A new White Paper has been published to start discussions about the opportunities and challenges around digital trade in Africa and examine how the mobile industry and its partners are working to open up a $180-billion market opportunity by 2025.

The report, “Towards A Flourishing Digital Economy for All – A Spotlight On Africa”, which was commissioned by the UK’s Department for International Trade (DIT) and conducted by GSMA Mobile World Live analysts, shows that, increasingly, digital trade is a driver of business growth globally.

“Our report triggers a much-needed discussion on how to advance the mobile commerce revolution in Africa, which will, in the long-term, lead to mutually beneficial digital trade between the continent and its trading partners, including the UK,” said DIT chief scientific adviser Dr Mike Short during the launch of the report at the Mobile World Congress in Barcelona.

The White Paper noted, as an example, that e-commerce has been changing the way people spend and shop since the 1990s, spurring innovation and creating the infrastructure upon which entire new industries have been built.

The Covid-19 pandemic sped up this transformation dramatically and, as a result, eMarketer predicts that online sales will surge from $3.3-trillion in 2019 to $6.2-trillion in 2023 and to $7.4-trillion by 2025, by then representing 24.5% of all retail sales.

“Much of this growth will come in developing markets. In these regions, young technology-savvy citizens are embracing digital behaviours. Connectivity is rising fast. Where the network infrastructure exists, the cost of going online is falling,” the report added.

According to the United Nations Conference on Trade and Development, Internet business in Africa could add $180-billion to the continent’s gross domestic product by 2025, with markets that present considerable opportunities for local companies and their overseas partners.

However, the report, exploring the progress made in building Africa’s mobile-driven digital economy and how mobile commerce is booming across the continent, showed that mobile-centricity makes Africa different from developed economies.

“For millions of Africans, the phone is the primary channel for accessing the Internet, given the lack of fixed-broadband infrastructure and, in many regions, it is also the dominant electronic payment and identity platform,” the report said.

“Across the continent, a cohort of pioneering businesses are already creating a vibrant market for e-commerce. They have developed innovative solutions to Africa's challenges around payment, identity and delivery addresses.”

Further, Africa’s mobile-centric infrastructure means it is also unencumbered by many of the legacy technologies that slow progress in the rest of the world and does not have the ageing infrastructure of Europe or the US.

“Because it is mobile-first, it can build infrastructure from scratch to facilitate wireless smartphone-oriented services,” the report highlighted.

The largely mobile commerce environment can, however, be a challenge for companies more used to transacting in a world of laptops, websites and credit cards.

In addition, there are significant differences among the e-commerce markets, particularly those leading the way, namely Nigeria, Egypt, Kenya and South Africa

“For example, Nigeria is home to a thriving content production sector, which is driving a strong market for digital products. Kenya’s market has been shaped by the success of its mobile money platforms. Kenyans now use M-Pesa and others to make cashless payments at retail, pay utility bills and buy insurance and savings products.”

“South Africa is different again. It has a much higher percentage of banked consumers, which has reduced the need for mobile money platforms. Its mobile network operators are also playing a key role in the evolution of its digital economy.”

There are further challenges relating to Africa’s infrastructure, regulation and social inclusion and bringing all of Africa’s inhabitants into this digital future will be a considerable task.

The report pointed out that most digital success stories remain exceptional, and that innovations rarely trickle down to the real economy and create too few jobs.

“There is also a connectivity deficit: only 26% of rural dwellers use the Internet regularly, compared with 47% of urbanites.”

In addition, there remains an affordability gap. In 37 African countries, more than 50% of the population cannot afford 1 GB of data a month and only 31% of all African firms have a website.

Despite this, there is widespread belief that Africa’s innovative and dynamic technology community of entrepreneurs can overcome these barriers.

“We are confident that the private and public sector can work together to find solutions and help Africa become a flourishing hub for digital trade,” the report assured.

The UK Foreign, Commonwealth and Development Office has long been working closely with the GSMA to accelerate mobile connectivity and reach.