- It’s time for Africa
By Sourin Buragohain
Let’s start this editorial with a story from far away India. Over the last 20 years, India has become the world’s favoured market for Business Process Outsourcing (BPO) companies, among other competitors, such as, Philippines, Brazil, Hungary, Canada, Australia, Ireland etc. The A T Kearney’s 2016 Global Services Location Index (GSLI) study rated India as number one out of the total 55 countries in the list.
According to study, Offshoring to India remains a highly attractive proposition for many global companies.
As per Gartner, the cost advantages of outsourcing from India are noteworthy as it costs less than US$ 7,500 per annum for a call center agent in India (cost to company) as compared to $ 19,000 in the US and US$ 17,000 in Australia. That is well over a massive 50% costs reduction for the customers outsourcing their business processes to India.
The Indian BPO sector employs over 3.5 million people directly and provides indirect employment to another million or more – through ancillary industries dependent on the IT-BPO sector. The BPOs in India handle 55% of the global outsourcing market.
The annual revenue of the Indian BPO market is more than $26 Billion and contributes around 1% of the GDP.
Africa – The sleeping giant out of its slumber…
Africa is the world’s second-largest and second-most-populous continent. It is so huge that it covers almost a quarter of the total land mass of the world.
With 1.1 billion people as of 2014, it accounts for about 16% of the world’s human population. Africa’s population is the youngest amongst all the continents; the median age in 2012 was 19 years, when the worldwide median age was 30 years.
So, it is a great, positive irony that Africa, widely accepted as the place of origin of humans in the world, is also the youngest continent in the globe, in terms of population. It is this power of youth and exuberance that will shape the future of Africa. It really is time for Africa in truest sense of the term!
Lessons for Africa from India success story
- Making skilled resource readily available in the country – more spending on education and skill development programs for the African youth by the Govts.
- Low operating costs – cut down on taxes, have a liberalized tax regime – Tax breaks and sops offered by the government
- Development of special economic zones (SEZs) which also help IT/BPO companies get tax benefits
It is in this context that it is worthwhile to share the success of a company, which is very much an African entity, with registered office in Mauritius and corporate HQ in Lagos, Nigeria.
The iSON Group comprises of two main division – the leader in technology services and consulting, helps clients in 29 countries in Africa and Middle East to create digital transformation strategies.
From application development to business process management to AI, Blockchain, Machine Learning and Big Data Analytics it helps clients to solve the problems effectively and efficiently.Additionally, iSON offers BPO services through iSON BPO, its data analytics driven BPO arm. The robust BPO services infrastructure is built on global delivery framework to deliver voice, non-voice and other knowledge process outsourcing (KPO) services through local presence and on-shore/remote support, leading to superior customer experience, highly satisfied customers and growth in business.
iSON Group has been doing business in the IT-ITeSspace in Africa since the last 8 years, with its inception in 2010. In its own humble ways, iSON Group has been the pioneer of the BPO industry with an un-matched multi country presence across Africa. iSON BPO employs close to 12,000 people across its Africa operations and 99% of its staff are local – Africans, serving African clients and customers.
Having started with 6 countries in Africa, with a large Telecom operator, managing 50% share of the business, iSON BPO has grown to approx 10 countries for them handling 70% share of the business – A testimony of the client’s on iSON’s proven capability and service delivery.
The Top telecom company in Africa has also awarded contract to iSON BPO for 7 countries to handle their 100 million subscribers end to end with technology. With this, iSON BPO now handles over 150 million customer base in Africa itself. Besides Telecom sector, iSON BPO also has presence in Retail, Airlines, BFSI and Technology sectors, across Africa.
iSON BPO, by virtue of the business impact it has created for its clients across Africa, has become the largest partner for most of its clients.
Thus it can been inferred, the iSON Group is completely dedicated to the cause of the African dream and has laid out for itself ambitious plans to grow organically within Africa, thereby creating more employment opportunities for the deserving and hardworking African youth. iSON takes lot of pride in promoting local talent and this is an essential aspect of its HR / People development delivery.
