FUTURE OF COMMERCE:

Outlook for 2024

October, 2023 www.techcabal.com Version 1

About Us

TechCabal Insights is an Africa-focused digital economy

consultancy that leverages big data to help startups,
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This report is sponsored by Sabi

3
Contents
04 Foreword

06 State of Commerce in Africa

16 Retail/Commerce Trends

26 Social Commerce Trends

30 Payments Trends

37 Logistics

44 Trends and Outlook

49 Key Takeaways
Foreword
Africa's economic landscape is undergoing digital
transformation fueled by technological advancements
and emerging consumer markets.
As we embark on the journey into the year 2024,
TechCabal Insights analyzes the growth trends in key
sectors like e-commerce, digital payments, logistics,
supply chain, and retail across the African continent.
Our report explores the dynamic and evolving African
marketplace, providing valuable insights into its current
state and offering a glimpse into what its future will look
like.
Over the past decade, Africa has emerged as a hotbed for
innovation, with technology acting as a catalyst for
economic progress. The adoption of mobile internet, the
smartphone penetration rate, the rise of digital payment
systems, and the expansion of connectivity have laid a
foundation for African commerce to thrive
We will examine the latest developments in Africa's
commerce sector, highlighting the key growth drivers,
consumer behaviour shifts, and emerging marketplaces
that are reshaping the way people buy and sell on the
continent.
As we anticipate the coming year, this report will also
present a forward-looking perspective, throwing light on
the potential opportunities and challenges that lie ahead.
It will also explore the transformative power of
technologies such as artificial intelligence, blockchain, and
augmented reality, providing a glimpse into their potential
impact on Africa's e-commerce, logistics, and retail
sectors in the near future.
By capturing the most interesting growth trends and
offering an in-depth analysis, this report aims to equip
startups, entrepreneurs, investors, and policymakers
within and outside the continent with valuable, actionable
insights to navigate the African market landscape
effectively in 2024 and beyond.
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FUTURE OF COMMERCE:

1. State of commerce in Africa

October, 2023 www.techcabal.com Version 1

1 in 2
banking leaders in Africa
are betting on blockchain
- Forresters

Though 90% of transactions in Africa is cash-based, it Another 46% plan to investment in similar technologies
does not represent the future of commerce around the over the next two years. Others are expanding across
continent. The future of commerce in Africa will be based border to reach other African countries.
on cashless transactions facilitated by blockchain
technology and other virtual platforms that support
seamless, instant interoperability across borders.

46%
According to Forresters survey of 128 decision makers in plan to invest in blockchain,
the African banking sector, 50% confirmed they are BNPL, mobile money, virtual
already making investments in the blockchain, BNPL and card and open banking.
infrastructure modernization such as mobile money,
virtual cards, and open banking.

7
As cross border trade continues to grow, the African
Continental Free Trade Agreement (AfCFTA) has become a
crucial factor for commerce in Africa.

In line with the expectations, the secretariat has

developed Pan-African Payment and Settlement System
(PAPSS) as a payment gateway to facilitate trade across
African countries in local currency, without need for the
dollar as the currency of exchange.

Fig 1. Instant Payment channel under PAPSS framework

see https://papss.com/how-it-works/ for how PAPSS works

8
 African startups are going multi-market

In line with regional integration, fintech and ecommerce
businesses are going pan-African with strategic
expansion into other African markets.
Fig 2. Timeline of strategic expansion by startups in 2023
For instance, Moniepoint acquisition of Kopo Kopo,
Flutterwave’s strategic move into Kenya, Safaricom’s
licence to operate both telecom and mobile money
service in Ethiopia are few examples.

Kenyan fintech, Kwara Nigerian neobank Shara Inc., a Kenyan Nigeria’s Haul247, an Flutterwave is set to Tunis-based fashion Kenya’s Wasoko, a B2B
acquired IRNET Coop FairMoney acquired fintech acquired a end-to-end logistics tech invest $50 million in e-commerce e-commerce company
Kenya, a subsidiary of PayForce,a Nigerian 55.8% controlling stake platform raised US$3 Kenya as part of its marketplace Dabchy has announced its
KUSCC financial services in Maisha Microfinance million in seed funding to
expansion strategy into has launched expansion into the
January 2023 platform. Bank Limited expand to other African
March 2023 May 2023 markets East Africa operations in Egypt Democratic Republic
June 2023 August 2023 August 2023 of Congo (DRC)
September 2023

