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Nigeria's ICT Sector Finds Strength in E-Commerce Growth(AllAfrica Via Acquire Media NewsEdge) The growing rate of ICT utilisation particularly the internet has influenced, at an exponential rate, online interaction and communication among the generality of the populace. Globally today, the Internet has become a window of interaction, making so many things accessible, including shopping. Indeed, the eCommerce industry is gradually becoming another focal point for ICT growth in Nigeria. ADEYEMI ADEPETUN writes. NIGERIA's Information and Communications Technology (ICT) sector has witnessed tremendous growth in the last 15 years. It has created immense opportunities for the very smart and hardworking populace. Statistics flying across the country showed that the ICT sector now contributes about 19 per cent to the service industry from about 0.04 per cent some 12 years back. While much impact has been felt through the telecommunications and the computer hardware sub-sectors, the contributions from the software industry is still nothing to write home about. In fact, the Minister of Communications Technology, Dr. Omobola Johnson recently in Lagos, lamented that about $360 million is lost through software capital flights in the country, almost on a yearly basis. Despite this challenge, the liberalization of the Nigeria's telecommunications sector about 13 years ago has truly made the country Africa's destination of ICT investments. Today, Nigeria can boast of over $32 billion investments in the telecommunications industry, grew its telephone subscriptions from the meagre of 400, 000 lines that now moribund Nigeria Telecommunications Limited (NITEL) struggled to manage about 13 years ago to an active mobile subscription of over 130 million lines. Besides, Nigeria currently has over 92 per cent teledensity rate, with over 64 per cent mobile coverage of the country as explained by the Mobile Network Operators (MNOs) including MTN Nigeria; Globacom; Airtel; Etisalat; Visafone and some others. For record purpose, it also worth mentioning that Nigeria is home to Africa's largest ICT market--the Computer Village, located at Ikeja, a suburb of Lagos. The industry has equally created employment opportunities for Nigerians and also helped to facilitate growth of other sectors of the economy. About 100, 000 jobs have been created directly, while over 1.1 million were created indirectly within the last decade. The contributions of indigenous ICT firms including Zinox; Omatek; Chams Plc; CWG; Anchor Telecoms; Upperlink; New Horizons; Veda Computers; Signal Alliance among others have been very significant. Many companies providing what has become known as value added services have also emerged in the landscape and helped to deepen service offerings to Nigerians and people beyond the shores of the country. However, a major area that telecommunications sector has helped developed is electronic commerce. Although the e-commerce market in Nigeria is relatively new, it is however growing in fast pace to attract interests of different sectors of the economy. With an estimated growth rate of 25 per cent yearly, the sector, which when examined in 2012 was worth $35 million, currently worths $550 million and projected to have a $10 billion potential if well harnessed. Johnson informed that about two years ago, the orders per day was 1000, "but now, 2014, the order per day has increased to 15, 000 and going by the potential value of $10 billion, the order per day should be about 300,000." As such, e-Commerce offers a level playing ground for large businesses, as well as small and medium-scale enterprises (SMEs) to operate in the global marketplace and for regional businesses and communities to participate in social, economic and cultural networks seamlessly across international boundaries. What drives eCommerce in Nigeria? In Nigeria, analysts are of the opinion that the recent growth in e-commerce is responsible for the continued expansion of the retail sector. According to them, there are about 300 e-commerce sites running in Nigeria. Besides, experts have projected about 10 per cent increase in the number of players in the sub-sector. This, according to them will continued to be fuel by new developments including investments in telecommunications industry such as the undersea cables bringing excess bandwidth are driving cheaper data prices and increased Internet penetration. Though, Nigeria's broadband penetration is said to have grown from about 6.4 per cent late 2013 to about 8.4 per cent now, the Federal Government through the National Broadband Plan is targeting a 30 per cent penetration by 2018. This is expected to formally put Nigeria on the global map and make players including Jumia; Konga; Gloo.ng; OLX; DealDey; Cheki.com; wakanow; Gidimall.com, among others compete favourably with the likes of Ali Baba; Ebay among others. Nigeria's massive mobile phone penetration with significant growth in the acquisition of smartphones has also been seen as another driving force. Today, Nigeria is home to over 170 million connected lines, of which 130 million are active. Reports have it that the country's smartphone market, estimated to worth close to N500 billion, will be another driving force by 2017. eCommerce Potential While the minister confirmed that Nigeria's eCommerce potential, if well harnessed is worth $10 billion, experts have added that the sub-sector can contribute 20 per cent to the