OPINIONPeople Daily

E-commerce can create 200,000 jobs in five years

Sam Chappatte

E-commerce in Kenya has experienced rapid growth in recent years. This has provided a unique growth opportunity for local businesses to create employment and support the government’s Big Four Agenda.

It is expected that e-commerce sales will grow tenfold in value terms over the next four to five years compared to 2017, employing up to 200,000 people.

This is based on a conservative benchmark of how the industry has evolved in other parts of the world and considering activities on Kenya’s online marketplace.

As it stands, only 0.5 per cent of retail business takes place online in Kenya compared to to 23 per cent in China, 17 per cent in the UK, eight per cent in the USA and five per cent in India.

But if Kenya were to put in place mechanisms that would boast e-commerce and allow the sector to flourish and evolve the same like India’s e-commerce sector, online retail would account for 5 per cent of total retail sales volumes by 2022.

This sales growth will drive a huge surge in job creation because e-commerce platforms rely on the services of supporting industries. With growth, comes jobs.

We estimate that e-commerce provides employment for up to 20,000 people today in Kenya. These people are either employed directly by e-commerce companies like Jumia (which currently employs over 300 people), or more likely, indirectly.

Audit firm KPMG’s estimates that in India, every direct e-commerce job creates  three to four jobs downstream in supporting industries, especially logistics providers.

In Kenya, Jumia has over 7,000 vendors selling on its platform. They include large businesses operators like Nairobi Sports House, who employ three to four people to manage their Jumia sales, and small and medium enterprises who typically employ one person. These people manage their online stores and drop off products with Jumia to fulfil orders.

To support these vendors, Jumia works with over 10 Third Party Logistic providers (3PLs), who employ another 300 people to help deliver orders. To support the creation of products for vendors, Jumia has a platform with more than 30 photographers and content writers.

To this end, and banking on a tenfold growth by 2022, the industry is poised to deliver at least 200,000 jobs. This will enable entrepreneurs, including women and people living in rural areas, to build meaningful businesses and will support a thriving local manufacturing sector.

It shouldn’t surprise anyone in the near future that Mama mboga will soon be selling her stock online or that she is the drop-off point for goods and services bought in Nairobi. The opportunities for inclusion are enormous.

To put this in context, China has more than 10 million people working in the e-commerce sector. India is expected to have 1.5 million jobs in e-commerce by 2021 – of which 30 per cent will be in “highly skilled” roles, with an additional 10 million new jobs created by vendors.

What will it take to make this happen? First, we must get better as an industry. We need to offer more variety to customers, at affordable prices, more consistently. We must train more vendors and do a better job protecting customer experience, whilst vendors learn the basics.

Secondly, the cost of data needs to come down further, so as to make digital services more accessible to millions of Kenyans. While the internet infrastructure is good, and there are a lot of smartphones around, people cannot afford to “live digitally”.

Thirdly, we need to build confidence in e-commerce. This will naturally take some time as network effects kick in. However this is an area the government can play a supporting role in raising awareness and promoting the industry.—The writer is the managing director, Jumia Kenya

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