. With the acquisition by Amazon, the Egyptian site turned into Amazon.eg on September 1, 2021, officially marking the end of Souq.com.

But if, as anticipated, Amazon’s African adventure will now accommodate playing in the continent’s major e-commerce markets, Nigeria will be uppermost in its reckoning.

In addition to being Africa’s most populous nation, Nigeria remains the leading African economy in terms of nominal GDP in 2021, making up 18.4 per cent of the continent’s $2.7 trillion economy. According to the International Centre for Investigative Reporting (ICIR), Nigeria’s GDP, which measures how much a country produces in financial terms within a year, grew by 11.89 per cent from 2020 to 2021. Likewise, data from the International Monetary Fund (IMF) revealed that Nigeria’s GDP went from $429.423 billion in 2020 to $480.482 billion in 2021, making the country the highest contributor to Africa’s economic output/ GDP and the 29th in the world.

However, cutting it in Nigeria, Africa’s biggest market, will test the might and resilience of Amazon.

Currently dominated by Konga and Jumia, the Nigerian e-commerce market is a challenging ecosystem that has signaled the death knell of many promising players. Although Amazon – especially considering its roaring success in other advanced markets – cannot be placed in the same bracket as some of the startups that have quietly exited the market after finding the Nigerian e-commerce space a mountain too hard to climb, it is fitting to call to mind the instructive words of a globally renowned tech leader and Africa Chair for IEEE World Internet of Things (WIoT), Chris Uwaje.

Uwaje, who is widely hailed as the Oracle of the Nigerian IT Industry, had pinpointed the challenge in cracking the Nigerian e-commerce market as one that lies heavily in the approach or business strategy adopted by most players, many of whom fail to situate foreign business models, ideas and strategies within the culture of the people and Nigeria’s existential realities.

“Nigeria remains a fertile business environment, especially for online-focused ventures such as e-commerce companies. It is also a country with peculiar challenges and a very strong traditional approach to retail which requires a deep sense of local know-how and understanding by players. This is one of the biggest hurdles faced by e-commerce start-ups here. Many e-commerce ventures run with foreign concepts and strategies more suited to foreign climes, making it harder for them to survive the difficult terrain that is the Nigerian business space.”

But beyond the foregoing, the challenge of making a success out of e-commerce in Nigeria is one that is fraught with huge infrastructural and institutional bottlenecks.

The combination of a frustratingly underdeveloped public transport infrastructure network, absence of a proper addressing system across cities, the still-largely traditional shopping predilection of the average Nigerian and the mega-hurdle of logistics, among others, are not issues that having deep pockets alone or a popular name will solve. During the height of the COVID-19 enforced lockdown, the activities of overzealous state actors saw delivery vans conveying essential items to Nigerians delayed needlessly for days on end, or even sent back in some cases – a debacle which almost eroded the gains that accrued from the increased dependence by many Nigerians on e-commerce for safe, contactless shipping during the pandemic and which epitomised the sheer scale of some of the institutional obstacles e-commerce companies may encounter in Nigeria.

Konga, acquired by the Zinox Group from erstwhile majority owners, Naspers and AB Kinnevik, and which has become the first e-commerce company to hit profitability on the continent, may represent a fitting playbook for Amazon to study.

Considering its technology-driven status (a factor that would resonate with Amazon); a revolutionary composite fusion of online and offline which it pioneered and subsequently adopted by other players (including Amazon); the way and manner it has resolved the thorny obstacle of logistics; its massive physical assets strategically located across Nigeria (warehousing, delivery, nationwide physical stores/pick-up locations); penchant for customer service and the confidence it enjoys in the minds of shoppers, among others, Konga stands apart. However, it is in the magic of how it found a way to break the cycle of unprofitability which continues to dog other e-commerce players in Nigeria and Africa – transitioning from a business that once posted monthly losses of over N400m to emerging the first profitable African e-commerce venture – that Amazon would most admire Konga.

Most importantly, under its new owners, the current management of Konga boasts that keen understanding of successfully navigating the difficult terrain that Africa’s biggest market represents. It is a strength which has come to weigh heavily in its advantage, making the Konga template arguably the one to beat. Backed by entrepreneurs with over three decades of consistent success in the Sub-Saharan African technology space, Konga has not only thrived where others have failed or are struggling, but the business is now set, as feelers indicate, for a run across other African markets and a much-anticipated listing on major global exchanges, with a glut of external investors waiting.

Succeeding in the continent’s biggest market, even for a big name like Amazon, may mean seriously considering a partnership with Konga or at least, borrowing a leaf from its strategies.

Amazon would also have to decide if some of the unethical practices it has been accused of would unearth more dire consequences if they were exported to Africa. The e-commerce giant was recently accused of anti-competitive behavior by preventing third-party sellers from offering lower prices for their products on other platforms, including their own websites. The foregoing formed the crux of an antitrust lawsuit filed against Amazon by District of Columbia Attorney General Karl Racine, which was thrown out in court last Friday, according to a report by The New York Times. However, the suit was thrown out partly because Amazon faces a nearly identical lawsuit, in this case, a class action complaint that claims the company pressures sellers into selling products for an equal or lower price than what they offer elsewhere.

