In the last 10 years, the share of Africans who choose to buy goods and services online has more than doubled; that’s about 10 percent of the entire population on the continent. And while this shift has resulted mainly from the COVID-19 pandemic, it’s becoming clear that even as economies return to a semblance of ‘normal,’ online sales are here to stay.
The market opportunity for African businesses here is significant. Online sales in Africa are growing at around 25%, year- by-year – one of the highest rates in the world – with more than 10 million people starting to buy online each year. Yet online sales in most organizations are only at the beginning of their growth trajectory.
While large organizations have transitioned their sales and operations digitally and have the necessary infrastructure to make this shift, only a small number of businesses have scaled digital sales so far. It is better to see this in empirics. In Europe, the digital sales landscape is so competitive that banks will pay, on average, about 25% of profit per client. However, in Africa, competition still needs to be higher so that banks can attract clients, spending at most 10% of the profit on that client. However, this is unlikely to last.
As the window of opportunity continues to open for digital sales on the continent, there are still opportunities for banks, retailers, telecoms, logistics, and more, to intensify in the race, develop their digital business and move their service offerings online.
Most of all, it is better foresee global advertising and social media platforms such as Google, Bing, and WhatsApp that are disproportionately dominant across Africa. Tapping into the expertise of international specialists working with these channels will be critical.
Google dominates the search market in Nigeria and Kenya at 98.6% and 97.7%, respectively, according to Global Web Index (GWI) digital marketing research for African countries. Among social media platforms, WhatsApp is the most popular for networking at 93.2% in South Africa, 93% in Nigeria, 96.5% in Kenya, 83.9% in Ghana, and 73.7% in Morocco, usually followed by Facebook, Instagram, and YouTube.
Investing in developing proprietary teams of digital customer acquisition specialists that understand these channels is likely to be a critical competitive edge. Fortunately, as remote working formats have become more common following the pandemic, recruiting global talent has become easier for African organizations. Recruiting talented employees is essential, given that there can be a need for more specialist skilled workers in African countries.
Even though they are working mainly through global channels, African businesses ignore the local context at their peril, especially if they want to scale across the continent. Each African market has subtle differences in consumption and channel behavior that must be considered when planning digital marketing campaigns.
For example, in South Africa, PCs and tablets register higher engagement than smart phones, and time spent daily with desktops, laptops, and tablets rose to a remarkable 5 hours and 25 minutes on average in 2021. South Africa also registers high laptop/desktop ownership (83.3% of the population) compared with most other African countries. This high concentration of internet and social media users, coupled with device penetration, makes it imperative to leverage paid and organic search, social, and display advertising as effective means to reach consumers.
By contrast, Nigeria boasts high smart phone penetration (99.2%) and the highest number of absolute internet users in Africa; 82.9% of internet users aged 16-64 said they used social media as the primary source when researching brands. WhatsApp and Facebook can be leveraged with chat support call-to-action functionality alongside Google search to deliver instant and more tailored messaging and one-to-one services to impact that context.
Rooted in Ethiopia’s internal reform program, the national ten-year perspective plan, sustainable development goals, and the African Union’s continental digital transformation strategy, Digital Ethiopia 2025 aims to leverage digital opportunities and propel Ethiopia towards a knowledge-based and innovative economy, noted the Prime Minister’s Office.
“Digital Ethiopia 2025 empowers us to thrive in the digital economy, requiring support for innovators and the creation of digital enablers. Today’s (11 April, 2024) mid-term review allows us to assess our challenges and celebrate the remarkable milestones we have achieved in a short time,” the Prime Minister said.
Since the launch of Digital Ethiopia 2025, Ethiopia has made significant strides in its transition to a digital economy. The strategy is based on a holistic approach, integrating principles of sustainable development, national development goals, and pan-African aspirations for digital transformation. With an emphasis on empowering local innovators and creating a favorable digital ecosystem, Digital Ethiopia 2025 has been designed to meet the specific needs of the country and its citizens.
