26 Jun 2019 / Article

Online Marketplaces: Major threat or huge opportunity?

Across Africa, online marketplaces are boosting incomes, creating jobs, and offering new opportunities for workers, and have a potential to create three million new jobs on the continent by 2025.

But how sustainable are these jobs, and can they generate inclusive economic growth across the continent ? This is a question that leading players in the field are generally confronted with.

“We have provided 3000 new jobs and mainly to fresh university graduates fresh who are always challenged with finding employment”, Jeremy Hodara, the Co founder of the leading e-commerce company in Africa,Jumia, told a panel discussion on tuesday 26th March at the ongoing AFRICA CEO FORUM 2019 in Kigali.

He added: “All jobs created have included about 8000 sellers and a lot of logistics partners, and these are mainly people who were doing business before. Now they do business in a more professional way because our platform enables them to sell higher volumes at a lower cost.”

Amane Dannouni, Partner at Boston Consulting Group, shared findings of their new report titled “How Online Marketplaces Can Power Employment in Africa”

Drawing from examples of successful online marketplaces like Jumia, Taxify, Travelstart and Uber, Dannouni said that along with creating new jobs, online marketplaces can stimulate skill development, boost supply and demand for goods and services, and bring more people into the formal workforce.

“Online marketplaces effectively utilize four models: business-to-consumer, business-to-business, consumer-to-consumer, and consumer-to-business. Such models enable them to match independent, third-party providers of goods and services with customers,” he said.

Because of their potential to provide the jobs needed by young people and improve service delivery, players in the field of online business must work more with African governments to deliver their full economic potential, experts said.

“The role of government is important but has been passive currently. We need government to be active about empowering online business platforms and overcoming their industry challenges, such as lack of regulatory clarity and limited market access”, Clemens Weitz, CEO of Ringer One Africa Media, said.

On whether online marketplaces are a potential threat to traditional businesses, experts say that competitiveness should flourish in order to drive better service delivery and innovation in Africa.

“Buying online is more efficient than traditional business, and it saves time and money and the quality is usually guaranteed and traceable. We are in competition with international platforms that have zero jobs created in Africa, so our governments must help us compete better,” Kuseni Dlamini, Chairman of Massmart, one of the largest retailer in Africa, said.

Governments were also reminded of their need to create a healthy environment in which online marketplaces can thrive and deliver inclusive economic growth in underserved regions, as well as advance national development goals.

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