Africa’s e-commerce & tech startups grow despite COVID-19 pandemic

Recent reports revealed that e-commerce Healthtech startups will continue to expand and gain popularity in some African countries, with investors and companies continue their investments in Africa’s tech space which started over the last few years. Many governments in Africa are also taking part in this development in their battle against COVID-19.

The Senegalese Ministry of Trade and SMEs, for example, is collaborating with the private sector to use e-commerce to facilitate the delivery of essential goods and services. In Uganda, the Ministry of ICT has issued a call for the development of digital solutions to aid health systems and public service delivery in the fight against COVID-19, while Rwanda is also been considered a success story in this regard.

More specifically, countries like Nigeria and South Africa are the epitome of African countries that are overcoming e-commerce barriers and are now at various stages of electronic buying and selling.

The rise in Health and Financial Technology in Nigeria

The Nigerian Startup Funding Report 2020 stressed that Nigerian health and fintech startups experienced massive growth in funding activity and size based on several deals made in 2020.

During that period, these startups raised $32.5 million in seven deals, which is 404%  more than the total disclosed record ($6.3 million) for 2019. In 2020, this accounted for 26.8% of all funding raised by Nigerian startups.

However, due to the increase in investment which coincided with the outbreak of COVID-19 in Nigeria, investors appeared to be willing to bet a lot more on health tech companies than they had previously.

Resurgence of Online Retail Startups

Online retail startups have raised the lion’s share of funding among West African startups over the last ten years. This sector dominated funding headlines Long before fintech companies became investment darlings in 2017.

Although, some of these eCommerce startups have struggled in recent years, and the sector’s funding has become erratic. A prototype of such struggles is Dealdey’s demise and Jumia’s struggles. The impact of the enforcement of the ban on Okada, commercial motorcycles, in Lagos, Nigeria in 2019 could also be felt on the Nigerian mobility and logistics startups.

However, 2020 was a watershed year for online retail and eCommerce companies. The pandemic caused businesses to move online, increasing their perceived value, which led to the resurgence of online retail companies with funding that increased by 5,892%. This, according to the report by TechPoint Africa accounts for 11.6% of all funds raised by Nigerian tech startups in 2020.

Opportunities for South Africa

The Covid-19 blockade has fueled e-commerce growth and popularity in South Africa, just as it has in Nigeria. Thousands of customers have been persuaded to become online shoppers due to fear of infection and a constant desire for social distance, resulting in a spike in e-commerce.

According to Tech Central, e-commerce has expanded in South Africa as a result of many customers moving to online shopping and adopting new trading habits. This trend has seen an increase in the use of delivery pick-up points, where customers can pick up their orders instead of getting them shipped to their homes. Consumers like this delivery method because it removes the need for an appointment for courier delivery and eliminates the need for anyone to be home when a package is delivered; they can pick up orders whenever it is convenient for them.

An epitome of this development is how Pargo, a South African logistics company established in January 2015, now has over 2,500 collection points across the world, thanks to partnerships with well-known retailers such as Clicks, Caltex, and Waltons. Takealot and Makro, its main competitors, each has around 80 pick-up points and over 200 lockers across South Africa.

In the long run, considering how well Africa is doing at this early stage, it will be important to see how big the development will be and how it will create a flourishing environment for Africans.

Writer, journalist, and legal researcher, Alafarika for Studies and Consultancy.

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