Effect of Artificial Intelligence on Retail and Consumer Markets in Africa:Market Power Concentration, Informal Trader Displacement, and Retail Protection Policy
Market Power Concentration, Informal Trader Displacement, and Retail Protection Policy
Keywords:
artificial intelligence, retail Africa, consumer markets;, informal traders, AI displacement, platform market power, digital markets, e-commerce Africa, AI pricing, retail competitionAbstract
This study examines how artificial intelligence (AI) is reshaping retail and consumer markets in Africa, focusing on rising market concentration, the displacement of informal traders, and the need for stronger regulation. It adopts a mixed-methods approach, combining documentary analysis, comparative regulatory review, and data from organizations such as the International Finance Corporation, the African Development Bank, the African Competition Forum, the ILO, and FinMark Trust, alongside reports from regulators in Nigeria, Kenya, South Africa, Ghana, and Egypt. The study identifies six key areas of disruption: AI-driven pricing allows large digital platforms to undercut informal traders, data control strengthens these platforms’ market dominance, recommendation systems influence consumer behavior, and AI-integrated supply chains often exclude small suppliers. As a result, informal traders, who account for a large share of urban employment, face growing displacement. Despite these developments, AI-specific retail regulations are largely absent across the countries studied. The study describes this as an “African AI retail displacement gap,” where AI widens the divide between global platforms and local traders, creating unsustainable economic and social outcomes. It argues that this reflects both a market imbalance and governance failure. To address this, the paper proposes practical measures including stronger competition rules, protections for informal traders, fairer supply chain access, pricing transparency, improved consumer protection, and increased investment to support local participation in digital markets.
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