Thus, the emerging Africa BPO story, a story of endless opportunities, has already begun and iSON BPO has been a flag bearer cum leader in the journey so far, in its own humble ways, doing its bit to fuel this dream for Africa. Africa will need hundreds and hundreds of such#iSONs to propel its dream.
The government and the private sector companies, agencies should encourage, recognize such companies which in turn will inspire a whole new generation of African youth to see and live the African dream.
Yes, the time has come for the world to listen to the roar of the sleeping giant, out of its slumber – it’s time for Africa!!!
Sourin Buragohain is the Head of Pre Sales, iSON BPO.
The power of women in the 21st Century: The Zinox Group example
BY: Dr. Abiona Iwajowa
“There’s something so special about a woman who dominates in a man’s world. It takes a certain grace, strength, intelligence, fearlessness, and the nerve to never take no for an answer.’’ – Rihanna
“A 21st Century woman is a privilege and special blessing to a family and society and anointed to lead corporates and countries from the second quarter of this century. Leadership shall demand global knowledge, style, absolute trust, creative energy and faith in God and all these are domiciled as a right in today’s civilized woman.” – LeoStan (2019)
For long, the world has paid lip service to the place of women in the global scheme of things. The situation, although more critically felt in developing economies, Nigeria inclusive, is one that has remained a problem globally.
Indeed, gender equality is a globally-acknowledged human right. Nevertheless, the world today still faces a disturbing and abject reluctance to leverage on the potential of this very important gender in shaping our existential narratives. Put in another way, despite the growing evidence of the sterling qualities and achievements that women have proved capable of delivering, there are still huge gaps in access to opportunities and decision-making power for women.
Globally, women have fewer opportunities for economic participation than men, less access to basic and higher education, greater health and safety risks, and less political representation. The situation is the same in the corporate space where men have been known to dominate leadership positions, even when there are more capable or at best, equally qualified or suited female counterparts.
Today, women leaders are still a pitiable minority in various sectors. Men continue to outstrip women in leadership roles across every sector in the world. This includes government, corporate, non-profit, education, medicine, military and religion. Research also reveals that globally, at Fortune 500 companies, women hold only 19 percent of board seats and 15 percent of executive management positions. In addition, the number of female CEOs at these companies is a paltry four percent. Four percent of 500 companies equals 20 female CEOs, with male CEOs running the remaining 480 companies.
A report published in March 2020 by data mining company PayScale also shows a global disparity in how men and women are paid, even when all compensable factors are controlled, meaning that women are still being paid less than men due to no attributable reason other than gender. In 2020, women make only $0.81 for every dollar a man makes.
As demonstrated above, this is not only a Nigerian problem. It is a global phenomenon.
The foregoing is in contrast to the evidence-based capacity of women to create a positive disruption when placed in leadership positions.
It is an open secret that guaranteeing the rights of women and giving them opportunities to reach their full potential is critical, not only for attaining gender equality, but also for meeting a wide range of international development goals. Research shows that empowered women and girls contribute to the health and productivity of their families, communities and countries, creating a ripple effect that benefits everyone.
As Michelle Obama, former First Lady of the United States of America one famously declared: “There is no limit to what we, as women, can accomplish.”
Numerous examples abound in government circles, with the likes of Angela Merkel, a woman who leads the powerful nation of Germany. In Chile, Michelle Bachelet also distinguished herself as President of the South American country from 2006 to 2010 and again from 2014 to 2018, the first woman to occupy the position. This is just to mention a few.
Here in Africa, women have also shown they have what it takes to lead from the front, with Liberia’s Ellen Johnson Sirleaf covering herself in glory after winning the presidential election in 2006, the first in Africa. She was also re-elected in 2011.
Even in the corporate world, where men have dominated, instances abound of women who have distinguished themselves when appointed to leadership positions.
However, there is still a grudging refusal to empower women with leadership responsibilities, not only in Africa., but the world over. Here in Nigeria, there is often times a shocking mind-set when women assume top roles in an organization. In most cases, there is a belief that she was unfairly favoured or, if she is an attractive woman, then she is deemed to have compromised or slept her way to the top.
This is why the example of Leo Stan Ekeh, Chairman of the Zinox Group is worth mentioning.
