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2022 Outlook: Direct Selling to spur e-commerce growth in Uganda

JAVIRA SSEBWAMI | PML Daily Staff WriterbyJAVIRA SSEBWAMI | PML Daily Staff Writer
December 31, 2021
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With the penetration of mobile technology and e-commerce, younger women have discovered new ways to engage their networks and sell products (PHOTO /Courtesy).
With the penetration of mobile technology and e-commerce, younger women have discovered new ways to engage their networks and sell products (PHOTO /Courtesy).

KAMPALA —Due to the increased use of the internet, the global market for goods and services for sale and purchase is expanding at unprecedented rates.

According to a study conducted by Trademark East Africa TMEA (2020), 91 percent of those sampled in Uganda had made online purchases in 2020, 86 percent in Kenya, 81.3 percent in Tanzania, 58.8 percent in Burundi, and 50 percent in Rwanda and South Sudan, indicating a significant potential for growth in online market delivery channels in these countries.

In Uganda, because of the extensive usage of “mobile money” (telephone-based financial transactions) and the fast expansion in mobile phone use, Uganda’s E-Commerce business is continuing to grow at a rapid rate.

Even though there are only 16.7 million bank accounts in Uganda, there are around 30.5 million mobile phone money accounts in the country.

As a result of President Museveni’s adoption of the National Payment Act, 2020, the Bank of Uganda (BOU) took over regulation of Uganda’s mobile money business in May 2021, replacing the National Payment Authority. Under this Act, the BOU was the first to regulate financial technology and mobile money transactions.

The most prevalent way of payment is cash or mobile money transfers, both of which are accepted worldwide. It is gaining popularity swiftly even though internet buying is a relatively recent phenomenon in Uganda.

E-Commerce in Uganda has a lot of benefits, one of which is the growing middle class, which has established a need for consumer products originating in the United States and other nations (regarded as being of superior quality than those from China and other countries).

Those between the ages of 18 and 30 make up the vast bulk of online businesses and clients.

The International Monetary Fund recently raised its projection for economic growth in 2021 to 6%, up from 5.5%, and projects 4.4% growth in 2022. The upgraded outlook is based on how well the pandemic continues to be controlled, the efficacy of fiscal policy in mitigating economic damage and global financial conditions.

But with all these projections, QNET experienced a record-breaking growth of up to 65% in some African markets. The increased demand for online shopping, and the transition to digital, played to the company’s strengths: high-quality personal relationships and a high-performing e-commerce platform.

The report shows that the 3-year Compound Annual Growth Rate (CAGR) is rising despite the devastation caused by Covid-19. From 2017 through 2020, the Direct Selling industry saw a CAGR of 3.0% (excluding China), demonstrating resilience where most commercial sectors are experiencing a downward trend due to the pandemic.

During shaky economic times, people have a renewed awareness of the need to establish more income streams and for those who are looking to start a business, direct selling offers an attractive opportunity to start one that does not require a lot of capital or the need to deal with operational and logistics hassles.

The International Monetary Fund, IMF, estimates that the global economy shrunk by 4.4% in 2020. Most world economies are struggling with rising unemployment, all except for one industry; direct selling.

Direct selling offers a great platform for users to become micro-entrepreneurs and build a sales business promoting such products when they sign up as distributors of direct selling companies.

The latest Direct Selling Report, published by the World Federation of Direct Selling Associations (WFDSA), shows global direct sales increased by 2.3% year-on-year, from US$175.3 billion in 2019 to US$179.3 billion in 2020.

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Tags: 2021 outlookDirect SellingtopTrademark East Africa TMEA

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