The e-commerce section of the Nigerian digital economy holds immense potential for the overall growth of the economy.
With 58 online marketplaces in the Nigerian e-commerce space, the contribution of companies such as Jumia, Konga, Jiji, Kaiglo, Njalo.ng, in recent years are exceptional and the economic outlook for the next few years of stability and consolidation.
Recently, the federal government revealed the improving impact of e-commerce on the country’s economy, saying the current e-commerce spend in Nigeria has grown to $13billion per annum and is expected to hit $75billion in revenue per annum by 2025.
According to Dr. Evelyn Ngige, permanent secretary in the Federal Ministry of Industry, Trade and Investment, e-commerce grew in Nigeria from 14% in 2019 to 17% in 2020. She stated that her ministry was passionate about the growing Investment opportunities in the e-commerce value chain, which are capable of contributing significantly to the country’s Gross Domestic Product (GDP).
Statista’s digital market outlook for Nigeria’s e-commerce also said the number of online shoppers in the country, which was at 76.7 million in 2021, is expected to hit 122.5 million by 2025.
A report by Agusto & Co predicted new entrants into the small and medium scale enterprises (SMEs) segment of the Nigerian economy thanks to the emerging e-commerce sales trend.
“Through e-commerce, players enjoy a wider customer reach with the ability to simultaneously connect to millions of consumers locally and globally. We note that the emergence of COVID-19 positively impacted the sector, with players recording a gush of customer orders particularly during the lockdown period. We expect this trend to continue into the emerging post COVID-19 era premised on the rising rate of adoption of online shopping by consumers on the back of the relative convenience it offers,” the report stated.
Commenting on this development, Jumia CEO, Spalazzi said: “It shows that Nigerians are embracing e-commerce more, and the services are becoming part of their daily lives. Importantly, this also shows that consumers are getting value from e-commerce services. This has been our aim at Jumia from the onset, and we are happy that the country is gradually seeing the impact of e-commerce to the economy.”
He added that e-commerce holds a lot of economic potential for Nigeria if given the needed support. “This is just like a tip of the economic benefits the country stands to get from e-commerce. A huge chunk of the market is yet to be exploited. The industry holds a lot of economic potential for Nigeria in terms of employment, technology development and overall GDP of the country,” Spalazzi said.
Figures by the Nigeria Inter-Bank Settlement System (NIBSS), also showed that Nigeria’s e-payment transactions increased by 85.5% year-on-year to N171.99tn in August 2021.
Little wonder the Nigerian government is paying more attention to this sector and formulating policies to facilitate a vibrant digital economy.
Abdullahi Kashifu, the Director-General of the National Information Technology Development Agency (NITDA) in his congratulatory message to Jumia on its 9th anniversary said that the federal government is visibly at work to improve digital economy activities in the country, especially seeing as it provided immense support to the government during the covid lockdowns.
He stated that Jumia has had an impressive nine years of e-commerce journey which has seen it expand to several African countries, creating employment opportunities and becoming a good reference for innovative startups on the continent.
He said “These are the kind of startups we encourage, an innovation-driven enterprise. You look at the global market and huge capital investment and job creation. And also you are innovative and creating a lot of jobs in the ecosystem.”
According to the Ministry of Communication and Digital Economy, “Internet penetration in Nigeria in the last one year is unprecedented. Based on available records, the internet came to Nigeria most probably around the year 2000. Up to 2919, the penetration was 33%. Averagely, that’s about 1.7% penetration annually. But from August 2019 to November 2020, the penetration catapulted to 47%. That is about a 12% increase within one year. It is expected that, by the end of 2021, we could have more that 50% internet penetration in Nigeria and this is encouraging indeed. E-commerce, leverages on internet penetration, without it’s very difficult. So the more broadband penetration, by implication, the more e-commerce activities in the country.”
Going by these indices and other pillars falling into place, e-commerce is set to be a major contributor to the direction of Nigeria’s digital economy as the nation surges towards the projected 2025 growth mark.