Although I have not had the privileged of a one-on-one encounter with the man, I recall that as far back as 2014, he had declared that women will lead the world, not as second class citizens, but in the management of global resources mainly in the corporate marketplace, by the second quarter of the 21st Century which starts by 2026. Ekeh, who was speaking at a Women in ICT event at Sheraton Hotel, Ikeja, had cited the increasingly pivotal role women in the corporate sector are playing in the global arena.
Here is what he had to say: “Women are naturally more structured, trustworthy, less greedy, live longer and more prayerful than men. These innate qualities have strategically endowed women with the basic ingredients for leadership. As entrepreneurs, all you need to do is combine these innate qualities with absolute commitment, capacity for innovation, credibility and sound digital knowledge and very soon, the male folk will be struggling to keep pace with the women in the industry.’’
Fast forward to 2019, I was privileged to attend the Disrupt Africa conference organised by Access Bank in May 2019 where Mr. Ekeh was one of the guest speakers at the event.
This time, he had also preached the gospel of women empowerment to the packed audience at the Landmark Centre, Oniru, Victoria Island. According to him, gone are the days when parents would rather prefer to have male kids, as was in the case in the olden days. Ekeh had stated that women are heavily knowledgeable, highly domesticated, humane, humble and less greedy, even as he noted that current statistics indicate that women have proven to be more knowledgeable and intelligent compared with men in the same age bracket and intelligence quotient (IQ). Further, he cited their concentration power and integrity in managing resources as far higher than those of their male counterparts.
Equally important, he had told the listening audience that the foregoing had nothing to do with Africa, noting that it was a global phenomenon.
I was one of the many who had given him a standing ovation at the end of his moving speech. After the conference, I had engaged a few other participants on the thoughts expressed at the event especially the thought-provoking ones espoused by Mr. Ekeh. I was initially of the impression that he was probably playing to the gallery at the conference, as many are wont to do at such public speaking engagements.
This had made me embark on some sort of mini-research or investigation into the Zinox Group. However, my investigations threw up a startling revelation and actually gave me some hope in the future of the battle for women empowerment in Nigeria and beyond.
Indeed, the Zinox Group, led by Ekeh, remains a shining light and a good example of a conglomerate that has not only justified the power of women as leaders, but also given them an equal playing ground to thrive.
At Technology Distributions Ltd. (TD Africa) which incidentally is arguably the biggest company in the Zinox Group in revenue terms, women occupy the first four management executive positions. The company is led by the CEO, Mrs. Chioma Ekeh, wife of Ekeh, a first-rate mathematician and certified Chartered Accountant who has previously worked in the United Kingdom. Next to her is another woman, the Coordinating Managing Director, Mrs. Chioma Chimere. Following closely is yet another woman, Mrs. Shade Oyebode, who is the Managing Director (Operations) and then, Mrs. Andrea Ijogun who is the Managing Director (Sales). Although I did not succeed in obtaining a clear state of the company’s impressive financial figures, it is worth mentioning here that Technology Distributions Ltd. is credited with pioneering ICT distribution in West Africa and till today, it represents the biggest, globally recognised names in the sector such as Microsoft, IBM, Dell, HP, Samsung, Cisco, Lenovo, to mention a few.
If the example of Technology Distributions is deemed a fluke or a chance occurrence, then let us turn our attentions to Zinox Technologies Ltd., the most popular company in the Zinox Group. In 2006 and 2010, the company had rescued Nigeria from a national embarrassment by overseeing the rollout of the computer hardware, components and software solutions used by INEC for the successful conduct of the general elections, rising to the occasion to deliver after foreign contractors failed. It repeated the feat in 2014 when it designed the Direct Data Capture (DDC) machines, Card Readers and worked with INEC in capturing and delivering a credible database of voters – a factor which contributed immensely in reducing post-election litigations.
Zinox Technologies Ltd. is also led by a female Managing Director, Mrs. Kelechi Eze-Okonta – with an M,Sc. in International Business Management from University of Liverpool, United Kingdom – a position she has held, along with all the perks of that office, for the past three years.
Do we still consider that a fluke?
