The pursuit of inclusion: Africa and the new digital economy by Juliet Anammah, CEO Jumia Nigeria

A banker in Ikoyi in Lagos Nigeria and a cleaner at the arrival hall of Kotoka Airport in Accra, Ghana. There seems to be nothing in common between them till you see that they both have smartphones, shop on Jumia app and are active on Whatsapp.

This is the intrinsic value in digital platforms; serving as a bridge, maximizing scale and reach across income classes.

Businesses and social interactions in Africa are still fraught with inefficiencies resulting from information asymmetry. The primary means by which digital drives inclusion is via providing accessible information on products/services/price, and connecting buyers and sellers who may never have connected through traditional channels.

The core question on how the digital economy ensures inclusive development in Africa is perhaps about how we ensure digital is not captured by a small elite to the exclusion of others.

As of January 2018, there were 172 million mobile social media users in Africa and this number is growing at an estimated 15% per annum.

Social media already provides a vibrant community for exchange of ideas, content and consumer to consumer transactions. Digital transaction records (including payment, purchase records as well as behavioral data such as delivery success on eCommerce platforms) are already used to generate credit scores for loans to small merchants and consumers who may never have qualified for loans through traditional banking channels.

The genie is thus out of the bottle and the reach of digital platforms can no longer be contained and captured by a small group to the exclusion of others.

The key question then is what levers can further accelerate digital access and amplify inclusive development especially to rural communities and other disadvantaged groups in Africa? There are several but these two are pivotal.

Mass market smartphones. A smartphone is the primary gateway to the digital economy in Africa and currently the minimum price of entry is an average of €80 per smartphone. For this reason, while mobile penetration is 82%, mobile social media penetration is stuck at 14%. The difference is the number of feature phones vs. smartphones. The lower the price of smartphones, the more people who can purchase and have access. This can be made possible through a combination of government/private sector partnerships on mobile telephony and blended consumer finance.
Data connectivity. Outside of the main cities, Internet connectivity is limited and this makes it difficult for the 64% of Africans who are living in rural areas to access the digital economy effectively. India provides a good example of how investment in data access drives inclusion. Here again, a deliberate data expansion strategy across the continent championed via government and private sector partnerships will be extremely useful.

In summary the digital economy in Africa is driving inclusion driven by private sector investment in social media and eCommerce platforms like Jumia. To accelerate the pace, African governments may need to invest either directly or through incentives for the private sector to expand smartphone penetration and data connectivity.

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