Digital platforms are changing the business environment as we know it. ​

Online retail giants such as Amazon and Alibaba have replaced traditional bricks-and-mortar malls, connecting shoppers to a vast array of different providers and providing for the introduction and growth of new brands without the need to invest in physical stores. Digital platforms allow for rapid scaling and quick access to markets that otherwise have high physical barriers of entry. This development has the potential to create significant opportunities for small and emerging retail businesses. 

Platform-based businesses are on the rise in Africa. For example, Jumia, a Nigerian e-commerce company established in 2012, has already made inroads into 23 African countries, bringing electronics, groceries and fashion to its customers. It has created a platform for many local companies to distribute their goods and has provided employment for many micro-enterprises operating in the delivery services segment.

In 2018, the Chinese e-commerce giant Alibaba also launched Africa’s first Electronic World Trade Platform (eWTP) in Rwanda. The new platform is aimed at enabling Rwandan SMEs to sell their products, including coffee and handicrafts, to Chinese consumers through Alibaba's online marketplace. This platform and others of its kind could create better trade links for African SMEs, increasing their trade volumes and creating employment opportunities. 

Business analysts anticipate that a significant share of future employment opportunities will be created as a result of the links created through such platforms. This may also result in a larger share of future jobs occurring in micro-businesses.

While digital platforms present a host of opportunities for African businesses, the greatest barrier to adoption and effective utilisation of these platforms is the quality of internet connectivity, both for sellers and, more importantly, consumers. Despite the major advances that have been made in mobile connectivity and the provision of internet access in recent years, many African countries continue to lag behind other regions. Many African countries are still rolling out 2G in rural areas and 3G in urban areas, whereas the roll-out of 5G has already begun in developed markets.

Equally important to the adoption of digital marketplaces is the cost of data. Although smartphone penetration in Africa has spiked over the past decade, progress in reducing the cost of accessing the internet has not been as rapid. Depending on where you are in Africa, purchasing a gigabyte (GB) of mobile internet data can set you back as much as USD 35. In a survey of 60 low- and middle-income countries, the Alliance for Affordable Internet (A4AI) found that, at the end of 2017, average income spent on 1 GB of data in Africa was 8.6% compared to the global average of 5.5%. 

Against this backdrop, if Africa is to harness the full potential of digital platforms, special attention needs to be paid to providing affordable and reliable ICT infrastructure. Additionally, creating low data usage apps similar to Jumia, Uber and Facebook Lite will be crucial in facilitating consumer access to goods sold by SMEs on emerging digital platforms.