What is holding back the uptake of e-Commerce in Rwanda?

By: Eddie Nsabimana | The New Times
Published on: 2018-12-28
Visits: 175

The government is encouraging individuals and businesses to embrace e-Commerce as part of its wider strategy to digitise the economy.

However, latest statistics show that only a small number of Small and Medium Enterprises (SMEs) in Rwanda have adopted online business practices as majority continue to struggle.

While businesses in Rwanda are reported to have online access, which presents enormous opportunities for e-Commerce, customers in the country browse business websites to source for information but still make purchases the traditional way.

Jaures Habineza, the Chairperson of Rwanda e-Commerce Association says Rwandans some Rwandans who buy goods through international online platforms claim that purchasing products via local online platforms is more expensive, hence the reason why the traditional way is still dominant.

“For us, many buyers are outside and feel like our products are very cheap but for the local market it seems quite expensive compared to what they get on the informal market,” says Habineza, who is also the CEO of Made in Rwanda Online, an online market that links local producers to the international market.

Whereas Habineza acknowledges that local products are widely available on online platform as well the shipping system, delays in the payment system, which holds the seller’s money for two to three weeks derails the country’s efforts to digitise the economy.

“Some (local) firms can’t afford to send their products to the United, for instance, and wait for the payment that long,” he says.

He proposes that government sets up a Fund through which small businesses can get the money for the goods ordered by foreign clients.

This, he says, would offset the challenge of delayed payment from international customers and hence propel the growth of the online local market.

These are some of the challenges that have attracted the attention of stakeholders in the ICT sector, prompting them to brainstorm on how Rwanda can accelerate its internet economy, mainly through e-commerce.

Through Rwanda Internet Governance Forum—an open and public platform—the stakeholders discussed the most pressing policy issues in e-Commerce.

The Information Technology and Innovation Minister, Paula Ingabire, notes that the rapid adoption of social media will drive the uptake of e-Commerce in Rwanda while partnerships with the private sector will help deliver dividends.

“There is a need for improved partnerships with the private sector to support e-commerce platforms in our country,” Ingabire said.

Collaboration with the private sector, she said, will help to raise awareness.

Current situation

The United Nations Conference on Trade and Development (UNCTAD)’s 2017 Information Economy Report indicates that the value of global e-commerce increased to an estimated $25 trillion in 2015, up from $16 trillion in 2013.

Meanwhile, McKinsey, an American worldwide management consulting firm that conducts qualitative and quantitative analysis to evaluate management decisions across public and private sectors, estimates that e-Commerce will account for $75 billon in Africa by 2025 from $16 billion in 2017.

In Rwanda, e-Commerce transactions are still very low.

However, the prospects are quite promising, given the rapid rise in internet penetration and a raft of initiatives by government to boost e-Commerce.

Currently, the national internet penetration rate stands at 47.8 per cent.

One of the initiatives is the Alibaba Group deal with Rwanda through Electronic World Trade Platform (eWTP), which gives local SMEs the chance to access the online international market.

Another critical initiative expected to respond to e-commerce challenges is ‘Rwanda: Enabling the future of e-commerce’—a joint project being implemented by the International Trade Centre that also supports SMEs.

The project targets to open e-Commerce opportunities to SMEs in Rwanda through increasing their ability to market their goods and services online.

An important component of this project, officials say, is to develop a domestic transport and logistic network of actors to facilitate the flow of goods and make e-Commerce faultless between suppliers and customers.

A mini survey conducted in Kigali by Rwanda ITC shows that 27 per cent of the people who live in Kigali buying goods online

Leonard Mungarulire, the National Coordinator of e-Commerce Project in Rwanda ITC, said Rwanda can first celebrate the very few SMEs that are using e-Commerce platforms and are making the mark on market.

However, he suggests that more effort is needed to help entrepreneurs and buyers understand the benefits of e-Commerce as a platform to access more consumers in Rwanda, Africa and globally.

“What we intend to do to address those challenges is that by the end of December 2019, we will have SMEs that are connected to digital platforms equipped with the tools and skills and the understanding and, at the same time, we are going to sensitize the consumers to increase the number people buying online,” he said.

The project targets to increase the number of SMEs trading online to at leaser 150 by end of December 2019.

Ghislain Nkeramugaba, the CEO of Rwanda Internet Community and Technology Alliance (RICTA), said Rwanda is on the right track to embrace e-Commerce.

“We see people selling and buying goods using informal channels of trade but we need just to formalise that from logistics, payments, and websites,” he said.

He added that: “We obviously need to put more efforts in having more start-ups in e-Commerce. We are in an enabling ecosystem and we are committed to play our role together with all concerned stakeholder to achieve digital economy through e-Commerce.”


ADVERTISE WITH US



Copyright - Digital Rwanda © 2018