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E-Commerce as Next Driver of Nigeria’s Economic Growth

28 Feb 2013

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The evolving of e-commerce and other online financial transactions in Nigeria can do better in the face of an enabling cyber-legislature as well as an unprecedented support from the government, writes Amaka Eze


As Nigeria integrates electronic payment system into its financial institution, a step which is expected to reduce the flow of physical cash circulating in the economy, she has also continued to encourage and accelerate electronic-based transactions (ecommerce/ebusiness). This is in a bid to modernise the payment system and drive sustained development in line with the Federal Government’s vision 20:2020.
Raising the awareness and understanding about the benefits and implementation of e-commerce in any given economy however, is a primary task of every nation, especially a developing country like Nigeria.

E-commerce, which is an electronic way of doing business, is a sound approach of people using the internet for their major needs and interest such as paying bills, shopping online, applying for vacancies, registering for exams etc. As a result, it tends to boost business activities and create doubly employment opportunities.
E-commerce puts especially the small and medium enterprises (SMEs) in the front-line, making them become more competitive in the market. As the enterprise grows, new markets are accessed and many new employment opportunities are created.

Within the last two years, various private and public (government) platforms have continued to rollout out in Nigeria. The likes of Jumia.com, Konga, Buylocalthings.com, Wakanow.com, worldmartafrica.com to name but a few have flooded the internet space, making it easier for online shoppers.

E-Commerce in Nigeria
With the emerging growth in e-commerce, Nigeria is fast-approaching an increase in economic growth, a major player in the e-commerce industry, and a co-founder of Jumia.com, one of the leading online-retailers in Nigeria, Mr. Tunde Kehinde, has said.
As a co-founder of Jumia Nigeria, Kehinde who referred to ecommerce as the process of buying and selling of products or services on the internet, stated that the internet has no doubt come to stay with its amazing possibilities.

According to Kehinde, Nigeria recorded an estimated 25 per cent growth in online shopping with revenues valued at N62.4 million in 2011, which is N12.5 billion increase from 2010 as reported by Euromonitor international, a global market research organisation.

Stating that with over 160 million people, Nigeria stands a great chance to become the next e-commerce hub of Africa, he said: “Online shopping has changed the way customers and retailers think. Customers are constantly seeking to comfortably shop endlessly while retailers are constantly seeking new paths to growth. A country's prospects for online retail success are closely related to how many people use the Internet and how many are comfortable purchasing products online in terms of security and customer satisfaction.”

Major Obstacles of e-Commerce
According to another co-founder of Jumia Nigeria, Mr. Raphael Afaedor, e-commerce could integrate several nations into the global market, which in turn improves and strengthens the economic well-being of these nations.

Afaedor as an expert in the e-commerce industry highlighted some basic factors, which he termed obstacles to the growth of e-commerce in Nigeria. According to him, lack of basic infrastructure like  steady power supply, good roads as well as limited access to telecommunication infrastructure and high cost of Internet, could hinder the growth of e-commerce in Nigeria.
In the area of poor infrastructure, he said the issue revolved primarily around power, available technological expertise and poor funding for startups.

He said: “The power situation in the country has remained very poor, there is the issue of limited access to telecommunication infrastructure and high cost of Internet and the roads are not fantastic either.”

“Being an online retail company, it is of utmost importance to keep our power structure up and running all day, seven days a week; so one can wonder its financial implications on the business and how we manage to stay competitive with our pricing. It’s simple. As a company driven by targets and customer satisfaction, we have built a mesh network of top local and international brands with a mission to bringing best quality products to our customers at the best price deals anywhere in the country, this in turn has helped us see a steady increase in our customer base, giving us the capacity to manage this challenge.”

According to him, existing in an environment with need for further enlightenment as to the business of e-commerce, not forgetting the menace of cyber-crime associated with our society, Jumia Nigeria constantly seeks to educate individuals about e-commerce; through its operations.

“We try to gain the trust of our customers and prospects alike, also, constantly looking for channels to reach our customers to show them we care about bringing solutions to what should indeed be a relaxing experience.”
He noted that the electronic way of doing business was a new concept in Nigeria. Most people are used to buying and selling face-to face were by they see and touch (physically) what they want, negotiate on best deals, and buy.

