BY MADUABUCHI EFEGADI
Africa’s economy would receive additional $46.1 billion over the next three year to 2025 as smartphones and internet technologies become increasingly accessible on the continent, according to numbers presented in a new research report.
The continent, with a bustling youthful population of 1.3 billion and a combined GDP of $3 trillion has become a lucrative market for the e-commerce industry, as the African e-commerce market is projected to reach annual revenue of $46.1 billion in 2025.
This year (2022), the African e-commerce industry is predicted to produce $33.3 billion in revenue, following an increase of 19 percent. Next year (2023), the industry will grow by 14.7 percent to $38.2 billion. In 2024, the annual growth rate will further drop to 11 percent, with $42.3 billion in revenue. In 2025, the annual revenue will reach $46.1 billion on the back of a nine percent annual increase.
Africa is shaping up to be the next hotbed for internet-based businesses. As smartphones and the internet become more prevalent in African countries, the population has started to shift towards online shopping, the report stated.
According to the stats available on Statista, the African e-commerce industry is expected to grow at a compound annual growth rate (CAGR) of 24.7 percent between 2017 and 2024.
In 2017, the industry’s annual revenue was just $7.7 billion, but it is now expected to increase to $42.3 billion in 2024. Thus, the yearly income stands to increase by almost 500 percent in seven years.
In the last couple of years, the pandemic has also helped the industry, like everywhere else on the globe. Thus, the report said it can also be expected that the recent surge in growth will slow down in the coming years. In 2021, the African e-commerce industry brought in $28 billion in revenue.
Compared to $21.4 billion in 2020, the 2021 figure represented a 31 percent annual increase. As per the report, the annual growth rate is expected to decline to nine percent by 2025 gradually.
Amid this positive news, opportunity beckons on Nigeria, the continent’s biggest user of smartphones and with the most internet penetration, with 109.2 million internet most active users (MAUs) as of January 2022, and 48.12 mobile penetration, to expand its economic base.
Continent wide, the user base would cross 500 million by 2025, the report said. The growth in the African e-commerce industry is primarily down to the expanding e-commerce user base on the continent. In 2017, only 138.9 million people shopped online in Africa. This figure is expected to grow to 519.8 million in 2024, at a CAGR of 17.9 percent. It is interesting to note that the revenue growth rate is higher than that of the user base.
Furthermore, the e-commerce penetration in the African population in 2024 is expected to be 40 percent. Therefore, there is significant room for further growth in the African e-commerce industry, the report noted.