• Tuesday, November 28, 2023
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African cities drive online consumption and growth


  Africa’s growth is fast diversifying from commodities. Specifically, democracy, better governance, urbanisation and trade with China are transforming Sub-Saharan Africa gradually. More and more Chinese contractors are building roads, railways, ports and airports, while technology is being acquired to give fillip to the growth.

In 2013, eight of the world’s 20 fastest growing economies will be African. No wonder companies want to expand their footprints from Cairo to Cape Town, even though there are challenges of poor roads, corruption, inefficient cross-border trade, inadequate intermodal transportation, cumbersome bureaucracy and scarce skills.

The Economist Intelligence Unit (EIU) reckons that “companies looking to expand into Africa want to concentrate their strategy where growth and demographics are most favourable – in major cities”.

As a result, the EIU has compiled data on 25 cities that matter in 19 African countries. For instance, city-level data and analysis reveal that “consumption in Africa is greater in urban than rural areas”.

Abuja residents on average spend $2,185, a little more than Lagosians who spend $2, 159. Abuja and Lagos are respectively, second and third most expensive African cities, after Luanda in  Angola.

Adopting a city-level viewpoint of, say Lagos, paints a different demographic picture from Nigeria. For instance, 35 to 40 year-olds in Lagos are mostly men. Location and income tell a different story in terms of mobile phone subscribers.

A 2011 survey by Gallup found that the average mobile phone owner in sub-Sahara Africa is more likely to be male, educated and urban. In Nigeria, 77 percent and 66 percent of urban and rural dwellers said they had a mobile phone respectively. Three-quarters of the respondents, aged 30 to 45, said they owned a mobile phone.

Average household income for most of those who reported they had a mobile phone was about $1,100, while household income for those without mobile phones was $740.

Except Nigeria and three other countries, this pattern was common in all SSA countries “where there is no statistical difference in per capita household income.”

Mobile data usage is surging on the continent. According to Deloitte, a consultancy, “Africa’s mobile data usage amounts to 14.85 percent of the total internet traffic – second only to Asia.” Increased access to the Internet via mobile phones is also highlighting differences in age, gender, education and location.

Demographics of those who patronise Cheki, Jumia and Konga, three popular e-commerce companies show that most are male 35 to 40 year-olds with a post-graduate degree, according to Alexa, an analytics company.

Luring women to shop online is still a challenge (maybe they prefer to research online and purchase offline). Nevertheless, Naspers, a South African multimedia company, lately raised its stake in Konga to 50 percent. Although online content and data originating from Nigeria is miniscule, early movers are patiently taking a position at the lower end of the curve.

Since Internet penetration is low and limited to cities like Abuja, Lagos and Port Harcourt,