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E-commerce the "lifeblood" of digital space in Africa - Spinlet

By , freelance writer for ITWebAfrica.
Africa , 03 Dec 2015

E-commerce the "lifeblood" of digital space in Africa - Spinlet

Digital services will not work in Africa until e-commerce is successfully established, and payments solutions are seamless, says Nkiru Balonwu, chief executive officer (CEO) of online music service Spinlet.

According to Balonwu, digital services in Africa are hindered severely by difficulties in receiving payments from customers, with no existing payment channel really serving the pan-African market.

She believes the e-commerce industry has the responsibility of developing payments methods that are acceptable to consumers continent-wide. Once e-commerce and online payments are established in African markets, the space will be open for other digital services to truly take off, she says.

"A major challenge for digital services in Africa is receiving payments from customers. Mobile money adoption is not really growing outside East Africa, there are over 700 million unbanked people across the continent and for those who have bank accounts, the online payment portals frequently fail. This is why the future of digital depends fully on the success of e-commerce, in my opinion," Balonwu told ITWeb Africa.

"Many e-commerce sites in Nigeria now operate a Pay-on-Delivery service, which pretty much defeats the point of e-commerce and adds to companies' risk, as several report that customers change their minds sometimes, by the time the ordered goods reach their destination," she said.

In fact, she says the Pay-on-Delivery model adopted by early market entrants was a mistake.

"Payment-on-Delivery should probably not have been put on the table but businesses need cash."

For other digital service providers, Balonwu says establishing reliable payments mechanisms will be a significant step forward.

"For a [digital] business like Spinlet, the availability of seamless payments will be a huge boost for us."

Balonwu says e-commerce has such an important role to play in establishing an active digital space in Africa, that it is the "lifeblood" of the digital space.

However, she says that in Africa any online service -including e-commerce - must cater specifically to mobile users, who make up the majority of online consumers on the continent.

"E-commerce takes transactions away from the physical world of bricks and mortar, into desktop or portable devices. You could even say e-commerce is the lifeblood of digital," Balonwu says.

"In a mobile-first region like Africa, where an increasing number of services are being redeveloped for mobile, it is important for the fundamentals of an e-commerce driven [market] to be present, in order to maximise the latent potential of the market."

According to the CEO, there are many infrastructural changes that need to happen in Africa for e-commerce - and the digital space at large - to be successful. These range from payments solutions and affordable internet connectivity, to basic road networks for deliveries.

"Quite a few things need to change. For e-commerce businesses doing physical deliveries, proper post-coding to make addresses easier to find is essential, so that couriers don't spend double the time asking for directions," Balonwu says.

"Bandwidth and mobile broadband issues also have to be addressed. Availability has to spread and data has to become more affordable. Payment gateways need to be more reliable."

Finally, she says, the legal aspects need to be worked on. Mechanisms need to be available so that contracts can be better enforced in a quicker timeframe; while there also needs to be a regulatory framework which ensures consumer protection and data security.

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