Nigeria’s $12bn e-commerce market seen as driver of growth in near term
June 23, 20174.2K views0 comments
Nigeria’s e-commerce, valued at $12 billion as at end 2016, is being projected as a major driver of growth in Africa’s largest economy,
according to the latest Ericsson Mobility Report, released Thursday, June 22, 2017.
The report indicated that 62% of Nigeria’s 180 million people are youths who are active Internet and mobile phone users with many making
online purchases, adding that as at the end of the first quarter of 2017, mobile Internet subscription grew by three million.
According to News Agency of Nigeria (NAN) reports, Rutger Reman, managing director, Ericsson Nigeria, while speaking at the presentation
of the report in Lagos Thursday, further revealed that total number of new mobile subscriptions is 107m across the world, with Nigeria having one-third of Africa’s nine million new subscribers.
As at 2015 e-commerce, Telecoms, others contributed about 8.7% of Nigeria’s GDP
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Indeed, the National Bureau of Statistics had noted that the e-commerce sector is expected to contribute about 10 percent, of the projected N10 trillion to the nation’s Gross Domestic Product (GDP) by 2018 if key challenges are addressed.
While e-commerce has begun to experience significant and remarkable, in the country, statistics show that the numbers are still
relatively small compared to the rest of the world, even as the numbers and trend forecasts are showing great potential for sustained growth
following the arrival of more e-commerce sites over the last few years.
A report by eMarketer, an online e-commerce research company, showed that e-commerce is growing at a rate of 16.8 per cent yearly globally;
while in Africa, the e-commerce space is put at 25.8 per cent – making it the fastest growing sector in the world.
Operators in the sector have since come in to invest.
Hussein Hachem, global chief executive officer, Aramex, leading global providers of e-commerce, logistics and transportation solutions, which last year expanded its operations to Nigeria, put the total value of Nigeria’s e-commerce market in the range of $12 billion, adding that with Nigeria’s active internet and mobile phone users, the value was just a tip of the iceberg.
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He expressed optimism that with the right payment platform, more Nigerians will swell the growing e-commerce market in the country.
“The challenge is in having a proper payment gateway that would allow people to pay online. We are working on that and I think a partnership between us, the payment gateway and the telecoms would do that. You will see more people participating in the e-commerce solutions that we are bringing into the country,” Hachem said.
Nigeria’s ecommerce market has been bugged down by lack of customer trust, Internet connections hiccups and other issues. Despite the
challenges, Nigeria’s status as an emerging market, its burgeoning youth population and its attraction to foreign investors, have seen
investments in the e-commerce market space.
In 2014, Paypal, international payment platform, launched its operations in Nigeria, joining other leading online retailers like Jumia, Konga, DealDey, and others. Two years after it launched, Nigeria became the third largest Paypal mobile e-commerce market in the world with
transactions by mobile phones put at $610m in 2015, while its 2016 earnings was valued at nearly $819m.
Local start-up have also been involved in growing the nation’s e-commerce market. In 2012, Jumia, Nigeria’s largest online firm,
cofounded in 2012 by Raphael Afaedor, Rocket Internet, MTN and Milicom, while Jumia Group secured over €300m funding from MTN, Rocket Internet, AXA, Goldman Sachs, Orange and CDC.
Konga, founded in 2012 by Sim Shagaya, raised a $3.5m seed from Investment AB Kinnevik, a Swedish investment firm, same year. On
November 29, 2013, Konga.com, the firm’s website, crashed and remained offline for 45 minutes due to unprecedented online traffic as a result of Black Friday promotions. The company’s total sales in six hours exceeded what it sold the previous month. As of 2013, Konga was valued at $200 million and won the 2015 Kalahari award for E-Commerce Provider of the Year.
According to Sim Shagaya, CEO of Konga, a panelist at the 2014 Economist Magazine Summit in Lagos, electronic commerce is a key driver of
Nigeria’s GDP because the use of information technology is helping to bridge the unemployment gap in Nigeria.
While speaking on the start of his KongaMarketplace in June 2016, Shagaya said the platform provided an opportunity for small businesses
“We believe in a Nigeria where every small or large business owner is given an opportunity to succeed and we are helping to provide that
opportunity with the Konga Marketplace. We now have the beginnings of an ecommerce platform that I am incredibly confident will impact on our society in a much more profound way than we have done so far,” he said.