By Anthony Otaru
Stakeholders have suggested reasons why Nigeria’s e-commerce revenues may hit $75bn market per annum by 2025.
This came as the sector’s spending is currently estimated at $12bn.
As gleaned from data from the Nigerian Bureau of Statistics (NBS), the Information Communication Technology (ICT) sector alone contributed over 18.44 percent to the nation’s Gross Domestic Product (GDP) in Q2 2023.
This comes as the Minister of Industry, Trade and Investment, Doris Uzoka-Anite, assured that the Federal Government is currently working to establish a strategy for e-commerce businesses that would further benefit the sector’s growth, among other measures.
The Minister’s words, “Recently, Nigeria signed a Memorandum of Understanding (MoU) totalling N200bn for the Small and Micro Enterprises (SMEs), which is a component of the e-commerce business, as part of efforts further to support the prospects of e-commerce in the country”.
Findings by This Nigeria revealed that e-commerce activities in the country are rapidly growing as a result of the vast improvement in telecommunication services. E-banking has also become an essential aspect of transactions, and e-commerce has recorded upward growth in the country.
Also, data from an online platform, Statistical Package for Social Science (SPSS), indicates that the major drivers of e-commerce adoption in Nigeria comprise increased sales, competitive advantage, customer loyalty, increased automation processes, better knowledge management, enhanced well-being, and customer education.
According to an external report by Payment and Commerce Market Intelligence (PCMI), e-commerce transactions are expected to surpass $33bn in 2026 from the $15bn recorded in 2023.
The report, which ThisNigeria monitored, indicates that Nigeria, the most populated country in Africa, plays a significant role in the continent’s e-commerce landscape. More so, its e-commerce penetration has steadily increased, and online sales currently make up six percent of the nation’s total retail sales, which is one of the highest in the region but low by global standards.
ThisNigeria also learnt that there is potential for e-commerce development in Nigeria, as estimates from the International Telecommunication Union (ITU) published in 2023 indicate that only 35 percent of Nigerians were using the internet as of 2023.
An expert, Prof Ajayi Omo-Ogun, also argued that the country’s fast-growing youthful population, increasing consumer power, and improved smartphone penetration have undoubtedly increased e-commerce and financial technology in Nigeria.
However, he identified key challenges to the growth of e-commerce in the country, including power outages and frequent power interruptions.
Others are insecurity, technology costs, lack of trust in web retailers, software compatibility, and acquiring Information Technology (IT) skilled personnel. There is also the need for adequate publicity on e-commerce with emphasis on e-shipping, e-banking, and e-businesses.
On his part, Prof Akpan Ekpo Akpan told ThisNigeria that despite the recorded increased transactions value chain along Nigeria’s e-commerce business, unemployment in the country may further worsen.
Akpan, a professor of Economics at the University of Uyo, Akwa-Ibom State, said, “We should remember that e-commerce transactions are done using internet services.
“Only a few people get the jobs while most remain unemployed. This is not good for the country, especially now that we need help to reduce the unemployment rate.
“There’s also this fear of tax evasion on the part of the operators; many of them may not pay necessary tax to the government because they are portfolio investors. This will further deplete the government’s source of revenues.”
He advised the government to quickly establish a monitoring team or agency to hold operators more accountable to the nation.
He states, “The e-commerce operators should be monitored and tracked so that the government can gain maximally from their transactions in Nigeria. This is good for the country, but many people may lose their jobs while it thrives.”
An economist and newspaper columnist, Prof Sheriffdeen Tella, who admitted that e-commerce has been growing globally with technology, stressed that it is a cheaper way of buying and selling with modern ICT advancements.
He said, “The growth will continue, but trust among buyers and sellers must be checked. This trust has to do with both sides fulfilling their obligations. Sometimes, what is advertised may not be the same as physical goods.
“We should also look at the issue of buying on credit, with consequent regular defaults, or making payments without delivery of goods at the same time, or at all.”
He noted that by and large, more than these challenges are needed to reduce the growth in the subsector, more so that global efforts are evolving to solve them legally.
