Burkina Faso, Senegal and Togo tap into e-commerce opportunities

Burkina Faso, Senegal and Togo need far-reaching reforms of their infrastructure and legal systems to benefit from e-commerce, new studies of the West African countries by UNCTAD have revealed.

The reports will be presented at a regional e-commerce workshop organized by UNCTAD and the Economic Community of West African States (ECOWAS) in Ouagadougou, Burkina Faso.

“Studies carried out by UNCTAD show that vast reform projects are needed for Burkina Faso, Senegal and Togo to seize fully the development opportunities offered by e-commerce, and that they will require ambitious actions on the part of governments. UNCTAD is here to help them,” UNCTAD Deputy Secretary-General Isabelle Durant said.

“This is a win-win strategy, which must be pursued because e-commerce is now a key gateway to foreign markets.”

The workshop, the first step in the preparation of a regional plan, will be inaugurated by Ms. Durant in the presence of the ECOWAS agriculture, water resources and the environment commissioner Jonas Gbian and Daouda Ouedraogo, a representative of Burkina Faso’s commerce, industry and handicrafts ministry.

While taking account of each country’s specific circumstances, the UNCTAD evaluations highlighted the common obstacles they face.

Although each is committed to building a digital ecosystem, none currently have a dedicated e-commerce strategy. And low-levels of internet accessibility and service quality, due to a lack of competition in the telecommunications sector, is a significant obstacle to the digital growth.

Weak and costly hard infrastructure, and logistics services that are not well integrated by operators, make deliveries of consumer good bought or sold online to “the last mile” often impossible.

Despite increased dynamism in the development of electronic payment systems, competition remains limited and online payments remain marginal. Cash payments on delivery are standard.

Although legal frameworks comply with ECOWAS regulations, their implementation remains insufficient and takes little account of the emerging aspects of the digital ecosystem.

Meanwhile, a significant gap remains between the needs of businesses and the knowledge of students, with schooling oriented towards traditional commerce.

Finally, Burkina Faso, Senegal and Togo share difficulties accessing finance to support e-commerce ventures.

The assessment found that e-commerce expansion is taking place mainly in the informal economy, through private classifieds sites and social networks, while a small number of professional operators have developed platforms covering sectors such as agribusiness, clothing, IT and household appliances.

“Burkina Faso must capitalize on the strengths identified by the study: the process towards the digitalization of public services, a competitive telecommunications sector, the development of broadband internet infrastructure, a science park and dynamic start-ups. The proposed roadmap will enable us to accelerate the country’s digitization,” said Burkina Faso’s commerce, industry and handicrafts minister Harouna Kabore.

Under the aegis of Burkina Faso’s Plan National de Développement Économique et Social, the “Burkina Start-Ups” programme financially supports start-ups. But their growth and structuring as companies often remain uncertain.

Dakar has become a laboratory of tech start-ups. Fintech players are already trying to penetrate the local market by forming strategic partnerships.

The e-commerce sector in Senegal is relatively dynamic, compared to many of its West African neighbours. Internationally renowned firms, such as Jumia, have established a strong presence by relying on the local market and the Senegalese diaspora abroad. Others, on a smaller scale, are trying to find a place in a market destined to grow.

However, apart from a small number of operators, e-commerce is developing mainly in the informal economy, through private classified sites, aggregator sites and social networks.

“The impact of the development of e-commerce in the structural transformation of the Senegalese economy is well established. This is why, thanks to UNCTAD’s assessment of Senegal’s readiness for e-trade, efforts will be more focused on mobilizing stakeholders, the state, the private sector and eTrade for all partners to remove obstacles, identify and implement its flagship recommendations,” Senegal’s investment, partnerships and teleservices minister Khoudia Mbaye said.

Several factors have contributed to the development of e-commerce: broadband internet (mainly in the big cities), a legal framework set up in 2008, electronic means of payment via mobile telephony, and people trained in information and communications technologies. However, there are several logistical and financial challenges to overcome before these favourable conditions can be exploited.

The potential for the development of e-commerce in Togo is limited: there is a weak internet infrastructure, few online payments, and it is difficult to make or receive deliveries outside of the capital Lomé. However, tech start-ups are bursting with innovative solutions that make it possible to work around existing problems.

“My ministry is strongly committed to making e-commerce a powerful engine for economic growth, inclusive trade and job creation in Togo. This new assessment has identified the development of e-commerce as one of the strategic sectors that should promote trade and remove barriers to trade,” said Togo’s commerce minister Essossimna Legzim-Balouki.

The German government funded the Rapid eTrade Readiness Assessments as part of its support to UNCTAD’s eTrade for all initiative.

This initiative provides countries with capacity-building solutions for e-commerce and optimizing synergies between different partners.

It has 29 partners, seven of whom will participate in the Ouagadougou workshop: the World Bank Group, the African Development Bank, the United Nations Economic Commission for Africa, the International Trade Centre, the World Trade Organization, Universal Postal Union, and the Africa Civil Society for the Information Society.

UNCTAD has conducted e-commerce assessments for developing countries since 2016, recognizing that policymaking will need to move quickly if least developed countries are to capitalize on rapidly changing economics.