If so, what about Task Systems Ltd., Leo Stan Ekeh’s first company? Incorporated over 30 years ago in 1987, Task Systems Ltd. was the company through which Mr. Ekeh transformed the Nigerian media and publishing landscape, transitioning it from its prevailing analogue state of metal cast style publishing and ushering them into the world of Desktop Publishing and Computer Graphics many years ago. In fact, my late twin brother, who was a top journalist, was one of the witnesses of this revolution which transformed the likes of Punch, Guardian, Sketch, Daily Times, Vanguard, Daily Independent and many others. Back then, he had claimed that Mr. Ekeh was an American whiz-kid! It was until recently that I discovered that he trained in India and the United Kingdom.
For the past five years, Task Systems Ltd. had a woman, Ms. Olufunke Oduntan, as Managing Director. It was only earlier this year that she was replaced by a man, Stanley Okpalaeke with an MBA from LBS as MD after her retirement.
The Group Head, Human Resources, Mrs. Chioma Nwoke, is also female.
Across the Zinox Group, women have not only held top executive management positions; they have also been encouraged to aspire to the very echelon of the corporate ladder. In this remarkable Nigerian example, there are no glass ceilings for the women-folk. At this juncture, it is worth stating that some of these women have worked in the Zinox Group for the past 20 years, growing through the ranks and displaying a high level of integrity, performance and credibility – qualities that have made them undisputable choices for the rarefied positions they occupy.
Indeed, each of these women have merited their appointments.
This is clear when you look at their respective profiles. These are corporate giants who know their onions and who can defend their appointments or distinguish themselves in similar appointments in the global marketplace. These are women who are ethical and spiritually filled and imbued with the right ingredients to drive a business to profitability. Further, their occupancy of those lofty positions is tested on an annual basis, with their unerringly brilliant leadership seeing to the continuous profitability of the Zinox Group.
More remarkable is the fact that the Zinox Group has remained in the forefront of sustaining Nigeria’s march to technological emancipation. The numerous feats recorded by the various companies in the Zinox Group have not only given Nigeria a voice in the technology sphere; but have also gone a long way and still continues to usher millions of Nigerians into the contemporary world mediated by advancements in technology.
But there has hardly been any significant recognition for this Nigerian miracle.
It appears the Nigerian government is more comfortable with recognizing politicians or noise-making institutions and persons who hardly contribute anything of note to the nation’s development. If not, how do we justify the fact that such a gender-sensitive, high-performing entity that has been in business for over 30 years in a difficult terrain such as Nigeria without any major scandal, providing direct and indirect employment opportunities for millions of Nigerians has not received any form of special honour by the Nigerian government?
I put it down to the fact that the Zinox Group is not a noise-making entity, as exemplified by the character of the organization and the fact that its leadership is dominated by women, who are naturally conservative. Perhaps, if the company was into beating the drums of its many achievements they would be identified. Very unfortunate!
Having a man such as Leo Stan Ekeh as a Nigerian is a blessing to this country. These are the kind of leaders that Nigeria needs – people that see beyond today. He has shown remarkable vision in many of his dealings and specifically, with his clarion calls for women empowerment which he has not only preached but implemented across his companies while the country struggles with civilization.
Little wonder, Mr. Ekeh has been at the forefront of driving the charge to computerize Nigeria for the past 30 years, as he has always declared that no nation is truly independent without achieving technological independence.
Despite the non-recognition by the Nigerian government for its many contributions to national development, the Zinox Group has been mightily blessed. In my research, I have followed the growth of this exciting technology group and, despite the difficulties in the operating environment, the Zinox Group has continued to give hope to many Nigerians. No wonder Alhaji Lateef Jakande- the former Governor of Lagos state said at the launch of Task Systems’ Allen Avenue, Ikeja office in 1992, that if the country could have five Leo Stan Ekehs, Nigeria would emerge as a quality representative of Africa in the global community.
Today, a lot of our young ones are out of school without any clarity as to how long this predicament will last. Yet, the government cannot partner with a proudly Nigerian brand such as this to empower these little kids, all of whom will pay taxes in future, with simple gadgets and devices to aid their learning. On the other hand, the government is investing billions in a feeding programme riddled with controversy for out-of-school children.
