Namibia: The Rise of Electronic Commerce – Is Namibia Ready?

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E-commerce has become a buzzword as one of the key revelations of 21st century economic realities. We have all witnessed the advent of the COVID-19 pandemic, further reinforcing the importance of being able to buy and sell goods and services or transmit funds or data over electronic networks.

According to the United Nations Global Vision for Electronic Commerce report, global electronic commerce as a share of global GDP was estimated at 30% in 2020, while its share of global retail sales increased from 14% in 2019 to 17% in 2020. This highlights the ever-changing nature of the global economic system, characterized by the proliferation of global value chains across all industries, and the growing importance of the service sector.

China accounted for a significant share of global e-commerce transactions in 2020 at 25%, followed by the United States at 17%. Africa, on the other hand, accounts for only 3% of global electronic commerce.

Although the relatively small size of the African economy should be seen in this context, the low adoption rate of e-commerce among African countries is further reflected in a low intra-African trade of 17%. This shows that, despite the considerable progress made on the continent in terms of economic integration, cross-border barriers, poor transport infrastructure and the non-harmonization of essential services for trade facilitation have partially hampered the growth of a African e-commerce ecosystem.

However, Namibia’s intention to develop as a global and regional economic player raises the issue of institutional readiness to effectively reap the benefits of the African market.

The establishment of the African Continental Free Trade Area (AfCFTA) which entered into force in January 2021 is an interesting point of reflection. The agreement widened the envelope of market access opportunities and e-commerce ecosystem for Namibia to approximately 1.2 billion people, with a combined GDP of $ 3 trillion. This essentially means that an individual in Namibia can now purchase goods and services from any of the participating member countries on much more favorable terms than before, and vice versa.

Despite the laudable ambitions of the AfCFTA, intra-African trade has yet to gain momentum. But the low base creates a chance to revive the trade using the latest technology. COVID-19 has also underscored the urgency of digitization efforts in trade finance to ensure business continuity.

The extent to which Namibia can reap the benefits of the wider regional market through e-commerce platforms as a scalable method of conducting transactions would depend on the country’s digital readiness and its enabling environment.

This readiness, in turn, relies on two critical enablers: the quality of the Internet infrastructure; connectivity and availability in rural areas; and second, the quality of postal services, accessibility and awareness.

A review of the 2021 digital report by Hootsuite shows that the number of internet users in Namibia is 1.3 million. This reflects an annual increase of 1.8% and digital penetration of 51%. Mobile connections in January 2021 were recorded at 2.94 million. This figure exceeds the estimated total population in Namibia, showing that a greater majority of Namibians have multiple SIM cards to capitalize on the data plans offered by the country’s internet service providers.

Data accessibility in Namibia remains a problem by global comparison, in part due to the relatively small economic size of the ICT sector (accounting for less than 2% of GDP) and raising concerns about insufficient competition. The share of web traffic per device is estimated at 47.3% for mobile phones, down 8.7% from the previous year. Conversely, the share of web traffic per computer increased by 12 percentage points to 48.7%. The shift in the share of web traffic from mobile phones to computers could be attributed to the adoption of a remote working culture due to COVID-19.

Although smartphone penetration, which is an important catalyst for e-commerce, is estimated at 28%, this figure should be used with caution as there is a likely risk of overstatement due to the issue of multiple SIM cards registered per person. in Namibia.

The quality of postal services, accessibility and awareness are equally essential to accelerate the adoption of e-commerce in Namibia, especially given the unique nature of the country – large and sparsely populated. Taking advantage of existing postal networks would certainly help create an enabling environment for e-commerce. For example, with around 144 NamPost offices across Namibia, businesses can take advantage of these fingerprints to sell their products to customers through NamPost’s third-party services.

Namibia’s e-commerce industry is surely not yet mature, but there is significant growth potential as digitization gains ground. The public and private sectors could strengthen Namibia’s institutional readiness in terms of e-commerce penetration by instituting capacity building initiatives.

This would involve extending support to small businesses on how to comply with international transparency requirements and working with international specialists to build ‘electronic trust’ and enable electronic transactions, while at the same time reviewing its logistics capacity. infrastructure across the country.

* Obaking is the Coverage Sector Manager for Telecommunications, Media and Technology at RMB Namibia, and Uusiku (left) is the Market Research Manager at FNB Namibia.


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