Kenneth Ugbechie highlights the immense contributions of e-commerce to Nigeria’s economic growth and diversification
Make no mistake about it, Africa e-commerce market is growing. It is a demonstration that Africa has effectively joined the global online train. Many reasons account for this chief of which is the increasing access to technology. Mobile telecoms access, for instance, has seen exponential growth on the continent in recent years and Nigeria is leading the log. Nigeria also ranks highest in e-commerce growth. With anticipated increase in the deployment of broadband across the nation, e-commerce in Nigeria is expected to outstrip expectation.
In the United Nations Conference on Trade and Development (UNCTAD) 2016 business-to-consumer (B2C) e-commerce index which gauges the readiness of countries to engage in online commerce, no African nation made to it to the top 50 nations but the report did not fail to point out that e-commerce is on the bounce on the continent.
Growing internet penetration and increased deployment of internet-enabled gadgets have precipitated an upsurge in global e-commerce spend in recent years, a phenomenon which is expected to gross about $4.058 trillion or 14.6% of total retail spend by 2020. Nigeria, nay Africa, is expected to profit from this projected growth.
Different studies by McKinsey and PricewaterhouseCooper (PwC) among others have placed Africa e-commerce on a growth curve. The continent’s online sales are expected to top $75 billion by 2025, with Nigeria taking $10 billion of it, according to projections.
But there is a snag. E-commerce in Africa has not been as profitable as it looks on paper. Many e-commerce start-ups fizzle out too soon. It’s either they were not founded on firm financial footing or they deployed strategies that rob them of success. There appears, however, a glimmer of hope. The recent merger between Konga and Yudala (effective May 1, 2018) to trade under the name of Konga presents Nigeria an opportunity to break the cycle of non-profitability on the continent’s e-commerce market. It is a game-changer expected to cut through the ceiling of limitation.
Konga was recently acquired by Zinox Group (there were reports that it targeted to also acquire Jumia) in what some people described as the biggest corporate coup. Its merger with Yudala, another e-commerce maverick that sprouted from the stub of the defunct BuyrightAfrica (founded in 2012) has completely reset Nigeria, nay Africa, e-commerce market.
It is expected that in the coming months and years, the impact of this acquisition and merger would not only reverberate in Nigeria’s e-commerce circuit, it will resonate across the continent.
Zinox Group is Nigeria’s flagship ICT conglomerate with interests spanning manufacturing, systems integration, technology warehousing and distribution, software engineering, telecoms, e-commerce, Internet services among others including a wide-range of non-ICT investments. Promoted by one of Africa’s most fecund minds, Leo Stan Ekeh, Zinox Group has over the years imprinted Nigeria’s name on the global ICT map, pioneering the manufacture of globally-certified systems in Nigeria (desktop computers, laptops, handhelds, power storage devices etc).
Year after year in the past two decades, Nigeria has ranked very poor in the World Bank ease-of-doing business index. It is worse for technology companies who have to function as enablers for other businesses. Lack of steady power supply, requisite skills set, frustration of losing your staff after investing in them to rivals and other sectors, poor forex management resulting in inadequate forex to sustain growth and create new opportunities, among others are the drawbacks that assail businesses in this clime. Add to that, a consistently poorly cobbled government policy that promotes patronage of exotic goods and services to the detriment of indigenous goods. Yet, Zinox has been able to surmount them to stay in commanding position ahead of its competitors in more advanced and less volatile economies.
Analysts have attributed the Zinox success story to the leadership quality and tenacity of its founder, Mr. Ekeh. His ability to always assemble a team with a rare mix of youth and experience has kept his empire at the cutting edge. He, obviously, has been planning for this moment. Years ago, he built the largest retail one-stop market in Owerri, Imo State with 229 stores. He followed it up with the biggest retail market in Abuja with 600 stores. All of this will come handy in the new Konga experience especially with the appointment of vastly experienced corporate strategist Olusiji Ijogun as its chairman.
Many believe that the mix of youth and experience will place Konga on the cusp of a growing curve of profitability and efficiency. The possibilities and opportunities of the merger, expectedly, will outstrip the competition given the energy and momentum that the promoters will infuse into it.
E-commerce is both today and tomorrow. To understand its essence, let’s reflect on some statistics. In 2016, an estimated 1.61 billion people worldwide purchased goods online. Same year, global e-retail sales stood at $1.9 trillion while in 2017, retail e-commerce sales worldwide amounted to $2.829 trillion. Projections show a growth of up to $4.06 trillion by 2020.
Asia Pacific e-retail sales accounted for 12.1 percent of global retail sales in 2016 while Africa and Middle East accounted for a tiny 1.8 percent of retail sales in the same period. Africa from all indications is still a virgin market.
Market pundits have predicted a great leap upward for African market with increasing mobile penetration driven by growing broadband awareness and adaptation. Africa is therefore a frontier market with the possibility of exponential growth in e-commerce. This is where the Zinox acquisition of Konga makes the most business sense. It will not only sizzle the Nigerian market, it is expected to stir up the African e-commerce bourse given the vision and focus of Zinox to widen and deepen its operations on a continent-wide dimension. Zinox business in-roads in the Middle East and the rest of Africa will come handy in the envisaged expansion of Konga operations. Such expansion will not only create thousands of direct jobs but also thousands of ancillary jobs.
With growing African fashion, entertainment and food industries as well as other indigenous but globally appealing products, the new Konga will serve as a reliable off-taker for most of the young African entrepreneurs.
One major challenge of e-commerce in Nigeria is its high churn rate. There is lack of loyalty from consumers who feel cheated in earlier transactions. They claim that products appear cute online but turn ugly on delivery. This is both offensive and off-putting and it is the norm across many of the e-commerce platforms. The pedigree of Konga and Yudala takes care of this. Both share a culture of ‘what you see is what you get’ (WYSIWYG) which is pivotal to delivering top of the range service and in record time too.
A major goal of the President Buhari administration is economic diversification. E-commerce gives vent to this objective because it does not only create jobs for the youths, it also appeals to their fancies and implicitly meets their needs.
Ekeh, a mass servant and chorister in his younger days, has always believed that technology holds the key to liberating the African youth from the manacles of poverty. He has over the years invested in the Nigerian youth. The new Konga, largely driven by youths, is yet another avenue to create a sustainable wealth empowerment window for the nation’s bulging youth population.
