The Beauty of Economic Endowment in Africa and the Role of eCommerce
Africa is endowed with rich natural resources. These include crude oil, natural gas, diamond, gold, uranium, platinum, copper, cobalt, iron, bauxite, cocoa beans, and so on. These commodities are made available by nature and in abundance to meet human, animal, or plant needs. Nigeria for example is the leading producer and exporter of crude oil. It is ranked fifth Oil Producer in the world, which represents 40% of the country’s gross domestic product. Despite that, other natural resources such as gas, coal, gold, and bauxite are under-exploited. Its agricultural sector also remains under-exploited. It is established that Botswana is the world’s leading producer of diamond, while South Africa is a nation with diverse mineral potentials and the world’s number one producer of chromium, manganese, platinum, vanadium, vermiculite; it is also the second producer of ilmenite, palladium, rutile and zirconium. Also, the Democratic Republic of Congo (DRC) is blessed with coltan as the world’s largest producer, and coltan is a primary product found in every mobile phone. Interestingly, the DRC is one of the giant producers of copper and diamond in Africa. Its contribution of Copper and Diamond to the total production in the continent is estimated at 13 and 34%, respectively. The mineral deposits of DRC could bring up to $24trillion into their economy. DRC is blessed with an unlimited water supply, best fertile soil of any land in the world. It is endowed with world class mineral deposits beneath the earth, which include cobalt, gold, diamonds, petroleum, timber, potash, lead, zinc, uranium, copper, phosphates, gold, manganese, natural gas, coltan, and derivates of niobium and tantalum, iron ore, lithium beryllium, rare earths (monazite, euxenite), niobium, tantalum (columbo—tantalite, pyrochlore), zirconium, titanium and germanium.
Another interesting economy in Africa is Zambia, which is the major producer of copper on the continent. Copper is a perfect conductor of heat. It is mainly used for electrical wiring in building construction, and Zambia is believed to house between 65 and 77% of continental copper supply. The production and supply of this commodity can create jobs for its teaming citizens, thus contributing to their gross domestic product. Another powerful economy that people look down on is Niger that is known for a massive production of uranium in Africa. Uranium is most commonly used in the nuclear power industry for power generation. In supply and exportation of uranium, the country represents 44 and 40%, respectively. There is a prediction that Egypt will be one of the most powerful global economies by 2030. Egypt owns major gas fields in the Mediterranean and has made structural investments in various sectors, which include power generation, and the establishment of numerous industrial zones.
The Republic of Guinea is extremely blessed with iron, bauxite, diamond, gold, uranium, petroleum, phosphate, and manganese. In terms of production capacity, the Republic of Guinea alone would contribute 95% to the continent’s bauxite production. The nation is blessed with enormous potential estimated at 40 billion tons of reserves. The exploitation of its quality iron accounts for 100 million tons per year. Ghana would not be left out as it contributes 15% of the continent’s total gold production and ranks second behind the Rainbow Nation. It is also blessed with manganese, bauxite, and diamonds beneath its lands. Ghana is also the second largest cocoa producer. Libya owns the largest oil reserves on the continent estimated to be 48 billion barrels and ranks ninth in the world. It also has the largest recoverable oil shale reserve in the world estimated at 26 billion barrels. Oil, nickel, cobalt and manganese deposit in Cameroon is estimated at over 54 million tonnes. Therefore, with all the enormous resources embedded in Africa, it can be argued that the resources are under-exploited. If the resources in Africa are well managed, then Africa will exist independent of the rest of the world.
Exploring these resources could be very difficult too, however, scientists all over the world do not relent in their efforts to ensuring that highly sophisticated machines with artificial intelligence technology are manufactured to make the process of commercial exploitation of mineral resources simpler and faster. When these resources are ready for use, there is a need for easy access, which is where the internet comes in. The emergence of internet commerce had broken geographical barriers, thereby allowing the exchange and access to products and services of any kind and magnitude.