Also staring it in the face are allegations of tax avoidance which may land the e-commerce behemoth in hot waters here in Nigeria and elsewhere in Africa. Research reveals that Amazon’s tax behaviours have been investigated in China, Germany, Poland, South Korea, France, Japan, Ireland, Singapore, Luxembourg, Italy, Spain, United Kingdom, multiple states in the United States, and Portugal. According to a report released by Fair Tax Mark in 2019, Amazon is the best actor of tax avoidance, having paid a 12% effective tax rate between 2010-2018, in contrast with 35% corporate tax rate in the US during the same period. Amazon countered that it had an 24% effective tax rate during the same period.

Africa’s budding e-commerce lustre may represent an allure too difficult for Amazon to ignore. Nevertheless, it would discover that this ecosystem will tax its wits, determination, and sheer ability to adapt to their very limits.

But in Konga, Amazon can learn from a proven success story.

 

Tarila Ben-White (Ph.D.), an e-commerce researcher, writes from Bayelsa

 

 

 


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Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University. Dear Reader, Your support matters. But we believe that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. That is why, we have devoted our energy to independent reportage of technology and finance and how they affect lives. Our incisive and analytical view of how technology news affects the daily life help individuals and organizations make up their minds. Quality journalism costs money. Today, we're asking that you support us to do more. Kindly support our effort to deliver technology and finance journalism to everyone in the world. Donate as little as N1,000. Bank transfers can be made to: UBA Plc 1017156876 Communication Week Media Ltd

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Oriental News 2024 Summit: Muda Yusuf to Lead Discussion on Nigeria’s Path to Green Economy Transition 

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Dr. Muda Yusuf, Chief Executive Officer, CEO, of the Center for The Promotion of Private Enterprise, CPPE, would drive discussion on Nigeria’s policy direction to establishing pathway towards economic recovery in line with global green economy initiative.

Muda Yusuf

Muda Yusuf

Yusuf, a renowned economist and former Director General, DG, of the Lagos Chamber of Commerce and Industry, LCCI, is the chairman of the 3rd National Conference being put together by Oriental News Nigeria, coming up on July 25th, 2024, at Radisson Blue GRA Ikeja, Lagos by 9am.

In recent years, economies all around the world have been experiencing a protracted slowdown driven by structural, global, and cyclical factors. Economic strategies that have been implemented to tackle recession and achieve rapid economic development have endangered sustainable growth by contributing to environmental degradation, global warming, and other negative repercussions.

Changing the paradigm to a green economy will boost natural capital stocks, safeguard the environment, and ensure social justice by providing practical tools and approaches to achieve sustainable growth while reducing environmental risks and ecological scarcities.

A transition to a green economy, however, faces challenges such as a lack of an appropriate policy framework, inadequate capital expenditure, varying levels of development, and resource endowments.

Therefore, for green sustainable development, newer business models, strategic changes and innovation in the use of resources, responsible and cleaner business practices, and green technologies are needed.

Above issues will form part of discussion to be spearheaded by Yusuf, who will further highlight challenges and how to accelerate the process.

Also, the Ag. Managing Director and Chief Executive Officer, MD/CEO of the Rural Electrification Agency, REA, Abba Abubakar Aliyu, will be addressing key energy professionals and other government officials on the Agency’s current drive towards delivering clean and reliable electricity across Nigeria.

Aliyu, who has confirmed his participation at the conference will take audience through World Bank approved Nigeria Distributed Access through Renewable Energy Scale-up (DARES) project

At the event also, the Director General, D-G of the Securities and Exchange Commission, SEC, Dr. Emomotimi Agama, would be x-raying key policies and options available in the country’s drive to strengthen her national economy while aligning with global push towards promoting green economy.

All of these will be the high point at the 3rd National Conference.

Oriental News Nigeria a leading digital media platform would gather key policy makers, Government and non-Governmental Organisations, industry experts in Nigeria’s financial sector to the conference which revolves around Nigeria’s Green Economy Initiative.

The theme of the 2024 Conference: ” Green Economy, Sustainable Growth and Infrastructure Transformation” considers various options available for Nigeria to sustain economic development and growth.

Sub-themes of the conference include, Green Finance, marketing, and supply chain, Strategies and Policies for a green economy, Renewable energy and Ecosystem for a green economy and Digital economy Entrepreneurship.

Agama, who has confirmed his attendance, expressed the belief that opportunities in terms of green economy are linked to the enormous possibilities for sustainable agriculture, renewable energy, ecotourism, and coastal development.

Also, other stakeholders have highlighted that Nigeria’s commitment to harnessing its natural resource potential could make the country a pioneer in promoting green economy development, hence the choice of the theme of the conference.

The conference is segmented into two main broad areas, with the opening programme to address the key thematic topic through the guest speakers intervention and chairmans remarks with comments from participants which centers around the conference theme.