January September

Umba, a digital bank for
emerging markets based
in Nigeria,launched
operations in Kenya
February 2023
Equiti Group acquired Safaricom Ethiopia
Cloud Invest, a Morocco received a mobile money
based digital payments licence from the National
provider. Bank of Ethiopia to
May 2023 expand M-Pesa in
Ethiopia.
May 2023
Airtel and Mastercard Moniepoint, a Nigerian wealth
launches new Nigerian fintech management startup,
cross-border remittance acquired a 100 percent Risevest acquire Chaka
service in Kenya and 13 stake in Kenyan , another wealth
other African countries. fintech company, Kopo management startup.
August 2023 Kopo. September 2023
August 2023
9
Payments lead as retail commerce struggles with
profitability
Even though, eCommerce is often touted as the next big
thing in Africa, payments is way ahead of e-Commerce
and Logistic in Africa. While the financial system is highly
regulated, commercial activities are often overshadowed
by high informal activities with weak regulatory
framework. eCommerce platforms in Africa have been
bedeviled by infrastructure constraint - technology and
transportation, social issues - trust and dishonesty, and
price volatility. Consequently, Jumia, Konga and some of
the largest e-commerce platforms in Africa have not
crossed the line to profitability since their inception.
However, since 2020, MSME have shown that the use of
online tools and messaging apps can boost sales,
increase margins and reach wider (export) markets.
Generally called social commerce, describing the use of
social media apps such as Whatsapp, Instagram,
Telegram and Facebook to reach target customers, sell
products and services; MSMEs, have posed tough
competition to those local digital marketplaces such as
Jumia, Konga, Takealot or Kilimall.
“MSMEs, in there fragmented forms using social
commerce, have posed tough competition to
those local digital marketplaces such as Jumia,
Konga, Takealot or Kilimall.”
10
The future of commerce will
be competitive across
categories
Interestingly, these platforms are enabled by network Fig 3: Businesses are integrating Payment as a service
infrastructure provided by telecom companies - that are
also divesting into payment service operations, e.g.
Airtel Money, Telebirr, Safaricom M-PESA, MTN Mobile
money. Logistics Telecom

The future of commerce will be competitive across

categories - payment, e-Commerce, logistics, and
telecommunications.

Banks would branch out into fintech; e-commerce and

Logistics firms will integrate pay-tech into their suites of
products (e.g. JumiaPay, O-Pay, BaaS); telecom firms will
consolidate mobile payment. E-commerce Payment

11
Digital commerce in Africa at a glance

Key growth indicators

52.7% $94.29 388M

Annual change in E-commerce Average Revenue Online shoppers in Africa
e-commerce revenue per User in Africa (2022) (as of 2022)
(as of December 2022)

17.9% 37% 476.5M

CAGR of online consumers Projected e-commerce Projected digital commerce
market (2022-2025) penetration rate by 2024. users in Africa by 2024

Source: Statista, International Trade Administration

12
Investment in digital commerce in Africa nears US$1 billion

Overview of funding and innovation

(2019 to 2023)

129
Number of
34+
Cross-sectional sectors in
100+
e-commerce products
companies that have African commerce launched
received funding

$948.5M 193 $125M

Total amount invested in ecommerce deals since 2019 Wasoko: Single largest
e-commerce companies ecommerce funding
round

Source: Briter Bridges, Africa: The Big Deal

13
With a combined user strength of 246 million, Africa’s major
ecommerce markets make up 56% of total users in the continent

Fig 3 Key information on major ecommerce markets across Africa (as of 2022)

● High internet penetration

Nigeria 90.9 million ecommerce users ● Increase in the number of card-based payment systems
● increase in digital and cashless transactions

● Government reforms encouraged informal retailers to

formalise their operations.
Egypt 62.4 million ecommerce users ● Market size is projected to grow from $ 7.88 billion in 2023 to
$ 15.71 billion by 2028.

● The use of 3D Secure in online transactions has reduced cart

South 55.7 million ecommerce users
abandonment.
Top product categories are data and airtime, clothing and
Africa ●
apparel, and online entertainment.

● High rate of financial inclusion

● Top ecommerce categories include Toys and Furniture and
Kenya 22.6 million users appliances, Food and Personal Care, Electronics and Media,
and Fashion

● Second highest internet penetration rate in the continent.

Morocco 14.7 million users ● Online transactions using domestic cards increased by 43%
over the course of 2020.