There is now a global marketplace for customers around the world to shop. Purchasing over the Internet is simpler, more convenient, faster, and less expensive. Companies and governments no longer suffer restrictions posed by geography or physical barriers. Different countries are now tapping into the opportunities presented by the internet. Africa is not left out too. One of these opportunities is eCommerce which has become a huge segment of every economy. It is of great benefit to businesses that sell their products or services on the internet. For example, in Africa, outside of her natural resources, especially in a situation where the resources are not well exploited, eCommerce brings another internet opportunity that can reposition the continent. This could compel the continent to go into real production to meet internal needs. In the contemporary world, traditional commerce is gradually becoming archaic and obsolete as eCommerce offers businesses the opportunity to reach more customers in real-time. This internet segment brings about the fastest-growing retail market with a huge number of people making their purchases online.
Statistical data revealed that 96% of Americans with access to the internet have made a purchase via eCommerce platforms, and similar statistics is beginning to show up in Africa, which is a good thing. In response to eCommerce opportunities, business models will continue to evolve to suit the present-day realities. These business modules sometimes is due to changes in the market or the advent of technology. For example, the ongoing pandemic has forced businesses to reassess their strategies and create new models to fit the time. It is around this trying time last year that www.kusnap.com (Kusnap) was launched in Nigeria to help the growth of businesses. Today, Kusnap has become a household name in Nigeria and the people love it because of the opportunities it offers.
Before now, cross-border purchase of farm produce was a major challenge, especially those that are perishable such as fresh tomatoes, pepper, etc. Today, technology and eCommerce have made it easy for one to purchase agricultural products and have it delivered in good condition. The likes of Kusnap in Nigeria, Crofarm, Waycool, Ninjacart in India, and TaniHub in Indonesia have recorded huge success in providing linkages for farmers and buyers of agricultural products. During the pandemic, more people resorted to shopping on eCommerce platforms in order to keep up with COVID-19 safety precautions. This development has given rise to eCommerce globally, especially in Africa.
In Kenya, the central bank came up with policies that required mobile money providers to waive transaction fees below the equivalent of $10, which represents about 80 percent of transactions in the country. The intent was to facilitate eCommerce and mobile payments in response to COVID-19. Similarly, the government of Rwanda recommended eCommerce platforms to the public during the lockdown, including farmers providing fresh produce from farms. Nigeria is not left out in contending for effective digital value chains. The likes of Kusnap emerged to connect buyers and sellers. Sellers can now reach potential buyers and in turn, increase their profit margin and productivity.
Africa’s eCommerce market revenue is capped at about US$28B (2021) with a projection of US$46B in 2025. Today, Africa population is estimated at 1.1 billion, which represents about 15% of the world’s total and is predicted to increase 1.5 billion by 2025, or around 18% of the world’s total population. About a decade ago, many activities for the continent pointed to very low participation in international trade through digital channels. Nowadays, the rise of eCommerce has been rapid and its growth can be illustrated by the emergence of global platforms that serve as the link between sellers and buyers. International eCommerce and several domestic eCommerce businesses in many African countries such as Nigeria, Kenya, and South Africa are strong and growing, even though similar platforms are currently absent from some other smaller countries. Considerable innovation is extended to serving local markets and international digital entrepreneurialism in Africa.
A reasonable amount of work is on the way at the international level to simplify customs and tax arrangements to deal with trade barriers and network security. All of these efforts are for the long term which would make Africa the world’s business destination. The new digital era is calling for new approaches to address challenges militating against the sector. Partnerships involving governments, local institutions, Policymakers, and competing companies are needed, and should be involved in a series of deliberate and purposeful practical initiatives, including enabling laws that would favor the development of eCommerce cooperatives, and currency exchange on digital trade with the view to developing international eCommerce in Africa.
The start-up series is regularly brought to you by Kusnap Africa Limited. For more information about the Kusnap brand, visit https://www.kusnap.com/; and for the Kusnap Entrepreneurial Institute, visit https://blog.kusnap.com/.