Nwaukor: e-Auction Market’s Potential Remains Largely Untapped in Nigeria

Hillary Nwaukor is the Chairman of the Certified Institute of Auctioneers in Nigeria Lagos chapter, and Chief Auctioneer at I-Naira Integrated Resources Limited, otherwise known in trading as I-naira.com, an e-auction platform in the country. The alumnus of the University of East London, United Kingdom, tells Sunday Okobi that Nigeria’s e-auction market holds immense potential, yet remains largely untapped, presenting a significant opportunity for growth and innovation in the country’s digital economy.

How did you get involved in the auction industry?

My interest in the auction business was ignited during my MBA programme at the University of East London between 2007 and 2008. In the course of my study, I was able to buy used books for my studies on eBay, an auction platform, for less than ten percent of the going market value for similar brand new books at the time. For instance, books with going market rate of £100 at the time could be bought on eBay for £5 to £10 pounds because the sellers do not have needs for them anymore and simply want to get rid of the books. So that is where the idea started and I said to myself that when I’m done with my MBA, it’s something that I should activate. Upon completion of my studies, I returned to Nigeria in early 2009 and immediately gained employment with Nextzon Business Services, a management consulting firm. There, I met colleagues who shared my vision of operationalizing such systems in Nigeria. Sadly, one of them, Mr. Olukunle Makinde, passed on two years ago; he headed the IT unit before his passing. Indeed, we put our heads together and started working on this project as a side project. After a year and a half, I left Nextzon to set up a consulting firm that would later lead me to work for the NNPC as a consultant. So, while working at the NNPC, we worked on the I-Naira project. We kept working on it and nurturing it until when we knew the system was stable enough to go live and we went live in 2016.

How does the I-naira.com platform work?

I-naira.com is an e-auction platform in Nigeria. We pioneered e-auction in Nigeria in 2016. We act as a middleman for clients who need things to be sold most transparently. This is where a reputable auction platform such as i-Naira.com or any other platform comes in. Our auction project is broken down into three phases: pre-auction activities, auction day activities and post-auction activities. During the pre-auction activities, we carry out a current position assessment of those assets to ascertain if what the seller (corporate client) has given us on paper is the same as what we found on the ground and based on that, we will now make a recommendation. If the client, for instance, tells us that the Net Book Value (NBV) for a particular item is N100, based on our assessment, we can recommend that they may be able to earn more or less than the NBV of that asset. This will inform the final reserve price for the assigned asset for auction. Subsequently, we are required to inform the public of upcoming scheduled sales by way of newspaper adverts, emails and social media marketing. The auction will be held at least a week after the public notice.

 How do you ensure the authenticity and quality of items listed on your platform?

As I mentioned earlier, when a mandate is received, after we have signed a contract, we go for assessment. And sometimes when required by the client, we will value the assets and then recommend the assets and tell the customers exactly the state of the items. If it’s a car, for example, we will state what is working and what’s not working. This will guide the buyers to make an informed decision. That is how we carry on the business of auction online and over time, build trust with over 25,000 users on our platform. Most of what we do is entirely based on trust and it comes from both the seller and the buyer. We have built a very transparent brand over time that when people hear I-naira.com is putting up a bottle of water for auction, they don’t doubt the quality.

So how do you get paid?

It is commission-based. Our commission ranges from three to 15 percent depending on the type of items we are selling. And for the cost of managing our platform, the buyer pays the buyer’s premium. It’s just like a real estate person, you get paid from both sides. We are sales people using e-auction systems as a tool.

How do you ensure that the described e-Auction process cannot be compromised?

The interesting thing about auction being a form of sales is that it’s not just the act of doing business. For you to be able to practice auctioneering, you must have a certain level of integrity. You see this thing we’re doing; the buyer has their record on our platform. The seller, which is our client, has their backend login on our platform and we have our backend login as well. Therefore, everybody sees what’s going on. That way, we are checkmating ourselves because as human beings, the only thing that keeps us in line are laydown guiding principles and laws that we all have to follow otherwise, it will be a chaotic kind of society. Thus, we are accountable to our clients and buyers.

 What advantage do e-auctions have over traditional physical auctions?

 The benefits are overwhelming. When you’re running an e-auction, you have a pervasive reach to more people who will potentially take the chance to win the item you’re trying to sell, unlike when you’re conducting traditional live auctions. I’m sure you remember two years ago, the last traditional live auction conducted by the EFCC, and how chaotic it was, which explains why the commission says the resources required to manage such a crowd are enormous. Secondly, they need to monitor what is going on through this process that I just explained to you, which is members of the commission or a client of ours, will sit in the comfort of their home or office and see exactly what’s going on, in real-time. Hence e-auction reduces the cost to both the sellers and the buyers. The buyer sits in the comfort of his office or home without transporting themselves to a physical location and bids with the excitement of possibly winning. Since the bidders are competing remotely, the possibility of collaboration among the bidders is eliminated. Moreover, the seller, which is my client, will tend to gain more in terms of the amount of money people are going to bid for the items. E-auctions leave audit trails as well. For instance, our clients can always come back to ask for the record of the last sales we did for them and all we need to do is go to our system, download their sales history and send it to them. Traditional live auction has its own benefits especially when disposing of items of value (collector’s items) but for greater reach and higher revenue generation, the organised private sector tends to embrace services of e-auction companies such as ours.

