Why many E-businesses in Africa Struggle

Why many E-businesses in Africa Struggle
January 5, 2018 234Finance

By Hauwa Abubakar

With globalization and the increased growth of Information and Communication Technology, it is only normal for African Entrepreneurs to join the wave and find new business opportunities that technology offers. However, amid this global widespread of e-businesses, findings have shown that unlike their counterparts in other regions of the world, e-businesses in Africa tend to struggle to break-even. E-business is not just about having a chic and classy online presence where everybody can visit your business whenever and however they wish. As shiny and rosy as it seems on the surface, e-businesses are daily confronted with nightmares and difficulties. This can be very frustrating and as a result, many e-business start-ups have stopped operations barely after starting. Why is this the case and how can those brands still operating get it right?

Technology and infrastructural deficiency:  The challenge of low internet penetration and accessibility in many communities in Africa means e-businesses are constantly struggling to sustain themselves (Ekekwe, 2015). Africa remains the only continent with the least internet penetration rate, placed at 31% and this brings with it the resultant effect of slowing down e-businesses’ productivity. In a continent like Africa, where many rural communities have little or no access to the Internet and electricity, it means that businesses are missing out on reaching a huge potential market and have to make do with the limited market in major cities with access to these infrastructures.

Infrastructure deficiency remains a leading factor in limiting growth and development in African societies. As a matter of fact, it is a determining factor for development and an essential ingredient for e-businesses. Many e-business owners must contend with factors such as erratic internet service and poor power supply. Imagine struggling to have your laptop charged once the power comes on and having to find an alternative power supply to keep your computer charged when power goes off. The amount of funds expended on lack of infrastructure and finding substitutes is enough to run a new e-business down.

Public acceptance and trust

Because of the poor internet penetration in Africa, many people in the region still hold reservations for e-businesses. The issue of trust remains a critical challenge for e-businesses. If it is bad enough that an established brand struggles to gain acceptability, it is twice as hard for a start-up. People wonder if their personal details are safe with you. They are uncomfortable about giving their personal details on an online platform. This is a nation where people still hold reservations for online banking and more lack the understanding of how e-businesses operate. They want to know how secure their details would be. They want to be able to visit a physical store or office, to either verify that you are a genuine business or to make complaints. To some, the whole idea of communicating or dealing with people they can’t see unsettles them. Thus, there is little or no trust for e-business ventures. Many of the businesses in the tech sector have to build trust and acceptability. Where this fails, an e-business may not stand the test of time.

Relevant investments

Sometimes, e-business owners are carried away with the idea of the kind of business they want to establish that they lose sight of what is really important. For instance, having a responsive website may be the priority but have you thought of how to feed the website with relevant content? That is more important because an inactive website simply means you are not functioning or working at the moment. How do you manage the website? Have you made funds available to take care of content and website management? Are you knowledgeable in this field or do you have outsource website maintenance? How much are you willing to invest in it? Prioritize your investments to avoid unnecessary waste of time and resources.

Technical know-how and expertise

You also need to have a good understanding of the technology your e-business is built on. A major problem many e-businesses face is acquiring the personnel with the technical and creative skills to manage the business. Certain industries do not have a massive pool of personnel to choose from, while others do not have many people who actually know the job well and if they do, they do not come cheap. For instance, it may be a challenge recruiting a competent hand to manage cyber-security. E-businesses have to deal with a shortage in relevant personnel and when there are technical crisis, they may have to spend a fortune to address them and get back on track, while some may never recover. For instance, nobody would want to repeat transaction with a business where their personal information was breached and they would not hesitate to warn their family and friends to keep off as well.

Recommendations

  • It is important to get every needed infrastructure and advanced technology before launching an e-business. For instance, it’s not enough to get a website, but you must also get the personnel to manage it. You must also acquire alternative power supply for when your power goes out.
  • You must also have a knowledgeable staff base or have access to them when you need them. Recruit not just the best professionals, but the passionate ones who share in your vision.
  • Ensure cyber-security and build trust with your customers through effective customer relationships and regular communication.
  • Utilize investments wisely and ensure to measure performance. Let every penny be accounted for and work towards scaling up your prospects within a set timeline.
  • And lastly, be accessible. Have a physical address and an effective customer service unit.

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Author: 234Finance

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