How Are African Online Businesses Adapting to the New Realities of COVID-19?

Tony Abyebare launched Online Butchery in Uganda as a platform to sell high-quality meat to institutions like hotels, restaurants, and schools. When the COVID crisis hit and these customers shut down, Ayebare was forced to pivot to a consumer model virtually overnight.

What Abyebare and his team had previously estimated would take six months now had to be executed in a matter of days. The Online Butchery managed the pivot, which didn’t completely replace the lost institutional business. But it did soften the blow and allowed them to live and fight another day.

A recent report in African Business examined how online businesses in Africa have adapted to the crisis in ways that may redound to their long-term benefit. The report featured Abyebare.

Success Factors

The African Business article discusses factors contributing to success or failure during the crisis, notably the growth in mobile money.

In Rwanda, for example, the weekly volume of mobile money transactions increased fivefold during the crisis.

The report also notes that online companies with physical infrastructure were most vulnerable in the crisis.

In that vein, “logistics and mobility” platforms have been hard hit by the pandemic. Ridesharing platforms like Kampala’s SafeBoda, for example, have seen business evaporate during lockdown.

There are silver linings as well. The eCommerce platform Jumia, for example, saw food delivery orders in the last half of March increase fourfold over the same period in 2019.

The eCommerce company’s overall fortunes rose and fell based on where online sales were permitted during the crisis. Jumia’s sales were booming in Tunisia and Morocco, for example. Sales were decimated in countries like Nigeria and South Africa where eCommerce was initially banned.

Mobile Money Has a Moment

A McKinsey & Company study suggests the crisis has accelerated mobile money adoption. McKinsey found more than 30% of African consumers are using online and mobile banking more during the crisis.

Quoted in the report, Sacha Poignonnec, co-founder and co-CEO at Jumia, said the following. “A lasting impact of the crisis could be a change of mentality to transacting and paying online. This will address one of the barriers to e-commerce in Africa.”

Further, Amandine Lobelle, Head of Business Operations at Paystack, told McKinsey: “We are seeing a massive acceleration in digital payments. For many businesses, the only way they will be able to survive is to accept digital payments.”

Reimagining Africa

McKinsey argues in its report that, while presenting huge public health and economic challenges, the crisis also represents an opportunity for businesses in Africa to fast-track digital transformation. And more broadly, to reimagine how societies operate.

“Most sectors of African societies and economies still lag behind the rest of the world in digitization,” the report said. “The COVID-19 crisis could be a catalyst to help close that gap, accelerating digital transformation in sectors as diverse as financial services, retail, education, and government.”

Source: “Reopening and reimagining Africa:
How the COVID-19 crisis can catalyze change,” McKinsey & Company, May 2020

BigFive’s Legacy of Lockdowns

BigFive Digital is examining the impact of the lockdowns as well. We’re conducting a survey, “The Legacy of Lockdowns,” asking AME businesses how the lockdowns are impacting them.

We will release the survey findings in a report available for free download in August. Stay tuned for announcements of its release. Would like to participate? Please complete the survey.