Read time: 3 minutes

SA leads online purchases in Africa: PayPal

SA leads online purchases in Africa: PayPal

South Africa is expected to spend about R63 billion online, according to Efi Dahan, General Manager for Russia, Turkey, Middle East & Africa at international online payment company, PayPal.

Dahan visited SA recently to deliver a keynote speech at this year's Seamless Africa conference, held in Cape Town last week.

He told ITWeb Africa during an exclusive interview that the country is seeing massive growth in online purchases because many consumers are using mobile devices as wallets.

According to Dahan, South Africa leads the whole of Africa in online purchases, this is despite Nigeria being home to the most e-commerce ventures in Africa - 40%, according to the Afri-Shopping: Exploring the African E-commerce Start-up Ecosystem Report 2017 by Disrupt Africa.

Dahan said online payments in SA amounted to R37 billion only two years ago, "this is amazing growth and it will continue to grow."

PayPal stated that more consumers in Sub-Saharan Africa are looking beyond their borders to source the products and services they need.

"In fact, according to a recent KPMG The Truth About Online Consumers 2018 Report, the African/Middle Eastern markets import 50% of all online purchases from other regions, making them the number one online importer worldwide," PayPal states.

Dahan believes the continent's e-commerce is growing much faster than a lot of mature markets.

"South Africa is one of the main markets, I think this is because of the mobile penetration happens much faster. Mobile is extremely important because people are starting to use their mobile phone not just to make calls or get WhatsApp messages or SMS; they use the mobile as a wallet," said Dahan.

"This is the future because mobile is also more secure and payment platforms know more about the user's behaviour."

Dahan said the company operates in 50 countries across the continent, with SA, Kenya and Nigeria being the biggest.

Lack of start-up funding

According to Disrupt Africa's findings, less than 30% of African e-commerce start-ups are profitable, affected by lack of funding, shortage of trust and logistical difficulties.

"Funding for e-commerce start-ups declined sharply in 2016," according to company. "Though there are signs that investor interest is picking up again in 2017, the funding available is not well distributed, with 90% of funds raised going to start-ups in just five countries."

"South Africa, whose start-ups compete with their Nigerian rivals for fundraising capabilities, and Kenya also have developed e-commerce markets."

Dobek Pater, Managing Director at Africa Analysis believes limited access to funding is a challenge as it would allow start-ups to survive the first few years of operation until such time as they have good cash flow and/or have become profitable and sustainable.

"Greater access to technology is needed to further drive e-commerce."

Daily newsletter