A few weeks ago, Paypal announced that it was introducing its services to the African market, the editor-in-chief here told me: “Paypal just entered our market. (Cameroon)” My reaction: “So what?”.
Sure it’s a great step for them, everybody knows that Africa is the last frontier for everyone in the west. They want a piece of the consumer market. They want to capitalize on sub-saharan Africa’s economy, notably Nigeria and Cote d’Ivoire to name few, because the emerging middle class has money and wants to spend it. The biggest thing Paypal failed to understand is this: Africans are proud. They want to consume, but they’re learning to consume African first.
Paypal is here, five years later than M-Pesa (startup from Kenya) the first service to convert cell phone minutes into cash. 2 years later than MTN and Orange mobile money solutions essentially duplicating M-Pesa. To me, that puts you at the bottom of the barrel. How do you even start to compete? In a continent where SMS is king, you’re providing a service not accessible to your core demographic. Let’s face it, in terms of what “Mobile solution” means in the African market, Paypal doesn’t fit the profile. Africa is mobile first. You lose.
African consumers are learning to trust the internet, and believe me when i say it’s a slow curve. While you’re asking them to provide their banking info to create transactions M-Pesa, MTN, and Orange only converts their cell phone minutes into cash. There are not enough people on the continent familiar with online banking, reason why everyone is shifting to mobile money. Apparently you didn’t get the memo. You lose.
Forget the percentage of online banking/ ATM cards users and let’s focus instead on the percentage of fraudulent online transactions. Contrarily to Europe (2%) and Asia (5%), 7% of online transaction in Africa are fraudulent. E-commerce have learn to adapt and create reassuring messages to the few consumers they can get. But the problem remains, a major barrier to E-commerce in Africa is trust. Again, you lose.
The fact that Paypal entered the market doesn’t change anything for me, my clients or e-shops owner in Africa. The ecosystem had found its own solutions. Locally e-shops have adapted and learned to operate without Paypal for the last decade. Maybe, just maybe, Paypal give an avenue to reach consumers in other markets. Say for example that you’re in Abidjan and people from Shanghai want to buy your products, sure, that makes somewhat sense. But the biggest problems for E-commerce have yet to be addressed: Delivery and stocking.
Until Delivery and stocking are sorted out, Paypal entering the continent is not going to make me hold my breath. Until I can track a package from sender to receiver, my clients are not going to care. Until I can stock and control an inventory for a client, our consumers are not going to care. More importantly, until you’re able to understand that Africa has its own set of challenges requiring tailored services, no one is going to care.
25 janvier — Douala, Cameroon