…Exploiting massive predicted cross-border growth
By Hilary Mare
ELECTRONIC commerce offers an opportunity for business development. Essentially, Namibia is being left behind by the developed world mainly because of lack of awareness of the existence of e-commerce and its potential advantages.
In light of the massive growth prospects of e-commerce in Southern Africa, DHL Express has released a report, ‘The 21st Century Spice Trade: A Guide to the Cross- Border E-Commerce Opportunity’, which indicates that cross-border online retail volumes are predicted to increase at an annual average rate of 25 percent between 2015 and 2020 (from US$300 billion to US$900 billion), twice the pace of domestic e-commerce growth.
Cross-border e-commerce is considered a growth rocket for sub-Saharan Africa retailers and the report reveals that cross-border e-commerce offers aggregate growth rates not available in most other retail markets.
Challenges revolve around logistics
The main challenges highlighted by consumers to cross-border purchases relate to logistics, trust, price and customer experience. At the same time, online retailers can take a number of relatively easy steps to identify, cultivate and service demand from abroad. The report noted that the e-commerce trend has given birth to a new eco-system of facilitators and off-the-shelf solutions (such as payment providers and programmes that localise a website’s check-out experience for the visitor), helping retailers to adapt their offering to the digital world and to transact with customers in foreign markets.
Imperatively on the other hand, a study published recently by MasterCard showed that 91 percent of South Africans who shop online are happy with their overall experience‚ a four percentage point increase from the 87 percent who said the same thing in last year’s survey.
The hypotheses that there exists poor knowledge and poor use of e-commerce in Namibia; that companies in Namibia can improve their efficiency and cut on costs by using e-commerce; and that the existing infrastructure in the country is good enough to support e-commerce activities need to be assessed and analysed and possible solutions granted.
A commentary published by a daily last year penned by Tulinanye Sheya is a UCT educated electrical engineer employed in the telecommunications industry affirmed lack of e-commerce embrace saying, Namibia has not yet recorded much progress in this new generation of business and there are a number of reasons for that, the main one being that most of the available online payment systems require users to have credit cards.
Only a very small percentage of the Namibian population qualifies for credit cards and the few who have them are hardly willing to do online transactions using their credit card information due to perceived security reasons.
“We also don’t have an open Namibian online payment system that any merchant can readily integrate on their site to accept payments online. The ideal online payment system for the Namibian market must be inclusive enough to allow anyone with access to the internet either through the PC or mobile phone to do online payments.
“This must be done without necessarily using a credit card but by rather loading cash on a payment system at designated places or online through local banks’ internet banking portals for later use when the need to buy something online arises. It must also be able to be interfaced to any website or app that Namibian programmers will develop for the purpose of receiving payments online. Such a system would expand the range of possible innovations that Namibia based ‘techpreneurs’ can come up with,” stated the article.
Local payment systems that come close to ideal are Mobi-Pay, FNB’s e-wallet, mobile operators’ premium SMSes and Ebank. All these are however not readily available through an API for any online merchant to integrate on his/her app or website as a payment system.
The availability of an online payment system would enable entrepreneurs to create sustainable revenue generating start-ups that would attract funding from venture capital firms. Better yet, entrepreneurs can easily bootstrap their start-ups if they are lean enough to be supported by the generated revenue and thus avoid the hassle of looking for funds that would result in ceding some equity and control over the venture.
The major challenges that are encountered when setting up an online payment system are, among others, security and banking regulatory issues with central/reserve banks. Security concerns must not be the show stopper in Namibia because online payment is not a new thing worldwide, so Namibia can learn from others and implement the well tested online security systems that are already used to secure billions dollar worth of daily online transaction done worldwide.
Namibia recently experienced innovation in mobile payment systems that are also prone to similar security issues but we have not yet heard of security breaches.
The Bank of Namibia, especially its governor, Ipumbu Shiimi, have shown enthusiasm towards the technology innovation ecosystem by his pledge of support towards the Namibia Business Innovation Centre (NBIC).
Based on that, one would expect the BoN to support the online payment system as long as it does not compromise the stability of the country’s overall banking system and especially that an online payment system would contribute toward having a cashless economy where businesses and individuals do not have to carry big amounts of cash.
Confidente. Lifting the Lid. Copyright © 2015