Driving Africa’s e-commerce potentials through effective postal service
By David Dadge
London, March 18, 2019 (AltAfrica)-With a population of more than 1.2 billion people, Africa is the second most populous continent on the planet behind Asia. However, according to a 2018 UNCTAD report, the region’s online shoppers (at 21 million in 2017) accounted for only 2 percent of the global e-commerce, meaning there is considerable potential for expansion.
The UPU is working steadfastly to help Posts seize this opportunity – one it seems they are ideally positioned to fulfil. The 21,700 post offices and 138,000 post agents in Africa represent an expansive distribution network that can offer immense support to Africa’s e-commerce growth.
“The Post has the comparative advantage of its global network. Posts have an extended physical network infrastructure covering both rural and urban areas and therefore have the opportunity to reach and connect more people than other delivery agents,” says Leolinda Dieme, Africa Regional Expert for the UPU’s Development Cooperation Directorate.
With more Posts diversifying their product portfolios, this network spans more than just the physical web of 677,000 post offices worldwide, explains the UPU’s Expert for E-Commerce Operational Integration, Fredrick Omamo. Posts also offer financial and electronic networks, which are key components for facilitating e-commerce transactions.
“Since the untapped e-commerce potential in Africa is so huge, postal supply chain stakeholders in Africa have to integrate e-commerce into their operations right now or they might miss the train. As ever more business traffic is generated through online transactions, the window of opportunity is fast closing for many African Posts if they do not embrace e-commerce,”
According to Dieme and Omamo, African countries have several key challenges to overcome if they want to capture the market. They need to introduce regulatory frameworks that safeguard the Universal Service Obligation – or the provision of an affordable basic service for all citizens – and fair competition. They also need to prioritize postal development in their national budgets and to modernize their postal infrastructure. Countries must also work together to set up de minimis thresholds, cross-border merchandise return policies and improve logistics infrastructure to ensure goods can be transported across the region, including by rail, road, sea and air.
The UPU is working on getting the region’s postal operators up to speed with the global online market.
Dieme and her colleagues in the UPU’s Development Cooperation Directorate are working with African countries so they can meet international operational standards for e-commerce through the Operational Readiness for E-commerce project, helping them to evaluate postal processes and provide guidance on international standards, quality of postal services, and the exchange of electronic data required to collect and distribute e-commerce items worldwide.
“Once we do our on-site evaluation and complete a compliance report with recommendations, countries, in need of financial support, have the possibility to use the UPU Quality of Service Fund to make necessary investments for compliance. We also have a special fund dedicated to the least developed countries which we use for procurement of IT equipment, licenses and vehicles to meet the minimum operational requirements for e-commerce,” she says.
The Quality of Service Fund finances development projects directed at improving the quality, reliability and durability of the postal network.
At the regional level, Omamo says there is a big opportunity to drive South-South cooperation. This is something he and his cross-cutting team of UPU experts are trying to achieve with the UPU’s Ecom@Africa initiative. The project will see leading countries in the region establish integrated cross-border e-commerce ecosystems provided by postal operators through physical e-commerce fulfilment centres, or ‘hubs’, interfaced with online e-commerce platforms.
UPU experts have identified potential hubs by analysing big data on postal exchanges and pinpointing countries that have conducive regulatory conditions and investment climate to support the project. So far, Tunisia, Côte D’Ivoire and Ethiopia have all signed on, agreeing to establish fulfilment centres that would serve surrounding countries. Eventually, they will also work on establishing virtual marketplaces that will interface with each other.
Omamo stresses that Ecom@Africa is not a postal project, but a national infrastructure project requiring commitment and support from governments and key postal supply chain stakeholders, such as customs and airlines. He hopes the initiative will sensitize governments to the need to develop and integrate the e-commerce logistics and payment network across the continent.
“Regional organizations such as the African Union are already starting to think about integration. Nearly 50 countries have already signed an agreement to establish an African Continental Free Trade Area. This would greatly galvanize the south-to-south cooperation and boost intra-African trade which is currently still less than 20 percent according to recent reports,” he adds.
“Africa is lagging behind in e-commerce, but with a young population, this represents an opportunity for the continent to come up with innovative initiatives and solutions that can overcome existing structural deficiencies. Africa can leapfrog into the digital world and create its own development path,” he says.
David Dadge isManager, Communication and Events Programme Universal Postal Union (UPU)