What a shame!
Dr. Abiona Iwajowa is a policy expert who writes from Kano.
Maximising the potentials of e-commerce in Nigeria
BY: Emmanuel Nwachukwu
The e-commerce revolution which sparked off in 1994 with a meagre $12.48 worth of transactions, has grown to a whopping $27 trillion market in 2020, according to eMarketer’s rating. Although the revolution started in the United States, it quickly extended to many countries in Europe and Asia, coming later to Nigeria in the past decade.
Unlike in the US and Europe, the revolution did not quite hit Nigeria with force as adoption of e-commerce was very slow for obvious reasons like internet penetration, distrust for virtual dealings, poor logistics infrastructure, huge capital requirement and low disposable income.
These resulted in the low patronage that, in turn, accounted for the high fatality rate of the many e-commerce platforms that ventured to open shop in the country. In order to overcome most of these challenges, the e-commerce platforms had to find their own way out by singlehandedly creating the environment they needed to thrive.
Jumia Nigeria, Africa’s leading e-commerce platform, and a couple of other e-commerce platforms that survived found a way to navigate this less-than-desired rate of patronage to stay afloat. For example, with regards to the issue of logistics, that is, moving the merchandise from their warehouses to their customers, these e-commerce platforms moved away from their traditional buying and selling to logistics operations. Jumia Nigeria, according to its chief executive officer, Massimiliano Spalazzi, entered into strategic partnerships with logistics services providers in order to deliver its customers’ orders to them.
“Most of our peers abroad ride on the back of the existing logistics infrastructure in their countries of operation. For example, Amazon, on inception, relied on the US Postal Service for their delivery needs until they were able to develop their own channels. We, in Nigeria, do not have such a luxury as the local postal services are unable to meet our desired speed so we had to create our own logistics infrastructure, albeit the huge capital costs,” Spalazzi said.
To address the country’s logistics needs, the government could do well and provide more funding for the revitalization of the Nigerian Postal Services (NIPOST) for greater efficiency. If this is done, NIPOST could provide logistics support to the e-commerce platforms at a much-reduced cost. This will, in turn, deliver greater value to the customer and boost the e-commerce sector in general.
On the issue of trust in the e-commerce sector, the Central Bank of Nigeria (CBN) and the fintech companies are working to enhance the level of trust in the sector by ensuring that transactions are concluded as fast as possible and that, in the case of failed transactions, refunds are made within 48 hours. Although this is an improvement of the seven days it used to take for the resolution of such issues in the past, it is still below the expectation of these customers, who want an immediate refund. To this end, Jumia, according to its CEO, has created its own payment platform, JumiaPay, for more efficient, secure and convenient payment experience.
According to Spalazzi, “Jumia customers, who use JumiaPay for payment of their orders, get instant reimbursement if their transaction fails to go through unlike their peers on other platforms, who would not have to wait for 24 to 48 hours for their refund.”
Another area the government can help to boost the e-commerce sector is to grow internet penetration in the country. For a sector that largely depends on the internet for its operations, a 42 percent internet penetration is a big snag. Worse still, the internet services are poor and unstable at times, and come at very high costs to the users. The government, through its regulator, the Nigerian Communications Commission, should work with the internet service providers to build more infrastructure that will enhance data carriage across the country, and to ensure that such services are delivered at cheaper costs.
A major reason many service providers don’t last for long in business in the sector is the huge capital requirement for e-commerce operations. In Nigeria, access to finance is highly limited or comes at a high cost, especially for start-ups. This, coupled with lack of logistics and internet infrastructure, makes the e-commerce business a nightmare for existing and prospective operators. To address this access to financing issues, the government may consider creating financing windows for operators in the sector.
Although some of these challenges, especially that of access to finance, are not peculiar to the e-commerce sector, the call for some kind of special intervention in this sector is based on the country’s coronavirus disease (COVID-19) pandemic experience. The e-commerce sector contributed heavily to the measure of success the government achieved when it issued restriction orders on movement and economic activities in its bid to contain the community spread of COVID-19 in the country. These e-commerce platforms took their customers’ orders during the lockdown period and supplied the same to them in the comfort of their homes. They still do this now that we are in the post-lockdown era.
