Bring down Internet costs, Jumia’s Kawamara asks govt
Jumia Uganda’s managing director, Mr Ron Kawamara
What you need to know:
E-commerce is an alternative for business continuity during these tough times. However, contrary to the narrative, industry players say online businesses have also had a fair share of the Covid-19 devastating effects on businesses due to contraction of purchasing power of customers, as well as high internet rates. Prosper’s Richard Luyombya spoke to Jumia Uganda’s managing director, Mr Ron Kawamara about the growth of e-commerce in the pandemic.
In terms of trends, how do you compare the second lockdown with the first one in terms of the affinity for people to buy online in this market?
The lockdown has had a real impact on businesses and forced people to close down. Restriction of movements has impacted people’s purchasing power which consequently affects whether offline or online businesses. The reality is that Ugandans do not have enough money to spend.
This has been the situation since the first lockdown when Covid-19’s negative effects began to bite, sippling over to the online industry.
When people are not able to move around, they find the value proposition of shopping online more pertinent.
Therefore, more Ugandans are buying their groceries online because of their enthusiasm.
However, due to reduced spending resulting from the closure of businesses, we have seen a shift in what they are buying.
Previously, they were used to buying electronics, now they are focused on buying essentials especially groceries and health items. Others items include, ‘work from home’ items such as computers, mifis, as well as sports attire.
If we go by numbers, we see that Ugandans are frequenting online sites yet some people argue that the conversion rate is still low. What is your take on that phenomenon?
We know that online business is still fresh in Uganda compared to North America where almost 35 per cent of transactions are done online, while in China, it is about about 30 per cent.
In Africa, it is less than one per cent. However, it is not prudent to focus on conversion because we have a much higher conversion rate than North America which is a good thing for entrepreneurs who want to invest in ICT innovations.
When many people transact online, it is a good indicator of the conversion rate. What remains is the quality of service, and prices the platforms offer. The conversion rate in Uganda is also driven by the increased smartphones and Internet penetration.
However, we have also noticed several regressive government actions that are making e-commerce even more difficult.
For the last 10 years, the growth of Internet usage was driven by the private sector with limited government support. But recently, government emerged with policies that impede the growth of the sector. We had an Over The Top (OTT) which yielded fewer results and now government has decided to introduce 12 per cent on Internat data. This is very difficult for businesses to expand their space.
Five years ago, there was a proposal by government to make Internet free in Kampala but that has not happened.
Out of the 10 companies leading the world in terms of net worth, eight are tech giants. We cannot achieve this if we are taxing the Internet.
On a more proactive side, how can policy help you grow from one per cent?
We want government to make Internet more available to Ugandans to spark innovation.
In so doing, Uganda Communication Commission (UCC) should work on a pricing model for the country so that telecoms do not overcharge data, which will open up space for as many players to compete in providing Internet for Ugandans.
Internet should also be made more accessible in institutions of learning with a focus on ICT in the school curriculum to encourage innovations.
E-commerce cannot operate in a vacuum. Therefore, there is a need to increase electricity distribution to increase ecommerce penetration.
There is also need to extend incentives for large companies to start-ups.
Available figures show that less than 30 per cent of businesses in the world are online. What are the facts?
I disagree. We need to understand that the majority of transactions cannot happen online such as buying livestock.
When you consider what is sellable online, you will realise that almost 50 per cent is sold online including medical issues, booking flights, hotels among others. But we have a low share of online sales in Africa.
Despite the low percentage, what is the trajectory of e-commence in Uganda and Africa?
The future of online business is bright. Africans are tech-savvy people and Covid-19 has exacerbated the need for technology to remain relevant.
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Before the pandemic, online shoppers were used to buying electronics, now they are focused on buying essentials especially groceries and health items. Others items include, ‘work from home’ items such as computers, mifis and sports attire.
With Uganda’s online based purchases below 1 per cent of all commerce similar with the rest of Africa, players say government’s actions contradict with the growth of e-commerce, for instance the 12 per cent tax slapped on Internet data.
