E-commerce development in Zambia portends significant potential for the country whose economy is driven by Micro, Small, and Medium Enterprises (MSMEs).
Some 1.4 million Zambian adults representing 17 per cent of the adult population derive their main source of income from owning and running their own business.
Some 57 per cent of this group is women and expanding access to domestic and overseas markets for these female business owners, through e-commerce, would contribute to inclusive economic growth and trade.
The United Nations Conference on Trade and Development (UNCTAD) says in addition to the dynamic tech start-up and e-commerce scene in Zambia’s capital, Lusaka, MSMEs in other parts of the country are beginning to tap into the benefits of e-commerce and the digital economy.
E-commerce readiness assessment and strategy formulation
Despite the potential of e-commerce to boost productivity and increase access to new markets, several challenges and roadblocks remain.
“A relatively strong policy framework for information and communications technologies (ICT) has been established in Zambia, however current national development policies and strategies remain rather silent one-commerce,” says UNCTAD adding, “Most policies and strategies are focused one-government.”
UNCTAD says that at the same time, many of the actions taken by the government to strengthen e-government, such as improving ICT infrastructureand related technologies, strengthening human resource development anddeveloping the legal and regulatory frameworks for e-government, will alsostrengthen the enabling environment for e-commerce.
“Coordination across the different activities and initiatives is limited, however, and more effort is needed to increase collaboration across stakeholder groups,” the UN body adds.
In a report released during the Africa e-Commerce Week in Nairobi, the government and development partners have dedicated significant attention and resources to improving Zambia’s business environment.
“As a result, the country’s rank in the World Bank’s Ease of Doing Business Index improved from 98 in 2016 to 85 in 2017 (among 190 economies).”
Although a number of improvements in the overall business environment can potentially improve the e-commerce environment as well, a number of cross-cutting issues have yet to be addressed.
The report titled Zambia Rapid eTrade Readiness Assessment, “A key shortcoming is the limited
ICT infrastructure and services
Zambia is a mobile-only country when it comes to the use of broadband Internet.
Three Mobile Network Operators (MNO) are currently active, with a fourth recently licensed and expected to enter the market shortly.
Although the impending arrival of the fourth operator seems to have already improved the pricing and reliability of mobile Internet
Moreover, while Internet penetration has increased in Lusaka and other key cities, connecting rural populations and lower-income consumers remains an issue.
The Smart Zambia Master Plan is aimed at addressing many of the challenges that may be inhibiting the growth of
Trade logistics and trade facilitation
In 2012, a National Addressing Policy was formulated together with the individual local policies for Lusaka, Kabwe, Ndola, Kitwe and Chingola districts.
Since 2014, physical addressing has been implemented through pilots in selected areas within the five districts by the Zambia Information and Communications Technology Authority (ZICTA).
Despite this, physical addressing remains relatively weak, particularly in the unplanned settlements growing across the country.
Currently, only a small proportion of the population in Zambia has a home address, which creates a challenge for goods-based e-commerce activity.
Goods that are ordered online cannot always be efficiently and reliably delivered to the buyer. Weak physical addressing is also problem for many local start-ups and e-commerce vendors, in particular deliveryand taxi businesses.
Nevertheless, ZICTA is working to complete the national rollout of its physical addressing project in all ten provinces by 2023.
Long distances, toll fees and many non-tariff barriers make trade logistics expensive in Southern Africa in general and Zambia in particular. This affects all cross-border trade, including cross-border e-commerce activity.
Development partners continue to assist the government with the implementation of the Trade Facilitation Agreement (TFA), including work on One-Stop Border Posts and other forms of improved border clearance processes.
Mobile money has gained significant momentum and is widely seen as a component of the financial inclusion agenda in Zambia.
It is offered by banks, MNOs and Information Technology and Services companies focusing specifically on digital financial services (DFS).
Yet, cash-on-delivery remains the most common form of payment for e-commerce transactions. For financial inclusion and electronic payments to reach all segments of the underserved market, interoperability between banks and mobile money operators, trust building in the general population and innovative risk management will be required.
Legal and regulatory framework
The government is taking steps to update relevant legislation related to e-commerce, including in the areas of data protection, cybersecurity, and electronic transactions.
Significant gaps remain, particularly in the capacity of regulators to support start-ups and e-commerce vendors at large.
Skills gaps in Zambia and development for e-commerce
Skills gaps exist at many levels, particularly in the sectors needed for e-commerce to flourish (web development, application development, content management, digital products development, etc).
For the development of skills required for e-commerce, some of the universities and start-up hubs like BongoHive, Hackers Guild and others offer certain services, but the hubs themselves are under-resourced.
Access to financing
Zambia has a strong policy focus on extending financial inclusion and facilitating the growth of MSMEs.
Although this focus helps to deliver broad policy objectives, including economic growth and employment generation, specific financing solutions for early stage start-ups and growth-oriented businesses in the e-commerce ecosystem still do not seem to be in place.
Some of the aforementioned challenges could be attributed to the lack of common understanding of e-commerce across stakeholder groups, limited trust in e-commerce transactions, inefficient information dissemination and awareness-raising, regulations that lag technological developments, and overall shortcomings in coordination, sharing and collaboration in this space.
Initiating inter-ministerial coordination and a strong public-private dialogue on e-commerce and the digital economy are key. In addition, identifying ways to strengthen the voice of start-ups and other e-commerce vendors, often operating outside the traditional business associations and bodies, would further help support the contribution of e-commerce to the country’s development.
Embarking upon the development of a national e-commerce strategy would help to create a national vision, increase trust in e-commerce and improve the enabling business environment, as well as provide the impetus for public-private dialogue and coordination.