country's GDP. According to the Co-CEO, Jumia Nigeria, Nicola Martin, e-commerce would soon be contributing up to 20 per cent to the country's GDP in terms of growth level. Martin, who was discussing e-commerce as next driver of Nigeria's economic growth in a TV programme recently, expressed strong confidence in the sector's potentials further facilitated by Central Bank of Nigeria's (CBN) cashless policy, which seeks to reduce the use of physical cash and increase the adoption of various electronic portals for financial transactions. He said e-commerce had grown tremendously, with companies such as Jumia seeing growth rates of 10 times every year, adding that the growing number of online players was good for the e-commerce industry because it would help the industry to grow as well as assist in educating Nigerians about the convenience of online shopping. In fact, online researchers, emarketer. com stated that while e-commerce across the rest of the world is growing at 16.8 per cent, Africa's e- Commerce space is growing at a rate of 25.8 per cent - making it the fastest growing in the world. This growth has also been seen as fuelling a massive consumer behavioural change in favour of electronic commerce. Online stores in Nigeria, according to a recent survey, record over $2 million worth of transactions per week, approximately N1.3 billion per month. Besides, the sub- ector can also take the teeming of unemployed Nigerian youths out of the labour market. For instance, the Chief Executive Officer of Gloo.ng, which clocked two on October 6, Dr. Olumide Olusanya said the sector can be major employment generation for the country, which could run into hundreds of thousands jobs. He stressed that when Gloo.ng started about two years ago, "we were only seven people working, today we are 20 and we are going to increase before the end of the year. It will interest you to note that because of increased orders, we have moved from a 5000 Sqf fulfilment centre to a 20,000 Sqf centre." In a recent interview, the Chief Executive Officer, Konga.com, Sim Shagaya the long-term vision of any e-commerce firm in the country was to reach all Nigerians across economic strata. Shagaya said that despite huge challenges in Nigeria, online shopping firms could experience geometrical growth. Investments so far Online shopping has indeed gained much traction in Nigeria. Today, apart from services some players are offering like easytaxi; wakanow; checki.com; carmudi among others, there is hardly any proucts a customer wanted that won't be available online. From fast food (Hellofood) to groceries to clothings to electronics to mobile and lately real estate. Indeed, recent report informed that the sector grew from N49.9 billion to N62.4 billion between 2010 and 2011, and to N78 billion between 2011 and 2012, representing a 25-percent increase in each period. Today, the sector is worth over $550 million. The minister informed that about $200 million has been invested in the sector lately. In fact, an unconfirmed sources disclosed that the sector is has attracted significant foreign investments as two of the leading players in the industry received $50 million (N8.25 billion) investments in the last 18 months. The sub-Sector's challenges Though, Johnson listed cost; insecurity; lack of options and delivery time as some of the challenges the sector is facing, the Gloo.ng boss corroborated these, when he said the issue of logistic, payment and local funding are threatening further growth of the sector. Logistics challenge, according to the Gloo.ng boss lies on poor road networks and traffic gridlocks, associated especially with the Lagos environ. "These challenges lie on poor road network; traffic gridlock among others, which hinders smooth delivery. This is also reason why it takes between five to seven days for some major players to deliver goods to customers. But we at Gloo, we deliver on same day because we have found ways around it. "In terms of payment, especially the e-payment part of it, the process is still very cumbersome. You will need to go from one link to another, several processes in all. But abroad, especially in the USA, payment is just one click. I will also say that there have not been local source for funding, 97 per cent of investments in the sector come from abroad. Nigerian banks have not really been a source of investment for the sector." But Shagaya believed firmly that ubiquitous Internet facility in Nigeria will be a boost to the sector and country estimated to have over 170 million people. "But think of it, we are an Internet company. We distribute our catalogue on mobile devices and personal computers. These mobile devices must be in the hands of people along with the Internet connection to enable them shop on Konga, in addition to payment channels among others. To some degree, our capacity to serve the lower income Nigerian depends on the affordability and availability of mobile devices and Internet connectivity." A former Director at the Nigerian Communications Commission, Dr. Sylvanus Ehikioya wants improved power generation to boost the sector and most especially, improved online security. Ehikioya noted that most Nigerians shied away from online business for fear of identity theft. "The cyberspace is not secured and people are afraid of losing money to hackers. The situation is even worst due to ineffective delivery system", he stated. Copyright The Guardian. Distributed by AllAfrica Global Media (allAfrica.com). |