Online marketplaces establishing themselves across Africa could create around three million new jobs by 2025.
These digital platforms, which match buyers and providers of goods and services, could also raise incomes and boost inclusive economic growth with minimal disruption to existing businesses and workforce norms.
These are among the findings of a new report, “How Online Marketplaces Can Power Employment in Africa,” released by the Boston Consulting Group (BCG).
The economic and social benefits of online marketplaces
“Online marketplaces are a good illustration of how the digital revolution can create economic opportunity and improve social welfare in Africa,” says Jan Gildemeister, BCG partner and managing director based in Johannesburg.
“Because Africa currently lacks an efficient distribution infrastructure, online marketplaces could create millions of jobs.”
Concerns that growth in online marketplaces will merely cannibalise the sales of brick-and-mortar retailers are misplaced in the case of Africa, according to the report.
There were only 15 stores per one million inhabitants in Africa in 2018, compared with 568 per million in Europe and 930 in the US. This extremely low penetration suggests that there is minimal risk that e-commerce would displace existing retailers and that much of the population is underserved.
The report also details the ways in which economic activity generated by online marketplaces boosts employment and incomes.
These businesses create demand for personnel in new fields, such as platform development, as well as for merchants, marketers, craftspeople, drivers, logistics clerks and hospitality staff.
Some e-commerce businesses also offer skills development programmes and help small enterprises raise capital to expand their businesses.
Online marketplaces also boost demand for goods and services in areas currently beyond the reach of conventional retail networks and bring new people – such as women and the youth who may be currently excluded from labour markets – into the workforce.
The report recommends that the online marketplace community and African governments collaborate to address the challenges that hinder the online marketplaces’ ability to grow.