Zambia’s e-commerce firms stay the course amid pandemic
Despite COVID-19 hurdles, online businesses in Zambia are clinging to their big dreams while the government strengthens the nation’s e-commerce ecosystem.
Zambia’s coronavirus lockdown shut down some more traditional businesses, but for e-commerce firms this was their chance to scale up operations.
AfriDelivery, a food delivery service with big dreams of becoming a business-to-business (B2B) e-commerce platform, recorded 100% growth in annual terms in 2020.
Afshon Wallace, the company’s founder and CEO, said it grew on two fronts – in business partners and customers – during the pandemic.
“We managed to keep delivering, from shops, restaurants, supermarkets and pharmacies while also finding more businesses to partner with. It’s been a powerful period for us, even though the growth was related to the pandemic,” Mr. Wallace said.
Meanwhile, as the tourism industry demand collapsed, another company, Voyagers Zambia – a travel agency and part of a group that offers travel, safari, insurance brokerage and car rental services – developed an online platform to distribute travel products efficiently.
The company’s director, Grant Gatchell, said tourism relief measures were limited for travel agencies, forcing the group to pivot towards car rental and transport including new products and services.
“In a way the pandemic made us reassess our offering and expand it,” Mr. Gatchell said.
Despite the opportunities, the pandemic also brought many challenges and unforeseen costs for e-commerce firms. Operational costs also increased due to measures taken to protect staff.
For Afri-Delivery, exchange rate fluctuations exacerbated the situation by driving up the price of imported motorbikes, the primary delivery vehicle in Zambia, Mr. Wallace said.
Other challenges cited by e-commerce firms include poor access to the internet and electricity, and the high cost of broadband services.
Tax breaks would go a long way to support the nation’s e-commerce firms, some owners say. They also encouraged the government to enter into more double-tax treaties to reduce the cost of imported technology goods and services.
The owners also say they receive limited government support and lack appropriate forums to exchange meaningfully with policymakers, as confirmed by a recent UNCTAD survey on COVID-19 and e-commerce.
“The pandemic has compelled businesses to accelerate digital transformation processes and reinvent their business models,” said Shamika N. Sirimanne, UNCTAD’s technology and logistics director.
“However, stronger government action and close public-private cooperation are needed to improve Zambia’s e-commerce readiness,” she said.
Turning recommendations into action
UNCTAD’s e-Trade Readiness Assessment for Zambia, conducted in 2018, recommended measures across seven key policy areas.
An UNCTAD review found that by mid-2020, Zambia had implemented about 50% of the recommendations, a huge advance for the country.
The southern African nation also saw an improvement of its ranking in UNCTAD’s B2C E-Commerce Index 2020 from 125 to 120.
The Zambian government is currently developing an e-commerce strategy using a robust, multi-stakeholder approach, and reviewing its national ICT policy.
Other noteworthy advances include:
- In the area of ICT infrastructure and services, Zambia’s continued emphasis on setting up communication towers across the country has boosted mobile network coverage to reach nearly 92% of the population.
- It revised the national energy policy in 2019 to facilitate more open access regimes, increase private sector participation, promote alternative sources of energy and cost-reflective tariffs in the pricing of services.
- On the trade facilitation and logistics front, it’s developing a national addressing system to enhance trade logistics and last mile delivery, as well as a national postal policy.
- Zambia is a signatory to the World Trade Organization’s Trade Facilitation Agreement. It uses ASYCUDA as the Customs Management System (CMS), and uses the ASYCUDA platform to build a single window environment serving importers, exporters or customs brokers.. This reduces the transit time of goods at the border and enhances trade. Recently, the country ratified the African Continental Free Trade Area Agreement.
- In terms of legal and regulatory frameworks, the government is reviewing regulations to address issues dealing with e-transaction and data protection. It has also submitted a bill on cyber security to the parliament. Zambia is also reviewing its consumer and competition laws to protect consumers in electronic transactions.
- On the payments side, the Bank of Zambia has developed a switch to support interoperability among banks and other financial services. In response to the pandemic, it took several measures to encourage the use of digital financial services and reduce processing fees for money transfer.
- ICT skills education has become compulsory in schools to develop technological capacity among the youth.
Helping beyond Zambia
Besides Zambia, UNCTAD is helping other nations in which it has conducted eTrade readiness assessments – 27 to date – to turn recommendations into action.
In January and February this year, UNCTAD and its partners brought together over 270 public and private sector stakeholders from more than 20 countries to discuss how best to fast-track the implementation of the recommendations.
The participants, who included eTrade for all partners, shared experiences and explored opportunities to foster collaboration.
Supported financially by Germany and the Netherlands, UNCTAD is working with the eTrade for all partners and UN resident coordinators to ensure e-commerce is mainstreamed into national development plans and development partners’ cooperation frameworks.