Source: Statista, Mordor Intelligence, International Trade Administration, US Department of Commerce 14

Africa’s major ecommerce players face a mixed bag of performances

Fig 4 Key information on major ecommerce players across Africa’s key markets
● Operates across 10 African countries, enabling users purchase
electronics,homeware, fashion, and groceries online.
● It also expanded into logistics, hotel and travel booking, food
Jumia 32 million monthly visitors delivery and payment services.
● Suffered a reduction in share price after its public listing due to
● operational challenges
● Has a significant presence across the middle east but Egyptian sales
make up more than half of its revenues.
Souq 10 million monthly visitors ● Acquired by Amazon for $580 million in a landmark deal
● Runs most parts of its system off mobile apps to meet customer
demand maintain efficiency.
● Incurred a US$13m trading loss in the six months from January to
June 2022 on sales of US$384m despite accounting for half of South
Africa’s online purchases
Takealot 10 million monthly visitors
● Faces huge competition as Amazon plans to expand into the
country while brick and mortar retailers launch their own delivery
platforms.
● Operates as a marketplace rather than a true e-commerce retailer.
Offers an online payment system, Lipapay, and logistics system
Killimall 500 thousand monthly visitors KillExpress.
● Recent expansion moves into Uganda and Nigeria have been
short-lived..

● B2B e-commerce company that allows traditional local shops and

FMCGs to order products at lower prices, allowing the FMCG brands
Chari 20,000 users to track their sales through its e-commerce application
● Acquired Diago, AXA Assurance Maroc, and Karny in the last two
years.

Source: Statista, HBR, TechCabal, NTU 15

 African e-commerce startups remain bullish at their
chances at success
Key highlights in Africa’s ecommerce industry
● Sabi, a Lagos-based B2B e-commerce startup providing
digital commerce infrastructure to Africa’s informal
economy, raised $38 million in Series B funding at a
valuation of $300 million.
● Moroccan B2B ecommerce startup, Chari is the most
active acquirer in Africa’s e-commerce sector with its
acquisitions of Diago, AXA Assurance Maroc, and Karny
in the last two years.
● Last year, Wasoko, raised $125 million at a $625 million
valuation last March with 50,000 active merchants
while processing over $300 million in GMV.
Source: Crunchbase, TechCabal, TechCrunch
● Three business models have risen to prominence in
Africa’s B2B e-commerce market: Asset Heavy, Asset
Light, and Hybrid models.
● Wasoko, MaxAB, Alerzo and TradeDepot are full-scale
asset-heavy platforms that have raised $285.5 million
in the past one year.
● Chari, Cartona and Omnibiz, employ asset-light models,
using third-party warehousing and logistics, while
marketplaces like MarketForce and JABU use hybrid
models.
Asset-heavy platforms are those that own and lease facilities
in their distribution chain from warehousing to logistics. 16
FUTURE OF COMMERCE:

2. Retail commerce

October, 2023 www.techcabal.com Version 1

e-Commerce spread in Africa is projected to reach 40%
by 2025

Fig 4: e-Commerce penetration rate in Africa from 2017 to 2027

Industry trends driving e-commerce adoption

Between 2023 and 2027, adoption

The increase in the number of mobile
internet users.
The growing adoption of digital financial
services, primarily mobile money.
will increase consistently by 9%
points to reach 44% in 2027; much
lower than the 19% points increase
from the preceding five years as the
market matures.

More Africans are becoming comfortable

with the idea of buying goods online

Source: Statista

18
e-Commerce users in Africa is projected to surpass
500 million by 2025

Fig 5. Number of online shoppers in Africa (in millions) between 2017 and 2027

17.9%
Between 2023 and 2027, online
shoppers in Africa will grow at a
CAGR of 17.9%, surpassing the 500
million mark by 2025 driven largely
by smartphone adoption and young
population demography..

Source: Statista, U.S Department of Commerce

19
User-growth will stoke a revenue growth of US$50
billion by 2025

Fig 6: Ecommerce revenue growth in billion dollars

● Revenue growth will increase from USD

10.4% 36.15 billion in 2023 to USD 59.18 billion
in 2027 at a CAGR of 10.39%, a much
slower rate when compared to 19.1%
%
R: 13.11 from the previous five years
CAG
● The period between 2024 and 2025 is
projected to record an 18.8% increase in
revenue; the highest within the period of
forecast.
19.%
● Revenue growth is expected to come
from increased e-commerce users, digital
sellers (social commerce) and a growing
population.

● Consumer electronics, fashion, personal

care will account for most the revenue
growth.

