____________

Experts have advised that e-commerce is likely to create as many as three million jobs by 2025 if African governments develop supporting infrastructure for growth beyond urban areas.

A recently released study by the World Bank and Alibaba Group emphasizes the potential for the flourishing of e-commerce in developing countries, particularly in rural areas. The report underscores e-commerce as a potent instrument for employing semi-skilled workers, women, and marginalized groups.

“E-commerce can create jobs directly through logistics services, improve household consumption and reduce inequality by bringing to people in rural areas (or upcountry) the convenience, variety, and low prices enjoyed by urban dwellers,” the report says.

This report offers hope considering the recent closures of online e-commerce firms in Uganda.

Norbert Kiiza Barigye, the Education Partner at FX Pesa, an Online Trade Company, also does not write off the potential of e-commerce despite companies closing shop.

“Despite some e-commerce giants closing their food delivery businesses, their transport and e-commerce stores are fully operational. Could it have something to do with limited appreciation and lack of critical need for online food convenience or merely about pricing efficiency,” he said.

He added food delivery business has a long way to go in Uganda, possibly in East Africa.

“In a statement released by Jumia, it was noted that one of the reasons for the business decision was due to unprofitability in their food segment. Given that Jumia has a thriving e-commerce goods business, it could be that the food segment was merely contributing to higher costs rather than boosting profitability,” he adds.

According to experts, the central urban space is not enough for e-commerce to thrive in Uganda but, addressing challenges in the regions or upcountry, such as limited internet coverage and lower digital literacy, can open the country up.

As outlined in a report from the Uganda National E-commerce Strategy under the Ministry of ICT, the e-commerce sector is anticipated to experience a 17.1% annual growth rate from 2020 to 2025. Projections indicate that Uganda's e-commerce revenue was poised to reach $220 million in 2021, with an estimated annual growth rate of 17.6%, leading to a forecasted market value of $421 million. Additionally, the report forecasts a user penetration rate of 29.1% by the year 2025.

Closures

Jumia Food follows Copia Global, an e-commerce platform, that closed shop in April after only 6 months of announcing its arrival to do business in Uganda.

These two additions join a growing list of collapsed and defunct e-commerce platforms in Uganda, which includes Kikuubo Online, OLX Uganda (acquired by Nigeria's Jiji), Hello Food (acquired by Jumia Food with an announced closure), Home Duuka, and Goods Express, among others.

Meanwhile, the fate of other platforms remains uncertain, with some thriving and others struggling. Among these are Wave Momo, Jumia retail, Jiji, Kikuu, Kilimall, Cheki, Eyetrade, Dondolo, Masikini, 2fumbe and Bazebo.

The exit of Jumia leaves Glovo, as the main an online app-based food delivery service. Others are run by restaurants and hotels such as Café Javas.