Why E-Commerce May Take Off In Africa
- Demographics are supportive of economic growth.
- Consumers are gaining access to the internet via smartphone.
- Challenges may also present opportunities.
- Naspers and Rocket Internet offer direct access to e-commerce in Africa.
E-commerce has become a way of life for billions of individuals in both developed and emerging economies. In the United States, the rise of online shopping has resulted in the retrenchment of many physical retail locations. In many Asian countries like China, online shopping has leapfrogged over an underbuilt physical retail presence to become a principal way that many shop.
May the next wave of growth in e-commerce come from Africa? There are reasons to believe so. We've highlighted these in previous notes. However, a recent article in PYMNTS highlights some of the same key reasons for optimism in Africa's potential.
Investors looking for access to the potential growth in e-commerce on the African continent can invest in companies such as Naspers (OTCPK:NPSNY), which is a large internet and media company based in South Africa and which also holds major stakes in some of Africa's leading online retail platforms. They can also invest in Rocket Internet (OTC:RCKZF) which holds a stake in leading online platform Jumia Group.
Potentially Favorable Demographics
The African continent is home to over 1.3 billion people, according to the article, which went onto note that 725 million of Africa's population own mobile devices. The article went onto note that population growth in Africa tops 2% and around 50% of the population is under 20 years old. While not at the same levels as in Western countries, people are earning money and have disposable income. A young, tech-savvy population with spending power is potentially favorable for e-commerce.
The Leapfrog Effect
In more developed economies, individuals are transitioning from laptops to mobile devices. At the same time, the retail environment is transitioning from a brick-and-mortar structure to one that is deriving more of its sales online.
Original Article: https://seekingalpha.com/article/4250809-e-commerce-may-take-africa