Brands & Marketing

Nigeria’s Slide in e-commerce Ranking – The Challenges of Steady Growth

The latest ranking of Nigeria by the United Nation (UN) as 94th among countries with readiness for e-commerce has been causing some ripples among economic watchers in the country.

In the latest United Nations Conference on Trade and Development’s Business-to-Consumer (B2C) e-commerce Index 2020, Mauritius and South Africa retained the top two positions in Africa. They are followed by Tunisia, Algeria, Ghana, and Libya in third, fourth, fifth, and sixth positions respectively, while Nigeria dropped from third to eighth in Africa.

E-Commerce, which is the processes involved in buying and/or selling products, services and ideas online, has gained remarkable popularity in the country in the last decade. This is due to the growing number of people with internet access and the increasing number of mobile phone users who are also quite savvy in Information Technology (IT).

Electronic commerce draws on technologies such as electronic funds transfer, supply chain management, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Different applications and platforms are used to move payments, goods and services to their different delivery stages.

Notwithstanding the recent low ranking of the country by the UN, the level of e-commerce transactions in Nigeria in the past three years has increased exponentially, particularly before the outbreak of COVID-19 that brought about the nation’s lockdown for many months.

However, there are many reasons for the 2021 slide. According to a recent research, many people have not yet fully adapted to the new purchasing technology as a huge number of people are still reluctant to pay online due to lack of trust in online retailers, and fear of inadequate online security of their data when making payments.

Some other  challenges in Nigeria, when it comes to e-commerce as revealed by the survey, include lack of proper infrastructure, privacy concerns, high cost of shipping to and from Nigeria, low penetration of credit cards usually required to shop online (debit cards are the common payment cards available in Nigeria), unreliable distribution and delivery processes, and residual distrust of paying online.

Nigeria is equally fighting corruption, and the issue of online scams remains a big factor; and in a place where phishing is regular, individuals are distrustful about listing their private information online.

Lack of trust from Nigerian consumers is a huge hindrance for the e-commerce business in Nigeria. While some customers are concerned about being scammed, others  are yet to find out how they can trade online.

In Nigeria, significant efforts on the regulation of e-commerce-related activities are still at the stage of Draft Bills before the National Assembly. One example is the Electronic Transactions Bill, which is modelled on the UNCITRAL Model Law on e-commerce.  It provides for the validity of  contracts, matters of evidence, electronic signatures and payment systems, amongst other issues.

Some of the recommendations to grow the acceptance of e-commerce in Nigeria include public awareness and making access to the internet much cheaper so that many more people will be able to afford it steadily on their laptops and mobile phones.

To further prevent online frauds, e-commerce sites should provide the customers with customised vouchers and generate exclusive codes, offer special discounts, tokens and coupons regularly as these will attract and retain customers.

The National Information Technology Development Agency (NITDA) also has a mandate which includes the establishment of a National Electronic Commerce Council (NECC) to govern all electronic commerce affairs in Nigeria and to facilitate international trade through an e-commerce infrastructure and the implementation of the Nigerian National Policy on Information Technology (IT).

With the foregoing policies and legislative strides taken by the Nigerian Government towards the regulation of e-commerce, it is obvious that the challenges facing it may soon be dealt with from the legal framework.

Nigerians are more dependent on the internet currently than they were in the past, and it has influenced commercial transactions in Nigeria starting from banking and telecommunications, and gained more influence from online retail with the advent of websites like Jumia.com and Konga.com, etc.

Read Also: E-Payment Industry Records Remarkable Growth

The National Assembly should be pressurized into making bills concerning electronic commerce a top priority to be enacted into law for the country to enjoy the benefit of a secure and regulated online commercial environment. 

The online payment space is improving, as Interswitch now faces fierce competition from Unified Payment, Paga, Eyowo, PayStack, SimplePay, CashEnvoy, and VoguePay in Nigeria.

Dr Chris Uwaje, a fellow of the Nigeria Computer Society (NCS), recently commended the management of Konga for creating a thriving e-commerce brand which all Nigerians should be proud of.

“The management of the new Konga has created a massive brand out of Africa. Today, Konga Yakata, its version of the globally celebrated Black Friday sales, has become undoubtedly the sales event in the annual shopping calendar in Nigeria.

“Presently, the Konga strategy is one that has made it too large to fail. The rollout of multiple warehousing facilities, expansion of its retail presence and launch of new, thriving subsidiaries such as Konga Travels which has grown over 200%, acquired all major airline certifications and opened up multiple new offices within a short space of time is proof of the experience and know-how the new owners have brought to bear on the business,” Uwaje added.

On his part, Mr. Oluwadamilare Ogunleye, CEO of Survenia.com, pointed out that there were infrastructural deficits such as payments, logistics, local manufacturing, digital identity, and credit that needs to be overcome for the success and growth of e-commerce in Nigeria.

Among Nigerian consumers, spending on e-commerce currently accounts for an estimated $12 billion per year and it is projected that by 2025 spending will rise to $75 billion in annual revenues. It is very likely that these promising estimates will eventually have a positive effect on Nigeria’s future e-commerce rankings.

Anthony Nwakaegho

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