Nigeria remains at the forefront of electronic commerce activities across the continent but the nation’s feeble logistic infrastructure, further amplified by poor road networks, unending traffic gridlocks and faulty address systems are hindering the sectors’ overall contribution to the economy, industry observers say.
With an estimated growth rate of 25 percent yearly, the e-commerce industry, when examined in 2012 was worth $35 million, is valued at $550 million and is projected to have a $10 billion potential if harnessed properly, according to the ministry of communications technology.
Industry observers are of the view that e-commerce should play significant roles in the economic boom, likely to come in the coming years, but point out that logistics present a challenge which must be tackled before the objective can be fully realised.
Tunde Kehinde, managing director of African Courier Express (ACE), a technology driven logistics firm, observed that Nigerians are not as trusting of e-retail as their counterparts abroad, due to rising cases of online fraud.
Speaking with BusinessDay in an interview, the co-founder of Jumia.com said E-commerce firms have in recent times encouraged Cash on Delievery (CoD) payments to bridge the lack of confidence in the system.
“In Nigeria, this leads to logistics issues concerning finding customers at a time when customers have the cash for their purchases, and issues surrounding cash remittance to the merchant. For many firms, the difficulty of mitigating this logistical challenges have been a barrier that keeps them from effectively pursuing e-commerce,” he explained.
Lending his own view, Sim Shagaya, chief executive of Konga.com, the country’s largest online mall, said logistica does exist in a chaotic, unstructured type of manner. Speaking in an interview with Forbes earlier in the year, Shagaya said, “The primary challenge in Africa is the absence of coordinated and structured logistics networks….And one of the greatest challenges Konga must tackle will be to bring order to this frenzied, unstructured energy of logistics that currently exists in the market,”.
Mark Essien, founder of Nigeria’s largest hotel booking website, Hotels.ng says the country’s poor logistics network presents a significant opportunity for enterpreneurs to build successful companies. Some companies are already taking advantage of the immense logistics opportunities in e-commerce space.
According to Kehinde, ACE’s technology, all developed in-house by talented, entrepreneurial minds, allows the firm to provide merchants with more details and information about their shipments – enabling them to make better business decisions. The growth in the ecommerce space in Nigeria has been made possible by the activities of major e- retailers such as Konga.com, Jumia.com, DealDey, WakaNow, RyteDeals, Checki.com, among others.
Findings reveal that activities of these companies are 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, and advertising.
According to recent newspaper reports, the e-commerce sector is attracting huge interest from the foreign investment community. Two leading players in the sector, Jumia and Konga have received $50 million (N8.25 billion) investments in the last one year.
From 2012 till date, the sector has attracted $200 million Foreign Direct Investment (FDI). Industry analysts at FBN Capital believe the development of this sub-sector is really an extension of the story of the emerging middle class and rising consumption which the portfolio community has embraced. Nigeria has become the object of attraction for local and international online firms due to the massive surge in internet subscription rate, industry observers say.
Ben Uzor