Source: Statista, U.S Department of Commerce

20
Online sales of fashion, electronics and personal care
will lead e-commerce revenue growth by 2025

Fig 7. e-Commerce revenues by sector in Africa in 2023 and 2025 (US$ billion)

● Electronics and Fashion will dominate

other sectors in terms of revenue as
12.9% Africa’s young population continue to
CAGR grow and rural urban migration
patterns persist.

● Food and beverages sectors will see

the highest Compound Annual growth
10.6% rates compared to other sectors - as
CAGR food delivery services continue to gain
12% 11% traction across the continent.
CAGR CAGR
10%
CAGR
13.2%
14% CAGR 4%
CAGR CAGR

Beauty, health, Beverages Electronics Fashion Food Furniture Media

and Personal
Household Care
Source: Statista, U.S Department of Commerce

21
B2B e-commerce startups still struggle, despite
investments

● Between 2008 and 2022, about 28 B2B eCommerce

startups secured over $470 million in venture funding.
● 90% of this inflow happened within a year - 2021 to 2022.
“I also see an increased use of data, artificial
● However, B2B eCommerce startups in Africa have faced intelligence in conquering issues relating to
operational challenges. commerce. Summarily I do believe that
● Notable shutdowns within the past six months include e-commerce will continue to grow but may
Zumi, Wabi and recently Sendy goes under administration. not be along the path of developed countries
as we, as Africans, will have to define our own
● Copia Global, Twiga Foods, and Marketforce have laid off paths since our challenges are different.”
700, 494, and 54 workers respectively between 2022 and
2023.
● Jumia is not left out of this struggle to profitability.
Francis Ebuehi
● Many ecommerce startups have reneged on expansion Digital Financial Services &
plans and implemented workforce adjustments to maintain E-commerce Consultant, IFC
financial solvency.

22
Focus: Tough market conditions for retail king, Jumia

After reaching an all time high in January 2021, Jumia’s

● In April 2019, Jumia went public on the New York Stock share price has seen a massive reduction in value
Exchange (NYSE) and raised $196 million in net proceeds.
Fig 9: Share price history of Jumia stock
● The share price, initially offered at $14.50, rose more than
200% in the first three trading sessions.

● Jumia, reported a substantial shift in performance metrics

in its recent earnings release for the second quarter of
2023: losing 1 million customer and processing 6 million
fewer orders in the first six months of the year compared
to the same period last year.

Source(s): Jumia Financials, Investing

23
Jumia cuts costs, profitability yet eludes it

● The earnings report highlighted a noteworthy 25% Although Jumia has cut down it losses, it is yet to make a profit in six
successive quarters
reduction in sales value, amounting to $202 million,
during the period spanning from April to June. Table 1: JUMIA’s Customer, Revenue, and EBITDA Loss figures from
Q1 2022 to Q2 2023
● This decrease in sales amounted to a 15% decline in
Period Customers Revenue Adjusted
revenue, totaling $48.5 million. EBITDA loss

● Jumia reported a loss of $19.3 million, 66% lower than a Q2 2023 6.5 million 48.5 million 19.3 million

year ago and its lowest quarterly loss in four years. Q1 2023 6.9 million 46.3 million 27 million

● An average inflation of 14% across the company’s 11 Q4 2022 9.9 million 66.5 million 49 million

markets as of June 2023 reduced consumer spending Q3 2022 9.4 million 50.5 million 45.5 million
and sellers’ ability to stock inventory. Q2 2022 10.3 million 57.3 million 57.2 million

Q1 2022 9.3 million 47.6 million 55.3 million

Source: Jumia Financials,

24
Like Jumia, Takealot faces significant losses in 2023

After three years of reduced trading losses,

● Takealot has three main operating units – Takealot faced a huge loss in HY 2023

Takealot.com, Superbalist, and Mr D.

Fig 11: Takelot’s trading losses between 2020 and 2023

● Takealot.com, South Africa’s largest eCommerce

platform, grew GMV(gross merchandise value) by 14%
year-on-year in local currency.

● Superbalist, a leading South African online fashion

destination, grew revenue by 11% in local currency.

● Mr D, an on-demand business, grew GMV by 8% and

revenue by 17%.

● However, the group incurred a loss of USD 22 million

(R400 million), representing a trading margin of -3%. Source: TechCabal , DailyInvestor

25
Rising operational costs hinder profitability

● The slower growth raises concerns that Takealot has Fig 12: Takelot’s gross merchandise value growth
rate between 2020 and 2023
reached the end of its strong growth phase but
continues to struggle to contain costs.

