As the world experiences new and complex challenges, many organizations are scrambling to innovate workable and appropriate solutions that not only make business sense but also have a positive social impact. Though, scaling these solutions is not easy, for organizations to succeed in an increasingly competitive digital economy, they must be capable of scaling-up an idea to a viable product or service. To achieve this, organizations must overcome hurdles such as lack of knowledge and inefficiencies in the surrounding ecosystem such as access to finance, human capital, supportive policies and regulation and limited cultural understanding.

The UNDP Digital X Scale Accelerator, supported by the Government of Japan, is an initiative launched by UNDP’s Chief Digital Office to support Country Offices scale their respective innovations. The UNDP Uganda Accelerator Lab is delighted to have been selected among the 10 teams to participate in the initiative, from 180 competitive applications. Ours is to scale the innovation of “Connecting informal micro, small and medium enterprises (MSMEs) to consumers through e-commerce”.

The Accelerator Lab team launched this initiative in 2020 when Uganda experienced the first wave of the COVID-19 pandemic, as a means of keeping value chains active while the country was in total lockdown. Uganda is currently implementing a second national lockdown, challenging us to move our innovation from a prototype stage targeting markets in Kampala, to launching the initiative in other regions of the country. The Digital X team of experts, including Digital Innovation Consultant Mr. Christof Hawle, is set to walk us through this journey as we scale this initiative to cause transformational impact not only at national level but also in diverse geographical regions. By leveraging cutting edge digital technology, the goal for Digital X projects is to increase impact and create momentum toward achieving  Sustainable Development Goals (SDGs).

"This is a very exciting initiative,” says UNDP Digital Innovation Consultant, Mr. Christof Hawle. “If we can leverage the promising pilot results and the strong partnership with Jumia to crack the challenge of how to connect informal market vendors to e-commerce, the impact on the entire continent could be huge. We are still analysing the economics of the solution, but once we have gained full understanding, we may have a groundbreaking, scalable solution to bridge the digital divide in the space of e-commerce."

It’s worth noting that this initiative is implemented in partnership with Jumia Uganda, which adapted the existing Jumia E-Commerce Platform to cater for a new market segment of vulnerable informal market vendors to sustain supply chains for food and other groceries.  This initiative is a strategic opportunity to empower vulnerable groups and those hardest hit in the informal trade sector such as women, youth, and persons with disabilities to connect them to niche markets.

From the early learning of the first phase of the experiment, we witnessed that there is a growing interest to join the Jumia E-Commerce Platform by the informal market vendors. In the first phase, we had over 3,000 unique vendors joining the e-commerce platform and doubling their weekly sales. The vendors were able to reach a larger customer base than they ordinarily would have reached through traditional markets.

We are using the lessons learnt from the start of this initiative to inform this scaling process. As we diffuse technology into informal businesses, we are learning that we must find ways to emulate the behaviors of a traditional market onto the E-Commerce Platform. We have also found that, for this model to work, it had to make financial or business sense for Jumia in terms of long-term sustainability.

“We have created an ecosystem and with UNDP we have been able to accelerate this ecosystem to reach more customers,” explains Jumia Uganda Country Manager, Mr. Timothy Mugume. “Within the next 6 to 12 months we have plans of expanding this programme whereby market vendors and most of the informal sector can be supported, and where customers are enabled to reach more vendors and more products throughout Uganda.”

The early insights paved a way for the second phase of the experiment and the Digital X Scale Accelerator funding and mentorship support is dedicated to this phase of the experiment.  This phase will pursue the following priority areas:

Re-designing the platform to cater for offline and low-income customers. We wish to explore avenues of making the platform more inclusive to cater for last mile consumers, the less technology savvy consumers and non-smart phone users while addressing their pain points and creating opportunities for them.

Expansion to new cities. This will include extending the e-commerce solution to new markets in Entebbe and Jinja where most of the potential customers are low-income customers.

Business and Digital Skills for Vendors and Market Agents. E-commerce in Uganda still experiences slow growth due to low digital skills of most citizens. This programme will empower market vendors and agents in a dynamic and convenient format realizing that the majority of vendors cannot leave their stalls to attend a training. We hope to model a skills-building package that imparts skills on vendors at the comfort of their stalls while strengthening the resilience of their businesses to economic shocks.

Sustainability of the model: We wish to unravel the quantitative dynamics of sustainability of the solution and derive future growth recommendations, with initial revenue model experiments to test the market models. This will include processing data from the markets to run parallel experiments with flexible commissions charged from different vendor engagement models, either individually or when they belong to a Savings and Credit Co-operatives (SACCO). In Uganda, SACCOs are community membership-based financial institutions formed and owned by their members to advance their economic interests.

As Uganda is still experiencing a significant digital divide in critical sectors such as education, health and agriculture, the potential for informal trade to move online is enormous. Integrating informal businesses into the e-commerce sector is one of the ways we can support business continuity for micro, small and medium enterprises (MSMEs), especially in the informal sector. 

Aside from the four areas of the second phase, the UNDP Uganda Accelerator Lab team also maintains a focus on the bigger picture of supporting the development of the logistics and infrastructure of e-commerce as well as the policies and regulatory framework at a country level, to bridge the gap between local businesses, suppliers and markets across the country and spur trans-boundary trade.

Working together with the Ministry of Trade, Industry and Cooperatives (MTIC), the lessons from this initiative will inform policy on e-commerce with the end goal of providing an enabling environment for trade. We also hope to continue conversations collaboratively to work with the United Nations Conference on Trade and Development (UNCTAD) and other key actors to implement an e-commerce policy framework in Uganda. When we achieve these, we will have scaled successfully.

By Deborah Naatujuna, Head of Exploration; Hadijah Nabbale, Head of Solutions Mapping; and Berna Mugema, Head of Experimentation.