Africa is known as a continent with rich natural resources but it was known as a poor continent too. The recent growth of economic includes expansion in commodities sales, manufacturing, and also services. There are several causes why Africa is considered poor continents like the colonization of Europe, instability economic and social situation, and many others.
However, Africa now has changed into a promising continent to invest in. There are many foreign investors putting their investments in Africa. Hence, Africa is named to be the world economic engine in the future. The economy in Africa was actually diverse, caused by extensive trade routes. In nominal GDP criteria, Nigeria has named the richest country with rapid growth of economic in Africa. Due to their natural resources contribute to the rapid economic growth in the country. Nevertheless, some countries such as Burundi, Congo, and Zimbabwe the growth of economic are somewhat miserable.
These days, there are many foreign investors are getting interested in investing in the continent. The countries in the continent can maintain the growth of economic regardless of recent large-scale recession of the economy globally. The investment return in Africa is considered as the highest, particularly in the developing world.
Economic development in Africa is caused by trade growth. Trading partners commonly come from Asian countries like India, China, Malaysia, Indonesia, and Thailand. Those countries are the most important trade partners for Africa.
Through the expanding trade development, splendid possessions availability, skills in the English language, education, and literacy improvement is anticipated to perform better economic is like straw in the wind. The business activities will also be boosted in order to reduce reliance on raw materials and imported products in the continent.
These days, entrepreneurship is the key to rapid economic development. To help advance innovation, the government should make sure the regulatory system with a friendly business environment. Education, furthermore, also holds an important role especially in raising economic development as the education level will influence people to be wiser in buying and doing business.
Tariff barrier is actually the main obstacle to deal with as it makes the process of trading predominantly complicated. Because of that, the price of imported goods is rising along with the cost of the transaction. The reduction of tariffs is needed whenever countries long to grow economic prospects. By and large, it will gain the economy through some likely projects which can affect the regional economy.
African consumers are particularly brand royal and savvy. Entrepreneurial and local vendors are the key to the chain of distribution. Simultaneously, consumer spending recently takes place in the marketplace, informal sectors and also e-commerce. Foreign investors even pay much attention to the frontier market as it is used to consider some important factors such as political system stability, tax favorability, key market proximity, finance capital and human access, and many more. Besides, the economy then could be more stable as well as secure consumer responses. Furthermore, some investors and business leaders are investing across the continents uncompromisingly which signs buoyancy in the future African consumerism growth.
World Bank forecast the economic growths in some countries have increased greatly. There are several reasons why the economy has grown so fast. As you know, Africa is known for its poor countries. Middle-class expansion, friendly market business, and also rapid urbanization have changed the business trends in the region.
Countries’ government across Africa has realized that the small and medium sector of business can be used as a source of job creation and economic growth. Some major countries even make everything easier for the entrepreneur to run a business. Some digital tools are also utilized these days. Now people in Africa familiarize themselves with some digital tools available in the marketplace where they can operate some streamline or online processes like opening a bank account for business, tax submission, registering a brand new business and etc.
Digital tools used to be very expensive in Africa especially for small businesses. On the contrary, people are easily able to access the internet to gain their business. Things like data entry, email marketing, customer service, and accounting make everything is easy. Nowadays, people use their phones as their gateway to information and knowledge from posting something on social media, complaining about things, buying online tickets, writing reviews, and many others. There are huge populations that make use of the internet in Africa. This is a business trend that should be utilized.
Africa is known for its large quantity of resources in both mineral resources and agriculture. Africa has struggled from transforming these resources into persistent economic development. New investments and innovations change and create an exciting occasion for business. Nigeria is considered the largest marketplace in the continent as it has a large population. Foreign investment is also growing rapidly mainly in resources sectors. The country is known for its power deficiency makes it a great opportunity for business.
Skeptical about online retail
On the other hand, internet business reality in Africa diverges from what is accessible in the western world. The optimism clouds some noticeable challenges in the continent to deal with. That’s why internet commerce is not profitable.
Many Africans are still skeptical about buying things online. They prefer buying things offline which is easy for them to choose items cautiously. On the contrary, people in Africa are enjoying the growth of the internet as they can access the web easily. With the high cost of bandwidth, internet business in Africa is challenging.
Since internet business needs delivery through the postal system, most countries in Africa only utilizing motorbike to deliver things. Of course, it will increase the cost that affects the price and selling. Literally, markets are everywhere with low prices offered and e-commerce companies have to overcome this to keep the company exists. Since many Africans cannot read and write, it is difficult to grow internet business in Africa. Low literacy capability affects the e-commerce business as everything displayed with texts and images.
Every marketplace in the world has its challenges to grow. Well challenges as a part of how marketing analytics should work, and it creates better and better strength each time. The geographical condition shall also bring impacts to marketplaces’ challenges. Southeast Asia, for instance, most challenges come to shipping, due to strict regulations in most of the countries or facts that Southeast Asia country comes in archipelagos.
But now let’s talk about Africa. What are the challenges marketplaces in Africa‘s face?
Then, what are the impacts of the challenges? What should you prepare if you were in the marketplaces’ CEO’s shoe?
Example of Marketplaces in Africa
In Africa, few local marketplaces are pretty famous and working well. One of the reasons is that they sell authentic locals’ masterpiece hand-made accessories. Africa’s hand-made woven or other authentic creations are pretty known around the world.
Those marketplaces are Jumia which operates around multiple countries in Africa, next is Kilimall which operates in Uganda, Nigeria, and also Kenya, then Konga which operates in Kenya.
The Examples of Challenges the Marketplaces Are Facing
There are so many examples of challenges the marketplaces should face. Some of them due to logistical problems. One challenge that has happened the most is the accountability of PayPal and other worldwide networks. A fact that worldwide is purchasing Africa’s authentic hand-made products but not a lot of their countries’ commercial banks are connected to Africans’. To handle that challenge, most marketplaces in Africa allow PayPal as their payment gate.
The next challenge for marketplaces in Africa includes the existence of eBay and Alibaba. Those two gigantic marketplaces have a huge power of the market in Africa among the Africans themselves. And because they are bigger, guarantee more items and products, and also likely have better distribution capabilities, the other marketplaces (such as Jumia, Kilimall, Konga, and others) should do regular development and evolve.
Talking about the better distribution of eBay and Alibaba
the next challenge of African marketplaces is the effectiveness of the distribution. As distribution is a crucial part of order-fulfillment, it is very crucial for marketplaces to make sure their distribution to the customers does not take too much time for the products to arrive.
Still talking about distribution and payment, the next challenge is cash-on-delivery payment. Impacted by the rush distribution across Africa, and also the marketplace should consider the additional costs for the cash-on-delivery payment services.
The next challenge is the high rate of return and refund possibilities in Africa. In some marketplaces even have more than 10.0% of refund and return demand from the customers for pretty various reasons. This is likely the last more crucial or happens in Africa. Meanwhile, the other challenges that were not mentioned before are pretty occasionally.
Are There Other Crippling Risks for African’s Marketplaces?
Yes, risks such as cultural, societal challenges, currency risks, and human resources are also common for the African marketplace. But we know that these risks are always stuck to every marketplace from around the world, and not necessarily only in Africa.