Afaedor stated that with e-commerce, the idea of people buying goods and services that could not see and touch physically was not the type of risk most people might want to take because they are not confident whether online merchants are trust worthy enough to deliver products and services as promised.

He explained stated that in a bid to address the issue of trust, Jumia Nigeria allowed its customers to pay on delivery after they must have seen, touched and confirmed the delivered product.

“We try to do a couple of things to become trusted in the minds of our customers. One is our payment method; we do cash-on-delivery. You can go on our website, order for items and only pay for those items when they are delivered to you. Although, you can go online to pay with credit cards or do online transfer, we also offer cash-on-delivery options as well.

“Once the selected items get to the customer and they confirm its authenticity and the warranty of the goods they can hand the cash over to the delivery man. Once a customer orders once or twice and have built trust, he/she can then move to the next level of paying online with credit cards,” he said.

In terms of Logistics, Afaedor said the company has had to deal with the issues of bad road network, and increased cost of transportation, pointing out that with no excuses for disappointing the customers, the company had increased their fleet to serve increasing customer base and even extended bases to Abuja and Port Harcourt.

“Persistently doing our best to overcome these challenges, the Jumia brand has in just seven months of operation; established itself as the No. 1 online retail store in Nigeria with products and brands from electronic, computing, mobile, fashion, games and consoles, beauty products, fragrances, books through to babies’ toys and kids.

“Positioned as the 8th most visited local content site, according to Alexa.com, an online marketing research organization, Jumia Nigeria has consolidated business with various foreign partners, and have grown from 15 to about 200 employees in seven months, rapid growth in Infrastructure- office complex, fleet, and brand affiliates and plans to grow our stores due to increasing demands by our customer and partnerships with various brands and suppliers.” he added.

He said: “Having realised the potential of e-commerce in any developing nations, all concerned bodies must co-operate to make a big difference. The government, experts in the e-commerce industry, online merchants, banks and all other stakeholders must work together collaborate, in order to avoid obstacles and benefit the nations from the outputs of e-commerce.

Boosting e-commerce in Nigeria
The role of government towards the growth of e-commerce in the developing nations cannot be over emphasised. In Nigeria for instance, Afaedor called for the government to take advantage of the potentials inherent in e-commerce for the development of the nation.
According to him, because of poverty, under development and lack of accurate internet penetration, most people in the country are not benefiting from the e-business industry both from the customer and merchant perspective.

Afaedor stated that if the three tiers of government could work towards handling some of the afore-mentioned problems of e-commerce in the country, a higher success rate would be made thus the nation can leap frog its economic growth.

He said: “Effective and satisfactory results will be accomplished if and only if all concerned bodies work together. One of the major concerned bodies is the government. Thus, I would like to indicate some points which the government, as one major concerned body, can do in order to change the situation.

“As Nigeria integrates electronic payment system into its financial institution; a step that is expected to accelerate the nation’s e-commerce growth, the negative impact of cybercrime on businesses, and the absence of appropriate laws to guarantee the legality of online transactions, continues to create fear in the mind of users and potential online users.”

Afaedor further said that although Nigeria’s e-commerce had grown steadily, the lack of legislation that specifically targets cybercrime or cyber security had no doubt continually hampered its accelerated growth; and the concerns raised by such nefarious activities, no doubt, calls for legal intervention.

According to him, the need for a cybercrime law in the country therefore, could not be over-emphasised. Recent studies have shown that people are more likely to engage in offensive or illegal behavior online because of the perception of anonymity, thus cybercriminals exploit the rights and privileges of a free society, including anonymity.”

“Jumia.com has however ensured that its online payments systems are as secured as possible through proper arrangements with its e-payments handlers,” Afaedor added.

Kehinde on his part, called for the government to ensure get more public services online to further drive e-business.
“How the government itself uses e-commerce has a determining factor for the growth of the industry.
“If the government can use the internet to give public services, the general society will adapt itself with the technology easily and this will greatly affect the advancement of electronic way of doing business in the country,” he said
He also stated that the government could support the ventures of merchants through different ways such as facilitating loans, organising trainings, as a sign of encouragement.

Tags: Business, Nigeria, Featured, e-Commerce, Nigeria’s Economic Growth

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