Nigeria’s E-Commerce Sector to Worth N2.5trn by 2018
As more Nigerians patronise online retail platforms following the Central Bank of Nigeria (CBN) cash-lite agenda and the Federal Government of Nigeria’s national broadband policy 2013-2018, the Nigerian electronic commerce sector is expected to expand further to as much as $13 billion (N2.5 trillion) in value, THISDAY findings have revealed.
According to the national broadband policy 2013-2018, 80 per cent of the Nigerian population is projected to enjoy mobile broadband access and 20 per cent fixed line access. The CBN’s cashless policy began nationwide on July 1, last year.
Prior to the commencement of the policy in 2012, the sector recorded 1,000 orders per day, with market size standing at $35 million (N5.6 billion).
Today, on average, the leading online stores achieve about $2 million worth of transactions per week (approximately N1.5bn per month).
These figures, THISDAY findings revealed, further increased to 15,000 orders per day, with market size valued at $550 million (N88 billion).
The growth in the ecommerce space in Nigeria has been made possible by the activities of major on-line retailing platforms such as Konga.com, Jumia.com, DealDey, QuikTellers, WakaNow, RyteDeals, Checki.com, Buga.com among others.
Also, THISDAY findings revealed that activities of these companies is boosting job creation with over 20,000 jobs found to have been created since 2012, with the sector having positive impact on service industry expansion, including infrastructure, warehousing, advertising and logistics.
THISDAY checks also showed that the sector is attracting a lot of foreign investments as two of the leading players in the sector, Jumia and Konga received $50 million (N8.25 billion) investments in the last one year. Since 2012 till date, the sector has attracted $200 million Foreign Direct Investment (FDI).
Meanwhile, analysts at FBN Capital believe the development of this sub-sector is an extension of the story of the emerging middle class and rising consumption generally which the portfolio community has embraced.
In a report made available to THISDAY, they stressed that Nigeria’s retail industry has become increasingly sophisticated, evolving from open-air markets to modern malls and online shops.
“Small and medium-sized enterprises (SMEs) are now primary drivers of growth for e-commerce. Cost reductions and improved marketing reach are two of the main advantages which electronic platforms offer.
Future growth will very much depend on the evolution of internet penetration. According to the Nigerian Communications Commission (NCC), active internet subscription via GSM was estimated at 83.2 million in February, equivalent to a penetration of 49 per cent. Based on industry reports, countries with highly successful e-commerce industries such as the United Kingdom, the United States and Norway have correspondingly high Internet penetration rates of 87 per cent, 81 per cent and 95 per cent respectively, “they stated.
They disclosed that online retail platforms such as Konga and Jumia have been seeking ways to incorporate SMEs into their marketplace to drive business.
“This has assisted in bridging the gap between consumers and access to products. One roadblock in the online retail market is data security, which reduces frequency of online purchases. In fact, a large number of Nigerians still prefer the traditional retail channels because of this.
“The CBN’s cashless policy encourages electronic-based transactions and has been of great benefit to online retailers, given that they rely on e-payment portals to secure order placements. Further steps by the CBN can drive financial inclusion which would increase the retailers’ customer base, “the experts said.
They added, “In the medium term, we expect e-commerce’s contribution to GDP to grow to a mid to high single digit percentage (from approximately 1% based on 2013 data). However, the FGN will need to provide stable and high-speed broadband. For now, broadband speed remains low. Former communications technology minister, Omobola Johnson, recently disclosed that the national average broadband speed stood at 4.7Mbps.”