Ostatech Ltd among firms eying continental deals in e-commerce space

Online purchases trend is set to carry on amid a growing demand for such services by consumers, with Sub-Saharan region a keen market for investments in startups eyeing such opportunities.

The East African market and more particularly, Kenya’s e-commerce market could reach a new peak of froth much sooner than industry trends had earlier predicted.

Tech experts are now predicting a funding frenzy in the fintech space, in what they believe will see the Kenyan e-Commerce market outperform global average of 6 percent, with the local market projected to register a yearly growth rate of 12 percent between 2021 and 2025.

The global e-commerce market reached a value of US$ 13 Trillion last year with the market forecast to reach US$ 55.6 Trillion by 2027, while Kenya’s e-commerce market surpassed $1.7 billion, according to Statista.

The World Bank Financial Inclusion Data notes that 72.9 percent of Kenyans who use mobile money, accounting for 26.1 percent of the population that make purchases and pay bills online.

“Connectivity is crucial for efficient, affordable, and safe business processes. In fact, 10 percent of all projects awarded between 2018 and 2020 focused on the digital transformation of the government, healthcare, and education sectors,” observes Oscar Mwai – the Chief executive of Ostatech Limited, whose predictions are supported by the rapid increase in Covid-19 – induced online purchases.

Unsurprisingly, Kenyan e-commerce market has been growing significantly over the last few years, especially among small and medium enterprises, but accelerated from 2020 because of increased convenience and efforts to avoid physical interactions with hard cash.

As a result, notable changes in shopping habits emerged among consumers while at the same time, households opted for bulk-buying and stockpiling of essentials – which proved vital for online platforms.

In fact, data by Statista Digital Market Outlook, predict that the compound annual growth rate for the next four years (CAGR 21-25) will be 12 percent, compared to year-over-year growth of 44 percent between 2020 and 2021.

This in their valuation, suggests a moderately flooded market, which will give birth to a booming ecosystem of highly valued, cash-rich start-ups, according to IT expert and the Chief executive of Directcore Technologies – which runs Nexcom brand.

“As we slowly emerge from the restrictions related to the pandemic, it is less clear how this shift in digital commerce may evolve across economies and industries. But the expected boom in that space shouldn’t attract tougher regulations, but instead nursed to obtain its advance latent.”

The pot of gold at the end of the rainbow will become even bigger than before, according to Alaa Alsadi, the IEC Telecom Group business development director for Middle East & Africa, who foresees more partnerships between companies to boost remote operations by firms.

“There is a market need to provide the right management and optimization tools to help our clients to have full visibility and control over their remote operations in a single centralized digital platform that they can access remotely”.

The embrace of e-commerce, according to findings by the International Monetary Fund (IMF) – a financing arm of the World Bank, appears to be particularly longer lasting in restaurants in food delivery, health care which includes telemedicine and some categories of retail, including department stores, electronics, and clothing.

“During the initial surge of the pandemic, there was a big demand for e-commerce relative to in-person commerce. Economies and sectors already familiar with some of the technologies were able to go online to a larger degree,” reads an IMF findings.

Electronics  and Media is the largest segment in Kenya and accounts for 41 percent of the e-Commerce revenue in the local market, followed by fashion with 31 percent, furniture and appliances with 13 percent, Toys, Hobby & DIY with 8 percent, while Food & Personal Care stands at 7 percent.

Kenya’s ranking jumped to 54th largest market for e-Commerce with a revenue of US$1.7 billion in 2021, placing it ahead of Sri Lanka and behind Hungary, as estimated by UN business and financial tracking agency, Unctad.