Growing amid daunting challenges, African e-commerce expects inspiration from Chinese partners

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Mike Manzi (C), a Rwandan student, bids farewell to his family and friends before departing for China to attend an undergraduate program at the Alibaba Business School at Kigali International Airport in Kigali, Rwanda, on Sept. 9, 2019. [Xinhua]
Adekunle Johnson, a Nigerian high school teacher, tried to order a 429-liter chest freezer from an online retail store during the annual Black Friday promotion which started earlier this month in his country.

"I really need it now, because Christmas is fast approaching and there will be a need for large storage of food items," he told Xinhua.

 Despite a huge discount, the chest freezer must be prepaid online as requested by the retailer, posing a challenge to Johnson.

 How to receive the product in good condition and without extra transportation cost was another question to him.

All these worries slowed his purchase rush.

Johnson's story reflects the reality of e-commerce development in Africa. With a population of over 1.2 billion and a fast growing number of Internet users, the continent witnessed the rise of indigenous e-commerce platforms Jumia and Kilimall.

The emerging industry is also exposed to challenges, including inadequate infrastructure, the fragmented market and finance pressure.

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Emerging market

The growth of Jumia, a leading e-commerce platform in Africa, is a typical success story.

Founded in 2012 in Nigeria's economic hub Lagos, Jumia has grown into a unicorn company valued more than 1 billion U.S. dollars, and become the first African e-commerce platform going public on the New York Stock Exchange.

Sacha Poignonnec, a co-founder of Jumia, had the idea of launching an e-commerce platform in Africa as early as 2008, after being inspired by the success of Chinese e-commerce giant Alibaba and its U.S. rival Amazon.

"We looked at Africa and we saw ... a huge opportunity. There were hundreds of millions of people on the Internet and there was no e-commerce," Poignonnec told Xinhua in Lagos.

 Known as "Alibaba in Africa" or "African Amazon," Jumia has built an e-commerce ecosystem including payment platforms, logistics, take-out and hotel reservations.

"We took all the components -- sellers, consumers, logistics, payments, the brand (and) the technology, and we made it relevant for the specific needs of every market where we are," he said, counting the firm's achievements so far.

There are 525 million Internet users in Africa, representing around 40 percent of the continent's population. The rapid growth of the Internet is expanding the opportunity for e-commerce.

Davy Nshuti, head of Rwandan leading e-commerce company DMM.HeHe Ltd. said the progress in regional integration brings another great chance for African e-commerce platforms.

Nshuti said the African Continental Free Trade Area (AfCFTA) formally launched in July removes trade barriers and helps increase businesses' consumer base.

"Our customers could be Nigerians, South Africans, Ghanaians, Kenyans or Ethiopians," he said.

 Clogs on growth

Many African businesses, including e-commerce firms, are confronting certain challenges.

One of the key challenges is the lack of infrastructure to ensure timely delivery of orders, said Jeremy Doutte, Jumia's executive vice president, in an interview with Xinhua in Nairobi.

Andrew Fassnidge, founder of the Africa Tech Summit series, told Xinhua in Nairobi that there is a long way to go before African online sales reach the levels in China, Europe and the United States.

"Most people are still not confident in making payments online as they prefer cash sales. The cost of mobile data is also high in many African countries and so potential consumers cannot access goods online," he said.

Africa consists of 54 countries, most of which are small and fragmented, with different rules and regulations and different levels of development, he added.

 "It makes it a challenging market for e-commerce platforms to become profitable. Online stores seeking to establish in Africa must take a long-term view of the business and have deep pockets," he said.

Despite the daunting challenges, however, the e-commerce industry in Africa seems headed in the right direction, as experts predicted the industry would emerge as the next big thing on the continent.

With a number of firms already operating in the e-commerce space across the continent, some African startups are also creating delivery models to cater to digital marketplaces.

Potential between china and africa

 "We were exposed to the real e-commerce here in China," Dianah Rutayisire told Xinhua excitedly.

The 18-year-old girl is one of the Rwandan students who are benefiting from the Electronic World Trade Platform (eWTP) launched by China's Alibaba and the Rwandan government last year.

Through that partnership, the Alibaba Business School matriculated 30 Rwandan students in its first cross-border e-commerce program for African students in September in east China's Zhejiang province.

"In just two months we have seen a lot of great things that e-commerce does here in China," said Rutayisire, adding she hopes to serve as an e-commerce adviser to the Rwandan government after going back home.

Rutayisire's classmate Mike Manzi expects to set up an e-commerce platform back in his country and help simplify tax declarations and customs clearance for cross-border trade.

"China and Africa have started cooperating and ... after my studies I hope to be a part of the China-Africa connection; not as a beneficiary but also as a contributor," said Manzi.

As China continues to help promote industrial capacity in Africa, experts noted that through this opportunity Africa can learn a lot more from the development model of China's e-commerce firms and the industry as a whole.

 "There is a huge scope for Sino-Africa partnership in e-commerce where China has an advantage," said Fassnidge, noting China and Africa are natural partners in e-commerce.

According to Doutte, who attended the sixth World Internet Conference in Wuzhen, Zhejiang in late October, Jumia can draw inspiration from Alibaba.

 "Our ecosystem from our philosophy to our practical approach to attract and maintain consumers is very close to that of Alibaba," he said.

Observing that his platform currently has over 81,000 vendors from Africa and 1,500 from China, Doutte said Jumia opened an office in the Chinese coastal city of Shenzhen in 2016 with two people, and has since grown to boast 50 staff members.

"We want to attract more Chinese sellers to the digital platform in order to enhance the variety and choice of products available for our African consumers," he said.

China has been leading the world in e-commerce and Internet application, said Peng Lihui, secretary general of the China Electronics Chamber of Commerce.

The mature technology and business model of Chinese e-commerce companies can offer lessons for their African counterparts, Peng added.

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e-commerce platformsAfrican Continental Free Trade Area