As Ethiopia continues its journey towards digital transformation, persistent challenges remain. Additional investments are needed to expand internet access and enhance digital capabilities of the population. Similarly, promoting digital entrepreneurship and protecting personal data remain key priorities to ensure a fair and sustainable digital transition.
Digital Ethiopia 2025 aims to be a catalyst for Ethiopia’s socio-economic transformation, paving the way for inclusive and sustainable growth in the global digital economy. With continued commitment to innovation, empowerment, and inclusion, Ethiopia is on the path to success in the digital era.
While global advertising platforms create unparalleled opportunities to grow the customer base, there is potential to promote local business growth by interacting with customers on owned channels. For example, businesses could consider using mobile apps, websites, email, and social media groups or messengers to deliver targeted information and improve conversion rates. The key to unlocking these channels could be growing relevant engagement with customers.
Digital marketing deals primarily with business mathematics, where it is necessary to calculate how much each user action costs: a click, an application, or a sale. Once a business learns to measure key metrics, it becomes possible to manage channels and campaigns using these precise metrics efficiently.
To build reliable analytics, organizations could consider setting up effective data tracking and storage systems and ensuring regular reporting to give everyone involved a clear picture of digital sales status. It is equally vital to build cross-functional teams that include analysts so all participants can access data at any time and use this effectively to leverage customer insights to drive further sales.
The main principle of digital marketing is to regularly generate, test, and evaluate the efficiency of new ideas. These may relate to working with new channels, launching further communications and formats for creative solutions, and trying new audiences. The secret of success lies in the organization of a well-coordinated team and reliable processes allowing regular testing.
The main thing is to make going digital a strategic priority for business and then work towards consistently building a digital function in the organization, characterized by advanced market competencies and flexible methods of operation. This method could allow a person to attract a significant number of customers while achieving a good return on investment in marketing.
To ensure the aspired goal, the African Development Bank (AfDB) has signed a 9.73 million USD grant agreement with the African Union Commission (AUC) to implement Phase 1 of the Upstream Project for Digital Market Development in Africa, the Group confirmed through a press release.
The AUC Commissioner for Economic Development, Trade, Tourism, Industry and Minerals, Ambassador Albert M. Muchanga, and the African Development Bank’s Deputy Director General for the East Africa Region, Abul B. Kamara, signed the agreement on behalf of their institutions.
The African Development Bank’s Board of Directors approved the grant of 7 million Units of Account (USD 9.73 million) in September last year. The project supports the AUC’s implementation of digital economy projects to enhance a continental single digital market.
It also supports the implementation of the African Continental Free Trade Area and the Digital Transformation Strategy for Africa.
The project is the backdrop of the Covid-19-induced recession that exposed several gaps in the African digital economy ecosystem. It addresses these gaps. Phase 1 runs from 2024 to 2027.
It will focus on three main components: digital enablers, digital trade and e-commerce adoption, and support actions. Specifically, the project will help strengthen the frameworks (strategic, policy, regulatory and conceptual) and cross-cutting (gender, climate change and resilience) dimensions for developing Africa’s digital economy.
These frameworks are critical for establishing a single digital market across the African continent by 2030.
The project will therefore contribute to implementing digital enablers—universal access to broadband infrastructure, sovereign African cloud, African digital market, etc.—e-commerce and digital trade promotion programs for medium, small, and micro enterprises and start-ups. It will also help to create an ecosystem conducive to digital trust, skills, and African experts’ networks.
Ambassador Muchanga expressed the AUC’s gratitude to the African Development Bank for its support. He said: “The COVID-19 pandemic underscored the importance of digital technologies and the digital economy as a whole, and in that regard, Africa should think big when it comes to digital development, the digital economy, and the grand opportunities for integration and economic growth.”
BY ABEBE WOLDEGIORGIS
THE ETHIOPIAN HERALD THURSDAY 23 MAY 2024
