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Africa: Slow but Steady Rise of E-Commerce and Fintech in Key Countries – Insights From Kenya and Nigeria

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London — Data gathered by Kasi Insights for its Brand Intelligence Tracker from 2021 offers a glimpse into how Covid-19 affected the take-up of e-commerce in Kenya and Fintech use in Nigeria. These are both leading countries in terms of tech take-up and Russell Southwood looks at what the data is saying.

According to Kasi Insights, e-commerce is a rising market in Kenya that warrants significant attention as the revenue for this year (2022) is expected to reach $3,562 million. Current user penetration is expected to be around 40.3%, but by 2025 this number is set to grow to 53.6%.

It’s important to understand what is meant by e-commerce in this context: it can be anything from a middle class Kenya with a credit card ordering online with Jumia to a less well-off Kenya using his or her mobile to connect with a seller on Facebook Marketplace.

In June 2021, consumers were asked what was their favorite or most used platform for e-commerce. Jumia came out on top of the pile. OLX is owned by Nasper. The figure for Facebook Marketplace seems small alongside the others but maybe it’s just that it’s not the easiest or most trusted way to buy things:

Jumia: 47%

Kilimall: 11%

OLX: 7%

Alibaba: 6%

FB Marketplace: 4%

Following mobile money services, 56% of the respondents reported that online purchases are the second most carried out activity on their smartphones. Over half of the respondents use their smartphones for online shopping as opposed to instant messaging (49%) and entertainment (42%). This was the case across genders and age groups; with only a 3% difference being recorded for online purchases between males and females, while the top 3 activities remained the same across the board amongst different age groups (Baby boomers, Gen X, etc.).

Respondents were clear in showing the importance of quality and pricing when shopping online. 53% of respondents ranked quality as their top consideration when purchasing online, while 45% ranked price as their second most important consideration.

As expected, shopping events (i.e. sales), meet the best of both worlds for Kenyans. Good quality items being sold for cheaper prices hit the spot for our respondents as they eagerly wait for Black Friday sales. 58% have shopped during Black Friday sales and generally searched for clothing items however, noticeable differences follow between genders, with more males searching for electronic items and females for beauty care/cosmetics.

In Nigeria, Kasi Insights looked at the take-up of Fintech services, most of which are delivered by mobile. On the supply side, almost all banks (21) now have some kind of Fintech offer, even if it’s only accessing your bank account online. On the start-up side, the investor interest in Fintech created 114 Fintech start-ups.

However, supply does not always translate into demand. A March survey produced information on awareness and perceptions of these products and services. 47% of respondents had seen or heard about them but only 31% were currently using them.

Not surprisingly, the majority of the users are in the higher income categories. Unlike M-Pesa in Kenya, Fintech services in Nigeria are not yet convincingly a story of financial inclusion for lower income customer. Of the respondents who currently use Fintech products or services, 56% have a combined monthly household income between 501 USD to 900 USD, followed by 27% between 901 USD to 1,800 USD. From these respondents, around half (42%) are salaried employees while a third (33%) are self-employed or contractors. This demonstrates that the current users of Fintech services are from the upper/middle class and economically active individuals.

For the services offered by traditional banks, they were used by 57% of respondents reflecting the higher income levels found in the sample. However, there were another 33% who were aware of the products and services but were not yet using them. Of the respondents who currently use traditional banks’ products or services, 36% have a combined monthly household income between 501 USD to 900 USD, followed by 30% with household income below 500 USD. From these respondents, more than half (56%) are salaried employees and 16% are self-employed or contractors.

In Nigeria, the field of Fintech start-ups is a crowded one and they have yet to demonstrate two things: a) that they have yet made much of a dent in the traditional bank or financial services customer base; or b) where have made arguments that they deliver financial inclusion that they do so.

See: www.kasiinsight.com

Ericsson corruption redux – The cupboard has more skeletons

According to Telecoms.com, “Ericsson has continued to receive detailed media inquiries from Swedish and international news outlets,” opened the announcement. “Their interest pertains to information detailed in a 2019 internal investigation by the company, on conduct in Iraq.” The investigation focused on activities between 2011-2019, so they include some of the time current CEO Börje Ekholm was in charge.

The investigation uncovered a catalogue or dodgy-dealing, back-handers and ‘identified evidence of corruption-related misconduct’. They included: making a monetary donation without a clear beneficiary; paying a supplier for work without a defined scope and documentation; using suppliers to make cash payments; funding inappropriate travel and expenses; and improper use of sales agents and consultants.

“The investigating team also identified payments to intermediaries and the use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes,” said the announcement. “Investigators could not determine the ultimate recipients of these payments. Payment schemes and cash transactions that potentially created the risk of money laundering were also identified.”

Readers of Balancing Act will remember that in September 2019 Ercisson agreed to pay a fine for various corrupt transactions to the US Securities and Exchange Commission. (See Djibouti Telecom corruption scandal revealed: who paid what to whom and how big the bribe was https://www.balancingact-africa.com/news/telecoms-en/46516/djibouti-telecom-corruption-scandal-revealed-who-paid-what-to-whom-and-how-big-the-bribe-was )

Want to get a free copy of the second edition of the African Interconnection report?

Readers who would like to see a free copy of the second edition of the Africa Interconnection report (published later this year) that will provide an updated landscape of data centre and cloud services provision in Sub-Saharan Africa should email me on [email protected] and put Free Report in the title.

In Brief

Uganda: Pan-African fibre operator SEACOM is to acquire selected infrastructure assets from the defunct Ugandan operator Africell. The deal includes 760km of fibre within capital city Kampala and surrounding towns and a 250 square metre data centre, and office space. SEACOM has been providing corporate solutions in Uganda since 2018.

Kenya: Airtel Kenya, the local unit of Airtel Africa has reportedly reached an out of court settlement with the Communications Authority of Kenya (CA) related to a long-running dispute about its operating licence. Business Daily writes that under the settlement pact terms, Airtel Kenya will pay KES2 billion (USD17.5 million) to the telecoms regulator for the renewal of its licence over the next two years, bringing an end to a seven-year dispute.

Orange and its subsidiary Sonatel will partner with SES to deploy and manage the first O3b mPOWER gateway in Africa. The three companies announced that the gateway for O3b mPOWER, SES’s next-generation medium earth orbit (MEO) communications system, will be located at the Sonatel teleport in the Senegalese territory of Gandoul among other local satellites antennas.

Nigeria: Healthtech startup Remedial Health has raised $1 million in pre-seed funding to digitize neighbourhood pharmacies across Africa starting with Nigeria… Casava, Nigeria’s digital insurance company has secured $4 million in pre-seed funding to provide affordable and accessible insurance products for millions of Nigerians.