● Its performance indicates slowing consumer demand

due to rising inflation and high-interest rates.

● Profitability was severely impacted by rising

operational costs due to persistent national rolling
power blackouts, escalating fuel costs, and the effect
of global supply-chain constraints.

● Profitability will depend on increased margins, cost

reduction, and increased efficiency.

Source(s): JBusinesstech.co.za

26
 Fig 13. Amazon’s profit by year from 1996 to 2020 (in USD
million)

If it took Amazon 8 years to become a

profitable company, how long will it take
for Africa’s ecommerce upstarts to
reach profitability?

● Between 1996 and 2002, Amazon made a cumulative

loss of over USD 3 billion
● The e-commerce giant didn’t make any profit till 2003,
when it made a profit of USD 35 million.
● From 2003 to 2020, it had 16 years of profit with 2012
and 2014 being the exceptions.

27
FUTURE OF COMMERCE:

3. Social commerce

October, 2023 www.techcabal.com Version 1

Social media platforms increasingly facilitate trade
transactions in Africa

Industry trends driving social commerce Myriads of business transactions are concluded over
adoption social media

The launch of Facebook marketplace, Whatsapp for Fig 14. Collection of Social Media Platforms that enable commerce
01 Business, and Business Pages on Instagram.

The 91% rise in smartphone adoption in Africa from

02 2018 to 2023.

Extensive business tools available on these platforms

03 and their existing distribution moat.

Low barrier of entry for the average user and reduction

04 in digital expertise to navigate.

05 Ease of payments and informal market integration.

Large number of users on social networks across

06 Africa.

29
Social Commerce is on an upward trajectory with
chat banking, online retailers, and businesses

Share of small and

medium enterprises Value of the social Projected growth of
that utilize social media commerce industry in social commerce in
for their business in Africa and the Middle Africa and the Middle
Kenya, Nigeria, and East by 2028 East between 2022 and
South Africa as of 2023 2028

67% $41.9bn 55.2%

Source: Quartz Africa, Finance Digital Africa, MSME Survey Report 2023
30
Social commerce will disrupt traditional markets in Africa
● 400 million people use social media platforms in
Africa.
● This large number of users has driven social
commerce to huge momentum as Africa and the
middle east was estimated to be a $9 billion market.
● Tik Tok is gaining massive adoption across the
continent and has launched TikTok for Business in
South Africa.
● The product launch will allow brands tell immersive
stories, provide a dynamic consumer experience
while also connecting with Gen Z audiences.
● Social commerce will enhance the shopping
experience through user generated content,
personalized recommendations, and convenience.
“African consumers often rely on peer
recommendations and reviews. There is a
high probability that I would buy a shirt if I
see the reviews from people who have
bought the same shirt or from the same
vendor. Social commerce platforms allow
users to share their experiences, reviews,
and ratings, which can influence
purchasing decisions and build trust
among consumers.”
Francis Ebuehi
Digital Financial Services &
E-commerce Consultant, IFC
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FUTURE OF COMMERCE:

3. Payments

October, 2023 www.techcabal.com Version 1

Revenue from e-payment in Africa will increase by
20%/year - McKinsey

Major trends driving digital payments adoption

•
Remittance remains largely underexplored. More Fintech
• 01 will move towards creating digital remittance products. e.g.
Swap by Flutterwave, Flexipay in Uganda
• Financial inclusion via wallets and
Mobile-money transactions will play huge role as alternative credit: As more non-banks
•
02 smartphone adoption and mobile internet penetration
grows.
handle the money operations of individuals
and businesses, the likelihood that this
would continue to advance financial
Fintechs will bundle retail and business banking products inclusion remains high. “
03 to reduce payment friction associated with MSMEs across
the continent.

Leveraging transactional data to gain insight into

economic patterns, consumer behaviour, and market
Ope Adeoye
04 trends to build targeted financial products and services to
CEO, One Pipe
aid commerce.

33
Digital Payments will reach US$174 billion by 2024

Fig 15: Transaction value of digital payments in Africa by segment from 2017 to 2027 (in USD billion)

● Mobile POS payments will lead other

segments in transaction value as mobile
money and agency banking continue to
deepen financial inclusion across the
continent.

● The period between 2026 and 2027 will

see a 14% growth in transaction value;
the highest within the forecast period.

