Ugandan e-commerce platforms power recovery from COVID-19 crisis

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Partnerships with development agencies and government efforts to boost the digital economy are helping soften the economic blow of the pandemic.

David Akanshumbusha sells groceries at a stall in Nakawa market on the outskirts of the Ugandan capital, Kampala.

He’s also on SafeBoda, a motorcycle (‘bodaboda’) taxi-hailing app that recently launched an e-commerce platform to connect market vendors with customers after the country went on lockdown to control the spread of COVID-19.

Customers place orders through the SafeBoda app and pay through its mobile wallet feature, then riders based at the market deliver the groceries.

“Thanks to the app, I now have more customers than ever before,” Mr. Akanshumbusha said.

The ‘bodaboda’ hailing app that has evolved into an e-commerce platform has boosted sales for him and hundreds of other small traders, benefiting thousands of customers as well.

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E-commerce platforms such as SafeBoda are helping soften the economic blow of COVID-19.

And the Ugandan government is helping them flourish by fostering an enabling environment for e-commerce and the digital economy, in line with recommendations of a UNCTAD eTrade Readiness Assessment.

Ugandan e-commerce platforms power recovery from COVID-19 crisis - Brand Spur
David Akanshumbusha at his groceries’ stall in Kampala, Uganda.

The triple-digit boom in business

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SafeBoda and other e-commerce platforms have seen a triple-digit increase in business following the outbreak of the pandemic.

By giving market vendors access to the app, it allows them to sell goods while sustaining the livelihoods of 18,000 ‘bodaboda’ riders whose incomes have been affected by the pandemic.

The app’s e-commerce platform is the result of a partnership between the United Nations Capital Development Fund and SafeBoda Uganda, supported by the Swedish International Development Cooperation Agency.

“We are pleased to see such collaboration between different stakeholders,” said Shamika N. Sirimanne, UNCTAD’s director of technology and logistics. “They show the importance of public-private cooperation with development partners.”

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Ms. Sirimanne said the collaboration shows the added value of partners under the eTrade for all initiative, which empowers developing countries to benefit from e-commerce.

From crisis to opportunity

According to the World Bank, Uganda’s real GDP growth in 2020 is projected to hover below 2% compared with almost 5.6% in 2019, due to COVID-19.

As part of its response to the pandemic’s economic fallout, the Ugandan government is at the forefront of promoting e-commerce and digital solutions for faster recovery from the crisis.

For instance, it has worked with mobile phone operators to reduce fees for digital services and offer complimentary internet data packages to consumers to facilitate cashless transactions.

It’s also using digital media to disseminate health messages and fight misinformation.

Besides, the government is strengthening public-private sector cooperation to improve trade logistics and enhance the supply of digital services, in line with UNCTAD’s recommendations.

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Ugandan authorities are also bolstering entrepreneurship by supporting innovation and start-up-driven solutions.

Further, the country has boosted internet connectivity by extending infrastructure that has enabled firms to lower the costs of their services.

Uganda is also improving trust in online transactions. Last year, it enacted data protection and privacy law to enhance the security of these transactions.

An e-payments law recently approved by the country’s parliament is expected to come into effect soon to level the playing field for providers.

In addition, Uganda plans to develop a national e-commerce strategy with support from the United Nations Development Programme (UNDP).

“We’re banking on e-commerce to catalyse innovation, growth and social prosperity in the digital economy,” said the country’s minister of trade, industry and cooperatives, Amelia Kyambadde.

Digital payments on the rise

Uganda has seen a boom in e-payment solutions in recent years.

Between 2015 and 2019, mobile money transactions in Uganda more than doubled in value, from about $9 billion to $20 billion, according to the country’s central bank.

COVID-19 has amplified the uptake of e-payments and growth of local fintech solutions.

Among the beneficiaries of the growth is Xente, an e-commerce and financial services mobile app with more than 50,000 subscribers.

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It allows people to buy goods from marketplaces using methods such as mobile money, credit cards or bank transfers, and to access loans within the app.

Following the COVID-19 outbreak, the company waived set-up and commission fees for small businesses for three months.

This saw it record a 10% increase in business-to-consumer transactions and a 200% jump in business-to-business turnover, said its chief executive officer, Allan Rwakatungu.

The company also launched a new service to ease online and mobile transactions and payments for micro, small and medium enterprises (MSMEs) hardest hit by COVID-19.

Partnerships for inclusive e-commerce

In another partnership, a food delivery startup Jumia Food Uganda joined forces with UNDP to boost its services, introducing contactless delivery and cashless payments in response to the pandemic.

Under the partnership launched in May, UNDP aggregates seller groups and provides technical assistance to improve the firm’s capacity in packaging, tracking sales and technology adoption.

Over 3,000 market vendors from seven markets are now connected and selling their produce on the Jumia platform. More than 60% of them are women, people with disabilities and the youth.

“Such partnerships help build the capacity of MSMEs through market-based digital solutions,” Ms. Sirimanne said. “We need more of them to strengthen e-commerce and digital ecosystems across Africa.”

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