African businesses what does that mean to you?
Online marketplaces establishing themselves across Africa, could create around 3 million new jobs by 2025.
These digital platforms, which match buyers and providers of goods and services, could also raise incomes and boost inclusive economic growth with minimal disruption to existing businesses and workforce norms.
These are among the findings of a new report, How Online Marketplaces Can Power Employment in Africa, released by Boston Consulting Group (BCG).
Generating employment is an urgent priority across the continent. The African Development Bank estimates that one-third of the 420 million Africans aged 15 through 35 were unemployed as of 2015.
Around 58% of the new jobs—created directly, indirectly, and through the additional economic activity generated by online marketplaces—will be in the consumer goods sector, 18% will be in mobility services, and 9% in the travel and hospitality sector, according to the report.
For online marketplaces to reach their full potential, however, the public and private sectors must work together to build the right digital environment from the outset, the report notes.
Obstacles to industry expansion include underdeveloped infrastructure, a lack of regulatory clarity and limited market access.
The Economic and Social Benefits of Online Marketplaces
“Online marketplaces are a good illustration of how the digital revolution can create economic opportunity and improve social welfare in Africa,” says Jan Gildemeister, BCG partner and managing director based in Johannesburg.
“Because Africa currently lacks an efficient distribution infrastructure, online marketplaces could create millions of jobs.”
Concerns that growth in online marketplaces will merely cannibalize the sales of brick-and-mortar retailers are misplaced in the case of Africa, according to the report.
There were only 15 stores per one million inhabitants in Africa in 2018, compared with 568 per million in Europe and 930 in the US. This extremely low penetration suggests that there’s minimal risk that e-commerce will displace existing retailers and that much of the population is underserved.
The report also details the ways in which economic activity generated by online marketplaces boosts employment and incomes.
These businesses create demand for personnel in new fields, such as platform development, as well as for merchants, marketers, craftspeople, drivers, logistics clerks, and hospitality staff.
Some also offer skills-development programs and help small enterprises raise capital to expand their businesses.
Online marketplaces also boost demand for goods and services in areas currently beyond the reach of conventional retail networks and bring new people—such as women and youth who may be currently excluded from labour markets—into the workforce.
The report recommends that the online marketplace community and African governments collaborate to address the challenges that hinder the online marketplaces’ ability to grow.