● Payments in digital commerce will grow

at a similar rate as mobile pos payments
as online shoppers increase across the
continent.

Source: Statista 34
Sub-Saharan Africa is the world’s mobile money leader

Table 1: Mobile Money growth according to region (2022)

Region Registered Active Transaction Transaction

Fig 16: Value and Volume of mobile money transactions by region(2022) accounts Accounts Volume value

Global 1.6 bn 401 mn 65 bn 1.26tn

Sub 763 mn 218 mn 45 bn 832 bn

Saharan
Africa

South Asia 336 mn 82 mn 10 bn 185 bn

East Asia & 361 mn 68 mn 8 bn 180 bn

Pacific

Latin 57 mn 32 mn 1 bn 35 bn
America &
Caribbean

Europe & 22 mn 5 mn 345 mn 6 bn

Central Asia
Source: GSMA
Middle East 59 mn 6 mn 357 mn 21 bn
/North
Africa
35
Online payments will increase as investments in
Africa’s digital infrastructure expand

Emerging trends in Africa’s Payments sector

Fig 17: Revenue from Electronic Payments for Africa between 2020
● The rise in virtual cards due to its shorter issuance time, and 2025 (in billion dollars)
ease of access compared to foreign currency limitations
associated with physical cards from traditional banks.

● Blockchain solutions are becoming widespread as cross

border payments friction lingers, while virtual cards and
open banking regulations continue to gain traction.

● Open banking (regulations) in more African countries will

create room for embedded financing (or Banking as a
service- Baas) which allows non-financial service providers
to offer financial services to their customers.

● African countries including Egypt, Ghana, Kenya, Tanzania,

Ethiopia, Nigeria, and South Africa, have adopted necessary
frameworks to support electronic payment systems. The
framework conditions include open banking regulations,
mobile money regulation, data protection laws among Source: McKinsey
others.
36
Banking as a service (Baas) will grow significantly in
Africa

● Anchor launched its Baas products to help non-financial Fig 18: Percentage breakdown by payment type (2025)
firms integrated financial services to their core services.

● Payments have surged in major African markets in the last

year as fintech giants like Safaricom, Moniepoint, and
Flutterwave embark on expansion, acquisition, and IPO
respectively to break into new markets.

● Payment giant, Interswitch launched support for Google

Pay on its payment gateway—the Interswitch Payment
Gateway (IPG) to enable online payments for Nigerian users

“The embedded finance market in Africa is nascent but

growing fast at over 30% CAGR. Anchor’s growth rate is
impressive and showing signs of becoming the category
leader which is something we look out for in our portfolio Source: McKinsey
companies.”

Justin Kan, Goat Capital.

37
Retail businesses are increasingly partnering with banks
and fintech to offer Buy Now Pay Later solutions

Trends driving buy-now-pay-later integration Fintechs offering BNPL products

Rising inflation rates across Africa resulting in

01 reduced purchasing power.

02 The lack of credit access across the continent.

High demand for digital products by young, urban

03 population.

Easy access to credit to the unbanked and financially

04 excluded.
Late Stage startups are expanding into Buy-Now-Pay-Later
Favourable payment plans for end users, leading to
05 increased cash flow. ● Egyptian Fintech giant, Fawry, announces plans to add
business lending to its portfolio after receiving
preliminary approval from the Financial Regulatory
06 Gross Merchandise Value is predicted to increase from
$204 million to over $1 billion by 2028 Authority.
● Jumia is set to launch its Buy Now, Pay Later solution in
Source(s): TechPoint TechCabal, GlobeWire
Egypt as the company aims to drive usage of its JumiaPay
app

38
FUTURE OF COMMERCE:

4. Logistics

October, 2023 www.techcabal.com Version 1

Logistics sector will see increased formalization, away
from small scale informal operations

Highlights and prospects of the logistic sector

Logistic sector is dominated by small scale operators

01 with less than 5 vehicles covering limited geography.

Logistics firms will get more VC funding to expand

02 across Africa to meet demand post-AfCFTA.
“It is still early days for robotics and
The Africa Development Bank has invested about US$
03 44 billion boost infrastructure in Africa.
automation in the African logistics sector.
However, the technologies are already
demonstrating their potential. We will likely
A boom in the logistics industry will expand
04 intra-Africa fintech products.
witness a shift from all-human facilities to
collaborative human-machine facilities in
Logistic companies are integrating smart technology the next few years.“
05 solutions & big data to improve operational efficiency.