The second segment is round-table discussion through wider engagement by select professionals to discuss the main theme and sub-themes of the conference.

The conference will draw together and engage researchers, eminent practitioners, and policymakers from across the country who will form part of the plenary (Round-Table) session that will deliberate on the latest findings on practices and policies for a green economy and sustainable growth through strategic change and identify priorities for action by stakeholders to pursue the most promising policies and practices.

The conference will also serve as a venue where academic peers may exchange information, share experiences, collaborate, and develop management answers to pressing business issues.


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5 Core Business Areas where AI can Drive Revenue

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By Kehinde Ogundare, Country Manager, Zoho Nigeria.

According to the United Nations, artificial intelligence (AI) has the potential to contribute up to $15.7 trillion to the global economy by 2030 – of which $1.2 trillion could be generated by Africa. With the potential to unlock significant growth and development in key industries across the continent, AI is fundamentally changing how businesses operate, driving innovation, improving efficiencies, and transforming lives.

Kehinde Ogundare, Country Manager, Zoho Nigeria

Businesses of all sizes that have already invested in AI are reaping its benefits, from increasing business productivity and agility to improving customer experience and decision-making with McKinsey noting that AI leaders are outperforming their industry peers by a factor of 3.4.

But if businesses are to make the most of the opportunities offered by AI, it’s also important that it be deployed in the areas where it will have the greatest impact. Here are some areas and subsequent examples of how businesses can use AI within those areas to drive revenue.

1. Finance and billing

One of the most obvious places AI can help drive revenue in a business is in finances and billing. Having an accurate, up-to-date overview of finances can help an organisation know when to invest in growth, for example. And if a business wants a steady revenue flow, it must send out bills, invoices, and payment reminders on time.

Here, AI can help in several ways. When it comes to expense bills, for example, an AI tool with built-in image recognition would allow a business to scan its bills with the system, then auto-generate the amount, place, date, time, and category of expense, helping save loads of time and effort. For billing, meanwhile, AI can greatly speed up the onboarding process for new clients by automating large parts of it. AI-powered tools can also extract relevant information from invoices, including customer details and product descriptions, and automatically populate billing systems, creating further efficiency.

2. Lead prioritisation

Another key area is new business leads. More specifically, AI can help assess the calibre of leads that the sales team is bringing in. After all, two or three great leads can be more beneficial than 10 weak ones.

Using a points-based system, AI can help score leads according to their quality. That allows the sales team to better evaluate which leads are worth pursuing. In turn, that should allow them to make more sales at a more meaningful level.

3. Improved customer experience

Customer experience (CX), rather than product or price differences, has been the major differentiator for businesses for some time now. Customers are willing to spend more, are more likely to stay loyal, and recommend a business to friends and family if they have a good experience with it.

Businesses, therefore, need to pull out more stops than ever to ensure that their customer experience really stands out. Here again, AI can be helpful. Take sentiment analysis, for example. AI can help identify the most disgruntled customers, allowing customer success teams to focus on their needs and turn their experience of the business around.

4. Better targeted marketing

The most effective marketing today is highly personalised and targeted. AI can make it significantly easier to achieve the level of targeted personalisation necessary for marketing success today. Once integrated with a company’s data, an AI marketing tool can create and hone personalised marketing content based on each individual customer’s CRM data.

5. Enhanced employee productivity

There is a strong correlation between employee productivity and revenue. Employee productivity is in turn driven by positive employee experiences. The more productive your employees are, the higher your revenues and profit margins will be. AI can help improve both productivity and the overall employee experience by automating repetitive tasks, allowing employees to focus on the kind of meaningful work that drives increased revenues.

Embrace AI, but use the right providers

While AI can add immense value when it comes to driving revenue within organisations, it’s also critical that businesses know what they’re getting into when embracing AI. That means doing comprehensive background research and ensuring that they choose tools that meet their needs and adhere to privacy best practices.


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NBC Grants C54News Nod to Operate in Nigeria

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National Broadcast Commission (NBC) has granted approval to Future One Africa Television (FOA TV), a pan-African television station, to begin operations.

NBC Grants C54News Nod to Operate in Nigeria

This followed a significant investment of $7 million by Idris-Etanami Abiodun Usman, network’s CEO, to establish a state-of-the-art broadcasting facility.

With NBC’s approval, C54News is now cleared to launch its innovative programming, showcasing the diversity and richness of African cultures, talents, and experiences.

The network promises to deliver high-quality content, including news, documentaries, entertainment shows, and more, catering to a diverse audience across the continent.

FOA TV’s cutting-edge technology and creative approach aim to redefine the television landscape in Africa, providing a platform for African voices, stories, and perspectives to shine.

The network has assembled a team of experienced professionals, including renowned journalists, producers, and presenters, to drive its vision forward.

As C54News prepares to take over the airwaves, audiences can expect a fresh and exciting broadcasting experience that reflects the complexity and beauty of Africa.


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