The period of the lockdown was actually an eye opener as to the role the e-commerce sector could play in the life of Nigerians, on the one hand, and on the economy on the other. Although some Nigerians had partially converted to e-commerce before the COVID-19 pandemic lockdown in the country, the lockdown gave the biggest incentives for the conversion of many Nigerians to online shopping. Restricted by the force of the law and the safety concerns, many Nigerians turned to e-commerce for the supply of most of their essentials.
Consumers were not the only group of people that benefited from e-commerce during the lockdown, and the period after. Some global brands including Coca-Cola, Procter & Gamble, Mastercard etc moved their products and services to the Jumia platform, either showcasing their products on the Jumia Mall or advertising their products on the Jumia Marketplace and benefiting from the Jumia’s wide reach and logistics operations.
From the roles that Jumia and other e-commerce platforms played during and after the lockdown days, and the fact that the pandemic is still with us, it is evident that the e-commerce sector deserves a special attention to assist it in achieving its potentials of keeping Nigerians safe, at least, until the pandemic has been defeated.
*Emmanuel Nwachukwu, a Business and Communication Strategist, writes from Lagos
E-commerce’s contribution to Nigeria economy, the challenges and need for government intervention
BY: Ezedi Udom
E-commerce platforms have proven to be critical enablers of economic growth and social development for Nigeria in spite of the myriad challenges occasioned by the tough operating environment.
A key player, Jumia is fostering cashless and financial inclusion by encouraging Nigerians to move from brick-and-mortar malls to selling and shopping online and making payment for goods online thereby promoting the digital economy.
With Jumia online marketplace, usage of electronic transactions in Nigeria continues to increase, banks are becoming more innovative with electronic banking products and services while more fintech companies are investing in the economy.
Jumia is promoting the growth of MSMEs and large businesses by offering sellers its online marketplace, logistics, and last-mile platforms to increase their customer base, reach the target market faster and become more competitive, profitable, and sustainable.
Support for enterprises and the Jumia system are solving the critical high unemployment problem, especially among the youth by creating direct and indirect jobs. Jumia’s over 5,000 employees form a significant critical mass of employment.
National Bureau of Statistics (NBS) reported that SMEs in Nigeria contributed about 48% on average to the national GDP in the last five years and accounted for about 50% of industrial jobs and nearly 90% of activities in the manufacturing sector.
E-commerce is becoming a potent tool for the government to optimize digitalization as a key component of economic diversification, and also to meet the new compelling need of enforcing social distancing as a key measure in flattening community transmission of COVID-19.
The Presidential Task Force on COVID-19 has issued several warnings of increasing number of unsuspected asymptomatic carriers of coronavirus with Nigeria now at “active community transmission” stage.
Thus, online shopping, digital payment/virtual transactions and online interactions hold the ace for the future to promote social distancing and avoidance of crowded places such as brick-and-mortar shopping malls, supermarkets, open markets and banking halls where the possibility of contracting the virus is high.
COVID-19 outbreak has significantly disrupted global supply chains among other activities. The Economist indicated that online retailers including Jumia boomed in the wake of the Ebola outbreak in Nigeria, in 2014, as more consumers shopped online for fear of contracting the deadly disease. Orders on Jumia reportedly tripled due to increased demand for hygiene products like hand-wash, bleach and other cleaning products.
The same trend also played out recently during the peak of lockdown in Nigeria. Scarcity of protective items like hand sanitisers, facemasks, gloves and reagents, and hoarding and price gouging of essentials like tissue paper and sanitary products was reported in some parts of Nigeria due to surge in demand amidst supply shortages.
Through its online marketplace and partnership with sellers such as Reckitt Benckiser, Procter & Gamble, Unilever, The Coca-Cola Company and other sellers, Jumia helped to mitigate supply crisis by facilitating movement of inventories from the factories to its warehouses and online marketplace and then to the consumers.
Jumia also ensured the sellers maintained fair pricing policy while it reported some sellers to the Federal Competition and Consumer Protection Commission over price gouging.
