Uganda has one of the most vibrant eCommerce ecosystems in Africa and has shown steady growth over the past decade. The exact data and statistics about the state of eCommerce in Uganda are lacking. Still, eCommerce revenue in Uganda is estimated at $227M, with an estimated annual growth of 14.90%, resulting in a projected market volume of $421M by 2025. User penetration is also expected to hit 29.1% by 2025.
In 2020, at the helm of the COVID-19 outbreak, more businesses opened up online shops, and it is expected that the eCommerce trade will further accelerate and grow.
Ecommerce sellers in Uganda typically market their products and services online, with customers and sellers connecting first via phone and then meeting physically. Consumers prefer making payments either in cash or by mobile money. Shopping directly from a website or app is a new concept in Uganda, although it is fast growing.
One key advantage for eCommerce in Uganda is the expanding middle class with a growing taste for European products. There’s a popular belief that products for Europe are of superior quality to those made in Uganda and China.
Advertising in Uganda’s eCommerce space remains largely unsophisticated and is mainly concentrated around social media platforms. Uganda’s most commonly used online platforms are Facebook, Twitter, WhatsApp, TikTok and Instagram.
The Ugandan law protects intellectual property rights (IPR), but enforcement mechanisms are too weak. Uganda cannot prevent piracy and counterfeit distribution, and as a result, theft and infringement of intellectual property rights is common in Uganda and is widely spread. Uganda does not seize counterfeit goods or prosecute for IPR violations.
Also read; 8 Problems with Online Shopping in Uganda and their Solutions
Highlights of the state of eCommerce in Uganda
- Uganda’s eCommerce revenue was projected at US$227M in 2021
- Annual revenue is expected to grow at 14.90% between 2021-2025, resulting in a projected market volume of US$396m by 2025
- The market’s largest eCommerce segment in Uganda is fashion, with a projected market volume of US$76M in 2021.
- Most revenue is generated from China.
- User penetration is at 19.5% in 2021 and is expected to hit 29.1% by 2025
- The average revenue per use (ARPU) is expected to amount to US$24.69%
- The total number of eCommerce users is expected to amount to 15.2m users by 2025.
Cross-border Vs. domestic eCommerce in Uganda
In Uganda, eCommerce is largely categorized into two segments, i.e., domestic eCommerce when a trade occurs within the country’s borders or cross-border eCommerce when a trade occurs across the international borders.
Cross-border e-commerce
There is a huge demand for products that are not accessible in Uganda. These products are mainly ordered via international eCommerce shopping platforms like Amazon, eBay, AliExpress, Banggood and many more. Also, there’s a global demand for authentic African products made in Uganda. These products are mainly demanded in Europe and Asia and are predominantly exported through eCommerce platforms such as Etsy.
Domestic e-commerce
The domestic e-commerce ecosystem in Uganda has been steadily growing for the last couple of years, attracting hundreds of local players that have launched online shopping websites in Uganda. Similarly, traditional brick-and-mortar stores have been actively involved in eCommerce since most now accept online orders through social media platforms like Facebook and Instagram.
E-commerce in Uganda has, however, been a challenging space in Uganda, largely due to infrastructure gaps and customer reluctance. Besides the huge success of mobile money, tangible goods need to be delivered, which requires good logistic infrastructure.
Logistic infrastructure in Uganda is still lacking, restricting eCommerce to only large cities like Kampala and Wakiso. Ecommerce retailers concentrating on selling Fast-moving consumer goods face fierce competition from informal retails and markets in Uganda.
B2C e-commerce has been flourishing in Uganda for the past 5 years. Domestic players such as Jumia, Kikuu and Ubuy are leading the game. All these players are active in Kampala and other major cities of Uganda, such as Mbarara, Arua, Moroto, Gulu, Jinja and Mbale. Some of these players also target rural areas and have built powerful networks of pickup stations around the country.
E-commerce is popular among millennials, cities and certain products.
According to the 2019 Jumia report, the largest eCommerce shoppers in Uganda are youths aged 25-34 who live in urban areas. The report listed Fashion and Electronics as Ugandan shoppers’ most popular product categories. However, due to the lack of accurate industry data, one cannot make strong conclusions based on this Jumia report.
What are the drivers for e-commerce in Uganda?
Mobile connectivity
UCC estimates that 46% of Ugandans are now connected to the internet, with 60.3% accessing it through mobile phones. In 2021, the GSMA estimated that Uganda had a smartphone adoption of 16%. This growth was due to performance on two enablers: infrastructure and affordability. The former was driven by improved network coverage, with 65% of the population covered by 3G and 17% by LTE/4G.
Online payments to facilitate transactions
Debit/Credit cards have low penetrations in Uganda since only 9% of the population is banked. The most popular domestic payment methods for eCommerce are:
- MTN MoMo
- Airtel Money
According to UCC, Ugandans performed UGX 525bn mobile commerce transactions in 2020. Although online payment infrastructure is in place, several eCommerce players have not underestimated cash payments. Companies like Jumia Uganda provide Cash on Delivery (COD) as one of their payment options.
Also read; Top 7 Payment Methods for Online Shopping in Uganda
Logistical infrastructure is getting in place.
Uganda’s postal system is very ineffective and cannot be compared with postal systems in more established markets. However, in the last couple of years, several private logistics companies in Uganda, such as CourieMate, have come up and are providing the crucial last-mile delivery. Recently, DHL introduced DHL Express, a platform that provides a standard for organizing logistics for e-commerce in East Africa.
Future growth of e-commerce in Uganda
To accelerate the future growth of eCommerce in Uganda, four key hold-ups need to be taken care of:
- Trust among consumers
- Lack of reliable data
- High shipping and delivery costs
- High import duties by URA
Ecommerce opportunities not only lay in Uganda but everywhere in Africa at large. According to Brookings, intra-African trade is only at 17% compared to 59% in Asia and 69% in Europe. There’s a lot to win here. Implementing the Africa Continental Free Trade Agreement (AfCFTA) is expected to boost intra-Africa trade by up to 52%. The agreement will eliminate import duties and reduce other trade barriers.
Although the uptake of e-commerce in Uganda has remained low compared to more developed countries, there’s an expectation that eCommerce in Uganda will advance further and develop its model based on market demand. Uganda’s e-commerce ecosystem will be an interesting thing everyone must watch.
