The Rise of eCommerce – is Namibia ready?

Reginald Obaking and Frans Uusiku

eCommerce has become a buzz word as one of the key revelations of the 21st century economic realities. We have all witnessed the advent of the COVID-19 pandemic further reinforcing the importance of being able to buy and sell goods and services or transmitting funds or data over electronic networks.

According to the United Nations’ report on eCommerce global view, global eCommerce as a share of global GDP was estimated at 30% in 2020, while its share of global retail sales has increased from 14% in 2019 to 17% in 2020. This highlights the ever-changing nature of the global economic system, characterized by the proliferation of global value chains across industries, and the increased significance of the service sector.

China accounted for a significant share of global eCommerce transactions in 2020 at 25%, followed by US at 17%. Africa, on the other hand, only accounts for 3% of global eCommerce.

Although the relatively small size of the African economy should be considered in this context, the low adoption rate of eCommerce amongst African countries is further mirrored by low intra-Africa trade of 17%. This points to the fact that, despite considerable progress achieved on the continent with respect to economic integration, cross-border barriers, poor transport infrastructure and non-harmonization of critical services for trade facilitation have partially hampered the growth of an eCommerce ecosystem in Africa.

However, Namibia’s intention to grow as a global and regional economic player raises the question around institutional readiness to effectively reap the benefits of the African market.

The implementation of the African Continental Free Trade Area (ACFTA) which came into effect in January 2021 is an interesting point of reflection. The Agreement has expanded the envelope of market access opportunity and the eCommerce ecosystem for Namibia, by about 1.2 billion people, with a combined GDP of $3 trillion. This essentially means that an individual in Namibia can now buy goods and services from any of the participating member countries on much more preferable terms than before, and vice-versa.

Despite the laudable ambitions of ACFTA, intra-African trade has yet to gain momentum. But the low base creates a chance to jump-start trade by using the latest technologies. COVID-19 has also emphasized the urgency of digitalization efforts in trade finance to ensure business continuity.

The extent to which Namibia can reap the benefits of the wider regional market through eCommerce platforms as an evolving method of conducting transactions, would depend on the country’s digital readiness and enabling environment.

This readiness, in turn, relies on two critical enablers: the quality of internet infrastructure, connectivity, and availability to rural areas; and secondly the quality of postal services, reachability, and awareness.

A review of the 2021 Digital Report by Hootsuite shows internet users in Namibia to be 1.3 million. This reflects an annual increase of 1.8% and a digital penetration of 51%. Mobile connections as at January 2021 were recorded at 2.94 million. This figure exceeds the total estimated population in Namibia, which points to the fact that a greater majority of Namibians own multiple sim cards to capitalize on data bundles offered across internet service providers in the country.

Data affordability in Namibia remains an issue by global comparison, partly due to the relatively small economic size of the ICT sector (representing less than 2 % of GDP) and raises concerns around insufficient competition. The share of web traffic by device is estimated at 47.3% for mobile phones, reflecting a decline of 8.7 percentage points from the previous year. Conversely, the share of web traffic by computer increased by 12 percentage points to 48.7%. The shift in the share of web traffic from mobile phones to computers could be attributed to the adoption of a remote working culture due to COVID-19.

Although Smartphone penetration, which is an important enabler for eCommerce, is estimated at 28%, the figure should be used with caution as there is a probable risk of overstating due to the issue of multiple sim cards registered per person in Namibia.

The quality of postal services, reachability and awareness is equally critical in accelerating the adoption of eCommerce in Namibia, especially given the unique nature of the country – large, and sparsely populated. Leveraging on existing postal networks would certainly assist in creating an enabling environment for eCommerce. For instance, with about 144 NamPost offices across Namibia, businesses can take advantage of those footprints to sell their products to customers through NamPost’s third-party services.

The eCommerce industry in Namibia has surely not come of age yet, however there is significant scope for growth as digitalisation gains traction. Public and private sector could strengthen Namibia’s institutional readiness in terms of eCommerce penetration through instituting capacity-building initiatives. This would entail extending support to small businesses on how to comply with international transparency requirements and work with international specialists to create “e-trust” and enable electronic transactions, while at the same time re-looking it’s infrastructural logistics capability countrywide.

*Obaking is the Coverage Sector Lead for Telecoms, Media and Technology at RMB Namibia, and Uusiku is the Market Research Manager at FNB Namibia.

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