How Telecom Investments Is Driving Nigeria’s e-Commerce Growth

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Nigeria’s e-commerce sector is escalating with thousands of websites offering consumers alternative choices. Instead of walking  down to mammy markets, shops, supermarket or shopping malls, consumers can in the comfort of their rooms use laptops or mobile handsets and make purchases from e-commerce sites with the goods delivered at their homes.

The surge in e-commerce in the past five years has made Nigerians to start making flight bookings, payment of utility bills, online shopping and other business transactions on the web. Today, online retailers are taking over from the traditional malls people are accustomed to.

Electronic retailers (e-retailers) tend to create a shopping experience for customers without having to visit the mall physically. Barely two years since indigenous online retailing started in Nigeria, names like Jumia, Konga, GTBank’s SME Marketplace Gloo, Jiji, Rytedeals, Mall for Africa and hundreds of others are gathering fame for their online retail efforts.

Helen Anatogu, chief executive officer of iDEA Hub said the digital economy in Nigeria continues to thrive mainly attributable to: the huge youth population that is creating and demanding online content, emergence of e-commerce platforms that facilitate the procurement of services, demand for data services over voice service due to the increasing lifestyle effect of global social media platforms like

She said , “Facebook, Twitter, WhatsApp, Instagram, Snapchat, etc., the Cashless policy by the Central Bank of Nigeria (CBN) as well as promotion of financial inclusion strategy by CBN and Bankers Committee, especially licensing of mobile money operators” has propelled the rise of e-commerce in the country.

According to research, globally, retail trade accounts for 27 per cent of the world’s Gross Domestic Product (GDP. The retail sector also employs 17 per cent of the global workforce, which is about 800 million people. In the United States alone, one in every 10 people works in the retail sector.

With over 80 million Nigerians living in metropolitan areas, creating huge opportunities for formal retail to thrive, e-commerce has become a major driver of economic growth, job creation and wealth generation globally while in Nigeria, it is creating great opportunities for existing and new investors to take advantage of.

Digital technology is driving the internet market place. Virtual transaction means that businesses can be transacted from the remote corners of our homes enabled by the internet. The growing number of smartphones and other advanced devices is increasing the use of data-intensive applications, particularly video streaming, on mobile networks. This is resulting in an explosion of data traffic, with volumes forecast to grow at a CAGR of 49 per cent over the next five years.

According to GSM Association, the mobile industry continues to drive innovation across the world, with its impact felt in both developed and developing markets. Mobile has allowed individuals, companies and governments to innovate in new and unexpected ways, with consumers across the globe showing a ready appetite to adopt new technologies.

In Nigeria, affordable smartphones running on mobile broadband networks are bringing many individuals their first computing devices and first experience of internet access. This has encouraged the development of new services, applications and use cases that have rarely been seen in more developed western markets.

According to telecom experts, mobile is playing a central role in delivering digital and financial inclusion. The Nigerian Communications Commission (NCC) recently said the telecom operators have brought in about $68 billion direct investment into the industry, with much of the investments coming from mobile network operators (MNOs).

Just last week, executive chairman, MTN Nigeria, Mr. Phutuma Nhleko, disclosed that MTN Nigeria has invested $16 billion into its Nigerian operation. This investment is key in spurring Nigeria’s e-commerce explosion. For instance, MTN Nigeria through its investment in infrastructure has enhanced digital inclusion in Nigeria.

Nigeria’s largest mobile network is investing in infrastructure rollouts, securing telecoms and cable broadcasting spectrum licences in Nigeria. It is also diversifying into digital financial services to restore investors’ confidence as well as eyeing new revenue stream for expansion, with plan to list part of MTN Nigeria shares on the Nigerian Stock Exchange (NSE).

MTN Nigeria is the largest music distributor in Africa and has investments in mobile money and Africa Internet Holdings (AIG). Last year, it rebranded AIG companies into Jumia’s ecosystem. Kaymu is now Jumia Market, Jovago, Hellofood, Vendito, Lamudi, Everjobs, Carmudi and AIGX are now known as Jumia Market, Jumia Travel, Jumia Foods, Jumia Deals, Jumia House, Jumia Jobs, Jumia Card and Jumia Services respectively.

MTN is aiming to transform into a financial technology (FinTech) operator through mobile money, e-insurance, e-commerce, cloud business, web services and last mile banking. It is also working on tapping into Nigeria’s $21 billion Diaspora remittance market. MTN has embarked on a process of housing new revenue streams, particularly digital services, outside the core business.

This will allow for more agility and greater flexibility to accelerate growth in these areas. New revenue streams are expected to increase their contribution to revenue over the next 12-18 months. In Nigeria, the mobile operator has acquired pay TV broadcasting licence, 4G LTE and digital financial services.

Tolu Akinluyi, communications, media and technology executive at Accenture Nigeria said,  “The Nigerian government must create an enabling environment to foster sustainable growth and development of the telecom sector. It must encourage the industry to promote, build, incubate and partner in the development and realization of IT innovation hubs.”

It is pertinent to emphasize the need for progressive regulatory environment that acknowledges the importance of ICT as a major contributor to GDP and a major alternative to oil revenue as well as need for proactive policy to fast tract the explosion of e-commerce and innovation in the country.

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