What are some of the challenges you have faced, especially in establishing and growing I-Naira?

The first challenge is capital. We realised that technology is not cheap. We have to speak to family and friends for initial resources to put the platform together. Again, being able to manage the platform and have people across Nigeria, that even if we get a mandate in Maiduguri, we have somebody there who can do the documentation. Therefore, we have ad hoc staff across the country and all of these things require resources to manage them. However, the major challenge we have comes from customers who are a bit malicious.

You know, when you’re bidding for something and you see that it has exceeded your budget, instead of letting it go, you want to ‘scatter’ the process by bidding outrageously. But when we notice that somebody is manipulating the system, we ban the person, take him out of the process and reset the process so everybody will have a fair chance all over again. And when you’re banned, you will have to pay a fee before you are accepted back into the system. The other challenge is you never know the number of people who will come and bid and as a technology company, what we did on our last major project, which was for the EFCC, was to optimise our system both horizontally and vertically in terms of server capacity. And what does that mean in layman’s terms? You have this pot of soup on fire you’re cooking with the energy derived from firewood. To avoid failing, we lined up a couple of woods by the fireside so that when you notice the woods are running out, you add more wood to the already burning fire to sustain it. This will keep your system perpetually available and scalable. It’s a big challenge if you are unable to do that as a technology firm. Hence, you must optimize as the system is scaling up based on demand. You must have ready tools to deal with the demand and if you are not prepared for such challenges, the system may begin to hang or crash.

You have been the chairman of the CIAN in Lagos for almost two years now, how has your experience influenced your work in the industry?

 In terms of influence on my ability to carry on my business, I will say it is the other way round because for instance, there are opportunities that we as a company, were chasing with the Lagos State Government before my election into office but now that I’m the chairman, if I continue to chase those endeavours, it will seem like I’m using my position for my personal benefits. So instead of it aiding my ability to do business as an auctioneer, we became quite careful how we engage businesses in Lagos. However, as the chairman of Lagos CIAN, we have been able to help the state government in sanitizing the practice. For instance, we make sure that our members pay their yearly license dues and ensure that anybody who is coming to the Lagos State government to apply for a license must be trained by our institute. We have been able to work with our colleagues and refer jobs to them. Not that we are declining those calls, we are only trying to make sure that everybody practices because as a company, we have over seven solid corporate entities that we work for on a repeat business basis. Top of the entities that we work for is the British High Commission. We have AIICO Insurance, Emple Insurance, EcoBank, and PepsiCo, among others. So it is not all mandates that come towards I-naira.com that we accept. What we try to do is to make sure that we’re dealing with deeply institutionalized businesses that respect contracts. Therefore, in terms of my leadership, we try to be fair, we try to carry our members along.

What role do you think auction industry can play in promoting economic development and trade in Nigeria?

Auctioneering as a tool for assets disposal serves a value bargain sales systems that enables consumer to buy assets at far less of the going market rates for similar assets on other ecommerce platforms. This in itself cannot be over emphasised because buyers are always looking for value. While we agree that e-auctioneering is at its nascent stage in Nigeria, the market is huge, and it is yet to be fully tapped into. We’re talking about 200 million plus people and every day, more people are adopting technology, buying smartphones, and other devices that connect them to all sorts of online communities. Based on the simulation we’ve done, e-auction may be the biggest thing after the likes of Konga and Jumia. What they have is a mere commercial platform, but something is interesting about the auction sector. What e-auction does is that goods are usually sold at a value bargain less than the current market value for similar assets. Effectively, without saying much, you can understand that the future is bright for the auction industry and for economic growth. As pioneers of the sector in Nigeria, we are creating a trade environment for young people. We equally engage idle sound people across Nigeria on an ad hoc basis when we are running projects in any of the six geopolitical zones of Nigeria. The business is still trying to grow, and I know how impactful it has been for me, my employees, and my clients. Thus, I believe we’re heading somewhere as an e-auction platform in terms of growth and economic impact in Nigeria.

Can you discuss the current regulatory landscape for online auctions in Nigeria?

In terms of regulation, we fall under the e-commerce kind of regulation and regulatory body that deals with all online businesses. And mostly the regulatory requirement here is circled around the need to protect the database and the privacy of users. And this is championed by NITDA. So in line with meeting those regulatory requirements, when you’re signing up on I-naira.com, your unique identifier is your Nigerian phone number, even if we require you to give us your first name, second name and email, your unique identifier is the registered phone number. When you register that phone number, the system will send you an OTP – a one-time pass. Until you can verify that the number you’re registering with belongs to you, you cannot proceed with the process. This is the first step in protecting users from malicious people. Subsequently, when you put that OTP back into the system, you can now complete your registration. Again, during the auction itself, the system will only show the first name of the users and the last four digits of their Nigerian phone number. This way, you are available there but are still anonymous and there is no room for collaboration among bidders. Thus, we’ve made it so simple that you won’t even see the depth at which data has been protected. And the only data we share with the clients are the names of their winners and their details, not our entire database because it’s required. In terms of regulation, we’ve done what we’re required to protect people who use our system. As a member of the Certified Institute of Auctioneers, Nigeria, we are equally given a set of guiding principles to follow by way of periodic training.