By Emmanuel Okwuke / Senior IT. Correspondent
Findings by the Centre for Values in Leadership (CVL) under the leadership of Professor Pat Utomi show that in Nigeria, the call for the last 30 years has been about diversifying the economy away from the monoculture dependence on crude oil earnings. Initial evidence suggests that three sectors were breaking the mould. These are: Information and Communications Technology (ICT), Entertainment and Agriculture.
ICT is an enabler industry, raising productivity possibilities makes its contribution even more profound. Banking has benefited much in its ascendancy from support from the ICT sector. Also, the convergence of computing, telecommunications and broadcasting has redefined customization and made market segmentation obsolete. It has redefined information asymmetric in decision making. This has also led to an explosion of e-Commerce leading to the emergence of such companies as Konga.com, Jumia.com, Buyam.com Gloo.ng; DealDey; OLX; Cheki.com.ng, Lamudi.com, Camudi.com among others.
Explosion of the e-commerce space
It has been said that the Nigeria e-commerce sector may have grown tremendously within a short space, attracting over $200 million foreign investments. It is ,however, not without challenges that require attentions of the Federal Government, indigenous players and an ally of sincere counterparts beyond the shores of the country.
The Minister of Communication Technology, Dr. (Mrs) Omobola Johnson who analysed the sector at the CVL organised award for achievers and inventors in Nigeria’s ICT industry recently in Lagos noted that Nigeria’s economy was growing with the increasing adoption of electronic applications for government businesses and commercial activities among the general public. However, she lamented infrastructural, funding and logistic challenges confronting its full adoption in every key sectors.
Explaining how e-commerce application has impacted the nation’s economy which is projected to have a market potential of over $10 billion, the Minister stated that in the last two years (2012), it was worth $35 million, and now (2014) it is valued at about $550 million and has moved from 1000 daily orders to about 15, 000 ,adding that the sector has in the last two years created 15, 000 jobs.
Between the 2012 and now the Minister added that the 97 per cent of investments in the sector come from foreigners and which in-turn gives them the large chunk of the market at the demerit of indigenous companies in the sub-sector.
Dr. Johnson who further appreciated the works of players e-Commerce space, noted that despite the challenges they have moved on converting these challenges to opportunity for further commitment and investment channels.
According to an online researcher, e-marketer, 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 e- Commerce.
Challenges of e-Commerce
According to Dr. Johnson, the principal challenges facing the $550 million sub-sector are the issues of logistics; payment system and local funding for the business.
The Minister listed cost; insecurity; lack of options and delivery time as some of the challenges the sector is facing, These views were collaborated by the Chief Executive Officer, Gloo.ng, Dr. Olumide Olusanya who affirmed that 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. This is also reason why it takes between five to seven days for some major players to deliver goods to customers. “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 away. 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.”
Prospects of e-Commerce
Olusanya, a medical doctor by profession who said the Nigerian market is still very robust and open, lamented that Nigeria was yet to meet the standards of countries including China; India among others.
Also, he stated that the middle and high-income classes are still the major driver of e-Commerce in the country. “However, going by the trends in the country, the low income class are gradually climbing the ladder and moving into the middle class. We believe that this growth will further expand e-Commerce in Nigeria. It has also been projected that more people will move from the rural areas to urban. With all these forecasts, we see tremendous growth in the industry” .
Taking advantage of opportunities in e-Commerce space
The Lagos Angel Network(LAN) has described Nigeria’s numerous infrastructural challenges as opportunities for angel investors to invest in start-ups developing solutions for the challenges.
Chairman Signal Alliance Limited, and member, Lagos Angel Network, Collins Onuegbu, told HumanIPO.com that Nigeria had several challenges and the most successful start-ups were those that had ways to provide their services in spite of the numerous challenges. “In the midst of the challenges we have in Nigeria, companies like Jumia, Konga and others are making money,” he said.
He noted that one of the challenges the start-up community in Nigeria has is the non existence of an ecosystem. “The current existing structure is very young and not as strong as those in United States and elsewhere. However, the good thing is that we are gradually building an ecosystem,” Onuegbu said.
He said the angel network was playing crucial roles in the development of the ecosystem to nurture start-ups in Nigeria.
“We started in 2013 and we are trying to build an ecosystem that does not exist. We want to be a catalyst for the ecosystem to growth and support start-ups to be successful. We want to formalise the sector and support the start-ups with fund,” he said.
Source : Independent