Last mile logistics remains difficult to hack due to poor Amadou Diallo
06 infrastructure, road network, and regulatory
framework.
CEO, DHL Global
Forwarding, MIddle East & Africa

Sources: Statista, African Union 40

The AfCFTA and Logistics in Africa

Potential economic impact on Logistics

28% 2 mn $345 bn
Projected increase in Number of additional trucks Projected investment for trucks
intra-African freight to meet up freight demand alone
demand

100k $6.7 trn ~40%

Number of additional rail wagons Projected business and Projected Increase in intra-African
to meet up freight demand consumer expenditure by trade when compared to a situation
2030
without the AfCFTA in place by 2045

Source: ECA, Mo Ibrahim foundation

41
Logistic Startups have raised $541 million since 2019,
48% happened in 2022

Fig 19. Venture Capital funding to Logistics/transport startups in Africa in USD million

● VC funding to logistic startups hit peak

levels in 2022. The total amount received
in that year alone was more than the
previous three years combined.

● Funding has gone to logistic startups

focused on B2B distribution, mobility
solutions, and green transport solutions
alike.

● Moove, a mobility startup raised the

highest amount so far- $323 million in
funding between 2021 and 2023

● The funding has largely been a mix of

equity and debt financing with the latter
coming from British International
Investment, Franklin Templeton
Investments and ABSA.

Sources: Disrupt Africa, TechCabal Insights, TheBigDeal

*as of Q2 2023
42
However, African countries lag behind on logistic
infrastructure

Fig 20. Logistics Performance Index (LPI) and LPI Infrastructure Score, 2023

● The average logistic performance score

for African countries in 2023 stood at 2.5
- compared China (3.7) and India (3.2)

● With an LPI and Infrastructure score of

3.7, and 3.6 respectively, South Africa is
the African country with the highest
logistic performance score, lower than
BRICS members, China but higher than
that of India and Brazil.

● The highest possible LPI score is five (5),

while the lowest score is one (1). A high
LPI score indicates an advanced logistics
sector.

Sources: World Bank 43

 These key trends will dominate logistics in 2024

● By 2024, over 80% of logistics companies in Africa will integrate smart technologies
Smart technology and integration such as IoT devices, real-time tracking solutions, and blockchain for enhanced visibility
and operational efficiency.

● The last-mile delivery market is projected to grow by 150% in the next three years,
Innovation at the last mile fueled by the adoption of drone delivery and autonomous vehicles to overcome
infrastructural challenges and deliver faster in remote areas.

Supply chain powered by ● Sustainability and climate change will influence businesses to adopt greener supply
sustainability chain practices and achieve a 50% reduction in carbon emissions by 2030

● Strategic collaboration among logistics providers, manufacturers, and tech companies

Strategic collaboration is set to increase by 60% in the next five years, fostering resilient supply chains to
withstand disruptions and optimize resources.

● Robust data system will gain massive adoption, enabling businesses to identify
issues and disruptions quickly, take countermeasures, and create forecasts for the
future
Data Driven Operations
● By collecting and utilising the right data, logistics companies can build and deploy
optimised strategies along supply chain segments, gain greater visibility and improve
service across all levels.

44
Sources: Trademark Africa, TheAfricaLogistics
Focus: AfCFTA will create new opportunities in logistics

● A single continental market will eliminate tariffs on most goods

01
and help in facilitating the free movement of goods and
Expanded Market Access services across African countries. This expanded market access
can benefit e-commerce businesses by providing a larger
customer base and reducing trade barriers.

● AfCFTA will encourage competition among businesses.

02
E-commerce platforms will face competition not only from local
Increased Competition retailers but also from businesses across the continent. This
competition can drive innovation, improve service quality, and
lower prices for consumers.

● To support the goals of AfCFTA, African governments are

03
expected to invest in infrastructure development, including
Improved Infrastructure transportation and digital infrastructure. Improved logistics
and internet connectivity can enhance the efficiency of
e-commerce operations.

● AfCFTA aims to boost intra-Africa trade, create jobs, and

04 Economic growth
stimulate economic growth. As economies grow, consumers
often have more disposable income, leading to increased online
shopping and e-commerce activity.