Jumia defied constant harassment of its field workers transporting groceries and other agricultural produce from the hinterland to the cities, by security agents enforcing interstate border movement restriction, who ignored government’s designation of e-commerce and logistics operators as essential service providers.
Jumia Food was on the move delivering food packages to millions of Nigerians observing lockdown, thanks to partnership with third parties like QSR outlets and kitchens.
With JumiaPay and Contactless Delivery platforms, social distancing and cashless transactions were significantly promoted, thereby limiting person-to-person contact and containing further spread of COVID-19.
Jumia’s Q1 2020 financials indicated that the e-commerce and e-payment system indeed increased demand for brands and caused uptake in delivery of essentials to more people. Sellers also sold faster while more brands and sellers were eager to join the Jumia marketplace and logistics/supply value chain to boost access to market.
There was also strong demand from offline convenience retailers to join the Jumia on-demand platform and increasing advertisers’ interest for online channels as a result of consumption shifting online.
Visa in a June 2020 survey affirmed that 71% of consumers interviewed among the banked population in Nigeria shopped online for the first time as a result of the pandemic.
However, despite showing high growth potential and occasional spikes in online shopping in crisis times, these cannot be interpreted as long-term sustainability for Nigeria’s retail e-commerce.
E-commerce operators are faced with challenges that are inimical to their growth and the larger economy given the interplay between e-commerce and MSMEs.
Dearth of critical infrastructure like roads, inefficient transportation and insecurity inhibit movement of groceries from rural areas where food crops are planted to the cities and movement of goods across distant locations. Erratic electric power supply and multiplicity of tax also increase the cost of doing business in Nigeria.
PricewaterCoopers in its June MSME Survey 2020 with the theme, Building to Last: Navigating MSME Growth and Sustainability – A New Decade, noted that lack of infrastructure, inadequate skilled manpower, multiplicity of taxes, high cost of doing business among others still persist and hindering SMEs growth and development.
Barriers to obtaining bank loans is a major obstacle to small businesses including e-commerce operators thereby limiting their capacity to expand their infrastructure. “In emerging markets and developing economies, 55% to 68% of formal SMEs are either unserved or underserved by financial institutions, leading to a total credit gap estimated to be USD5.1 trillion,” PwC noted.
It estimated the financing gap for Nigerian MSMEs to be about N617.3 billion annually (pre-COVID-19 pandemic), adding that, based on analysis of data from the CBN annual statistical bulletin, small businesses accounted for less than 1% of total commercial banking credit in 2018. The NBS added that less than 5% of SMEs have been able to access adequate finance for working capital and funding business growth/expansion.
Low consumer trust about the quality of online goods and the activities of cyber fraudsters as well as low purchasing power of Nigerians as a result of loss of income or job due to COVID-19 inhibit new customer acquisition and retention. Many times, ROI for huge marketing and advertising spend on customer acquisition is nil.
E-commerce platforms’ fatality has been recorded within the last eight years. For example, Efritin.com, an online marketplace, shut down after barely 16 months in Nigeria. Its Swedish investor, Saltside, attributed that they “didn’t get desired returns on their investment.”
Nevertheless, the time looks good to spur e-commerce growth in Nigeria. Forecasts show that online retail stores will grow due to expected influx of online shoppers due to post COVID-19 new normal.
But governments must promote an enabling environment for e-commerce and MSMES to thrive. Fix critical infrastructure such as roads, transportation, power and telecommunications. Ease of doing business initiatives including tax incentives for MSMEs, harmonisation of taxes, improved security and increased access to credits must be implemented.
Encourage adoption of online shopping and electronic payment among Nigerians, and digitisation of businesses to strengthen cashless and financial inclusion policy.
In light of the expected take-off of Africa Continental Free Trade Agreement (AfCFTA) regional trade market come January 2021, the growth of e-commerce directly impacts SMEs capacity, competitiveness and quality of services they render.
With Nigeria’s current online commerce estimated at $12 billion, and projection to reach $75 billion in revenues per annum by 2025, according to McKinsey, the economic outlook for the country looks good post COVID-19 and beyond. But removing barriers in the way of e-commerce and SMEs is exigent.
*Ezedi Udom, a Business and Communications Expert writes from Lagos
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