The rising youth population coupled with recent economic growth rates in Africa are forcing many people, especially the youth, to turn to the Internet for work and business opportunities. As of now, the online business space is mostly dominated by micro-entrepreneurs, which are business-people that employ less than five individuals or usually under informal arrangements.
However, there’s still so much more we can do with the opportunities the Internet of Things has brought with it. We’re currently well into the Information Age and the future is online. Sadly, though, the reality of online business on the African continent deviates greatly from what can be obtained in the Western world.
There are some obvious challenges the online business operator will have to face when in Africa, and many of them will be the same in whatever country you happen to be in on the continent. Hereinbelow are a few reasons why the internet business ecosystem in Africa isn’t as profitable as it should be.
Cost Of Broadband
The African continent is enjoying rapid growth in the mobile internet sphere, which is no doubt the most popular way people in this region access the web. While using some social media platforms such as Facebook can be free on certain telecommunications networks, watching say three-hour content pieces on MIT edX or Coursera might cost you as much as $55 in some parts of the continent. With bandwidth costing so high in many African countries, online internet businesses really struggle in Africa and many of them end-up relying on diasporas for a lot of their revenue.
A majority of the African population are yet to fully embrace the online marketplace and the business opportunities it offers. This is largely due to the crippling fear of online fraud most of the people have in the region. For instance, in Nigeria where phishing is very common, folks are normally sceptical when asked to put their credentials online. If it continues to be unable to attract the big spenders in the economy, this sector will, unfortunately, continue to be primarily for the younger population as well as college students to exploit.
Abundant Open Markets
On this continent you’ll find “markets” everywhere you go, starting with your ordinary security guard who has their small store right outside their master’s mansion. There are supermarkets, open-air markets and even unemployed youth going about selling their wares at traffic stops all around the major cities in the region. If your online business happens to be e-comm based then you’ll be forced to have a price tag war with these small entities if you want to be competitive. Also, because almost all e-comm based companies are formalized so that they can access banking systems they must pay taxes. In Kenya, for example, the government is looking to set a standard sixteen percent tax for entities doing business in the digital marketplace.
Even if integration and infrastructure issues were all fixed, which also happen to be things that help hinder online business in Africa, illiterate citizens might not be able to fully take part in the e-commerce and online business marketplace because most usually require both reading and writing skills. Burkina Faso, Niger and Chad, for instance, have literacy rates of around less than thirty percent. If the education of citizens is something that’s not invested in, the potential customer pool for internet entrepreneurs is greatly reduced.
The online business space has the potential of being very profitable for that web entrepreneur that’s willing to take the risk and fight through the challenges. It’ll just take a bit of time and a whole lot of effort to get there. The continent’s leaders must understand that besides getting websites up and running, there are several different elements that can provide for great success. For everything to work at an optimum level, African leaders need to concentrate on fixing the physical business ecosystems rather than placing all their focus on improving the total number of domains registered.