45
FUTURE OF COMMERCE:

5. Trends and outlook

October, 2023 www.techcabal.com Version 1

Pockets of events do not necessarily make a
trend; they could be indicators

47
Innovation and socio-economic development are the
factors that influence what becomes a trend
PAPSS & Unified Payments
(I) Interface (UPI)
Infrastructure
● PAPSS as a settlement
framework that facilitates trade
across African borders in local
currency will boost commerce.
Technology/Innovation
● The expansion of UPI into Africa
through commercial partnerships
between payment platforms will
further enhance transactions
within and outside Africa.
Virtual cards & Baas,
● Virtual cards are gaining wide
acceptance for international
Solutions
payments, albeit bedeviled by
fraudulent activities.
● Open banking facilitates API
sharing that supports BaaS. e.g.
Anchor, truID,Sopra, Basiq,
TrueLayer, OpenPayd, Stripe,
OnePipe, Stitch, Finastra.
5G infrastructure
● The spread of 5G infrastructure
and other fibre network will
support mobile internet
penetration which will in turn
engender development of digital
transactions.
● e.g. Nigeria, Kenya, South Africa,
Uganda, Egypt, Ghana, Morocco.
Cryptocurrency
● The use of stable coins like
bitcoin to facilitate international
remittance and cross border
transactions. e.g. VALR and Luno
partnered with CryptoConvert to
support bitcoin payment in their
apps at all Pick n Pay tills in South
Africa.
48
Innovation and socio-economic development are the
factors that influence what becomes a trend

Payment Licenses and Open

(II) Banking
Data protection legislation

● African governments are passing

Regulations
● Open Banking regulations and
and reviewing their data
guidelines in key markets like
protection laws to prevent the
Nigeria, Kenya, South Africa, and
willful use of personal
Rwanda.
information. e.g. Nigeria, Kenya,
● Payment Service Regulation, Uganda, Tanzania etc.
Socio-economic

Mobile money operator

development

● Corporate governance
regulations and digital service tax
framework.
regulations.

ECOWAS
AfCFTA
Francis Ebuehi
Digital Financial Services &
● The implementation of AfCFTA is ● Adoption of a regional
E-commerce strategy to
Consultant, IFC
Free Trade

expected to increase freight boost e-commerce through

demand by 28% in 2030 and specific measures in line with the
intra-African trade by 40% in eTrade readiness assessment
2045 . conducted by the UNCTDA.

● The AfCFTA will be far reaching

for African countries, sectors and
businesses in general.
49
The future commerce is facilitating intra-Africa
transactions
➢ Pursuit of Pan-African expansion by
financial service providers as
African countries build regulatory
Payments
structures.
➢ More Fintech will create remittance
products to tap from the pool.
➢ Increased adoption of Embedded
Finance and Baas by non-financial
businesses.
Social commerce
➢ In-app purchases will gain traction
as social media platforms like
Facebook and Whatsapp add inbuilt
stores and ‘check out’ option.
➢ Personalized Customer
Engagement will increase brand
reputation and drive customer
loyalty.
➢ Rise of digital logistics, small &
flexible, that reduce logistic cost
and enhance service delivery.
Logistics
➢ While B2B logistics is expected to
dominate, B2C logistics will also
grow as consumer spending rises.
➢ Regulation and infrastructure will
still struggle especially with the
expectations from the AfCFTA.
➢ Retail businesses will adopt BaaS to
retain value while enhancing
customer experience.
➢ Increased retail-Fintech partnership
Retail
to offer payment options such as
BNPL services.
➢ More retail businesses, especially
mid-sized, will explore
opportunities in social commerce.
50
FUTURE OF COMMERCE:

6. Key takeaways

October, 2023 www.techcabal.com Version 1

Key takeaways
The AfCFTA is already shaping the
long-term strategies of firms who are
seeking pan-African expansion through
M&A, product development and entry.
Logistics businesses must respond to the
pan-African landscape by going big in
terms of capital and technology to facilitate
trade across borders.
Businesses must explore alternative
payments - BNPL, BaaS, embedded finance,
virtual cards, chat banking, etc - to support
seamless cross-border transactions.
01
African governments are creating new
02 regulations, Acts and Sandboxes to
respond to the fast changing tech-business
landscape.
03
As payment/credit institutions pursue
04 Pan-African expansion to join the
competition at a continental level, entry
strategy becomes super critical for success.
05
Businesses must explore collaboration
06 for synergies across commercial value
chain, relying on technology competencies
to enhance service delivery .
52
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TechCabal Insights Research team Contacts

Amamchukwu Okafor, Research Lead Olanrewaju Odunowo

Mobolaji Adebayo, Analyst Head, TechCabal Insights
Ayomide Agbaje, Analyst olanrewaju@bigcabal.com

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