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Improvements in communications and transportation infrastructure key to creating three million jobs

Online marketplaces will create over 3 million new jobs in Africa by 2025 if improvements in communications and transport infrastructure are undertaken, a research has unraveled.

Digital illiteracy among African consumers and vendors also presents several obstacles to growth in online commerce, adds the report by Boston Consulting Group.

The report says that merchants lack the knowledge needed to adapt their value chains to the digital world. “Online marketplaces must often look outside of Africa for the digital marketers, data scientists, user interface and user experience designers, and other skilled workers they need to succeed”, the report reads in part.

To mitigate this challenge, companies like Jumia are offering online training that includes video tutorials and tests in topics such as pricing, search engine optimization, stock management, and order fulfillment.

“Online marketplaces are a good illustration of how the digital revolution can create economic opportunity and improve social welfare in Africa,” said Patrick Dupoux, a senior BCG partner who leads the firm’s Africa business.

The three million jobs estimate is based on current direct, indirect, and induced employment in online marketplaces in the region as well as the current and projected revenue of these marketplaces.

Indirect employment generated by marketplaces, including workers such as merchants, logistic clerks, passenger-vehicle drivers, hotel staff, and housekeepers, will amount to one million more jobs.

An additional 1.8 million jobs will be “induced,” or created through the additional economic activity stimulated by online marketplaces. Occupations affected will include car mechanics and cleaners, tourist guides, and craftspeople.

The biggest employment gains, the research says, will come in the consumer goods sector, where online marketplaces are projected to account for 58 per cent of jobs created—direct, indirect, and induced—by 2025, followed by mobility (18 per cent) and the travel and hospitality sector (9 per cent).

The report asserts that there is a correlation between higher e-commerce penetration and how efficiently commercial transactions are made.

“These platforms improve market efficiency in several ways. For one, they reduce the number of intermediaries in commercial transactions by enabling merchants to sell directly to consumers. This is especially valuable to merchants in Africa, where conventional retail channels remain underdeveloped”, the report reads.

It adds that online marketplaces also make information on buyers and sellers more transparent, such as by indicating trustworthiness through the publication of reviews, reducing the time and expense required to verify the reliability of both parties. This will further help increase penetration.

“While online marketplaces are often seen as disruptive forces in advanced economies, in Africa’s less-structured economics they can be tremendous catalysts of economic development,” said Lisa Livers a BCG partner and co-author of the report.


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