The state of e-commerce has become so deeply entrenched in daily trading activities across Nigeria and worldwide. The very fact that e-commerce has generally encouraged safer, faster, cashless payments across the internet has drawn great patronage to it. We will be examining the state of e-commerce in Nigeria – precisely in 2023.
The Scope of E-commerce
Simply put, e-commerce refers to all ‘commercial transactions conducted electronically on the internet.’ (Wikipedia). E-commerce covers a wide range of business and financial transactions which include:
- Internet banking
- Online shopping
- Cryptocurrency transactions
- Payment gateways
- Online ticketing
- Online auctions
There is a vast range of products and services being traded globally via e-commerce. Furthermore, the list of business enterprises and organizations (both government and private) that transact with customers through e-commerce is steadily growing. From banks to supermarkets, government establishments, finance houses, religious organizations and more. Even traders in the open market are gradually adopting e-commerce.
What’s more, there are now business entities who conduct much, or practically all their business dealings and activities on the internet. Such entities will naturally make vast use of e-commerce. In fact, some well-known business ventures started out on the internet. And they rely heavily on e-commerce for payments. Typical cases of successful e-commerce sites in Nigeria include the renowned Jumia, Konga, and Jiji sites.
History of E-commerce in Nigeria
As widely as e-commerce is being adopted worldwide, Nigeria has had serious setbacks in the e-commerce space. It all started in 2005, when Paypal placed a ban on remittances into the country. Paypal was such a popular payment gateway for Nigerians, that many users were left stranded and frustrated by the ban. Nor was it without reasonable cause. It was in response to serious cases of hackers and scammers traced to Nigerian sources, that Paypal made the unavoidable move.
And thereafter, more woes would follow. As a good number of well-known global online payment gateways dropped Nigeria from their list of accepted countries for remittances. Wise, Neteller, and Stripe kicked Nigeria off their list. While some others would not even make provision for Nigerian users in the first instance.
On the part of Nigerian banks, Naira debit cards were allowed for international payments for many years, until recently. Banks such as Zenith, UBA, and Fidelity allowed payments into (and remittances from) accounts in the USA, UK, South Africa and Germany using Naira debit cards.
However, there was a scarcity of foreign exchange that eventually pushed these banks to stop allowing international payments via Naira debit cards. You could only use Dollar debit cards to make international transactions. Yet another loss for Nigerians. The father of disappointments came when the Central Bank of Nigeria placed further restrictions on foreign spending. This was a sorry tale to tell for the state of e-commerce in Nigeria.
However, there are now concerted efforts to reverse this trend. Within the past one decade thereabout, Nigerian banks and certain fintechs have developed meaningful online payment methods for local transactions.
Virtually every Nigerian bank now operates internet banking portals (web and app-based). Similarly, Nigerian fintechs such as Interswitch, Remita, Paga, Flutterwave, Paystack, Monnify, ETranzact and several others arose to the rescue of Nigerians. At least they were available for local online payments within the country. Some of them were able to extend their operations to the West African region and beyond, still within Africa.
The Prospects of E-commerce in Nigeria
The ecommerceDB website reports that as we speak, Nigeria is the 40th largest e-commerce market in the world. This trend has seen immense boost from the huge number of internet users in Nigeria. At over 122 million internet subscribers, Nigeria ranks first in the largest population of internet users in Africa. A significant portion of this number are youths, who are extremely active on the internet and openly adopt e-commerce.
It is noteworthy that so many Nigerian users now make use of social media to engage in e-commerce. The numbers are expected to increase in the coming years. Also the National Communication Commission (NCC) reports that 89% of Nigerian internet users now make their purchases online. And another 24% are planning to do so in the near future.
Additionally, because of the phenomenal growth in the acquisition of mobile phones, many Nigerian consumers transact using their mobile phones. Nigerians can now choose between several internet-enabled devices to search for products and services, as well as compare prices.
Thus any Nigerian business with significant online presence would need to make their services available through multiple channels and platforms. Regardless of the device being used, the social media platform or communication channel, users should be able to easily access any meaningful business and transact easily.
This was the early success strategy of Jumia; and so many business entities are now following suit. Now there are apps, websites, social media pages, WhatsApp, and Telegram channels to interact with notable Nigerian businesses. And it is now easier to carry out e-commerce activities in Nigeria using any internet-enabled device.
