In recent years, Nigeria has witnessed an influx of international e-commerce platforms like Alibaba, Aliexpress and the most recent which made its debut in the country some months ago – Temu.
These platforms usually boast an extensive catalogue of products and the lowest of prices. At first glance, this seems like a win for the average consumer, especially with the current rise in inflation, but beneath the surface, these digital platforms pose a serious threat to our economy, local businesses, and long-term economic sustainability.
The sudden influx of these platforms is somewhat suspicious especially as they do not have any offices/representation in the country.
This means aside from collecting money from Nigerians, they have no substantial contribution to the economy via taxes, job creation etc.
The growing trend of these companies expanding into new markets, especially in developing nations like ours, as existing ones become less accessible, is concerning.
For instance, Temu‘s entry into Nigeria aligned with mounting challenges faced by its parent company, PDD Holdings, in international markets.
Vietnam issued a threat to ban the platform until it registers with local authorities. The app was also removed from major stores in Indonesia to protect domestic retailers.
Additionally, the company has faced lawsuits for violating customer privacy, allegedly using its e-commerce platform to acquire and sell user data.
Another lawsuit was issued against the company for sending marketing texts to people on the National Do Not Call list.
With all of these, one could conclude that the company is only trying to move to more lenient markets like Nigeria where they can be less accountable, and they would be right.
After all, unlike homegrown platforms such as Jumia, Konga, and Glovo, which invest in local supply chains, create jobs, and contribute taxes, companies like Temu operate with minimal local engagement.
So, what are the results of the infiltration of these foreign e-commerce platforms in Nigeria?
The Silent Strangulation of Nigerian SMEs
From rising production costs to unpredictable government policies, running a business in this economy is already a Herculean task.
The infiltration of the market with these ultra-cheap imports, often of questionable quality marketed by these platforms means that small and medium-sized enterprises (SMEs) who are already struggling with profitability, will bear the brunt.
Local businesses will not be able to compete with products priced far below market rates, especially when those prices are backed by massive tariffs.
The result? Shrinking profit margins, declining local production, and, ultimately, job losses. The irony is painful. While we celebrate the convenience of these platforms, we might, in fact, be funding the slow death of our own economy.
Hidden Cost of Cheap Deals: A Digital Economy That Doesn’t Benefit Nigerians
The Nigerian government has been vocal about its push for a digital economy, but what good is it if the wealth it generates never stays within our borders?
Non-resident e-commerce platforms enjoy free rein, making money off Nigerians without contributing meaningfully to Nigeria’s economy; isn’t that a major hidden cost of cheap deals?
This leaves the government with fewer resources to invest in infrastructure, social services, and local business support.
Meanwhile, resident e-commerce companies like Konga, Glovo, and Jumia, despite facing their own challenges, play by the rules.
They hire Nigerians, collaborate with local vendors, and pay taxes. These companies understand the nuances of our economy and strive to work within its realities, rather than exploit them.
The Case for Protecting the economy
Other nations fiercely protect their local industries. Why should Nigeria be any different?
We must rethink our policies to ensure that companies benefiting from Nigerian consumers also contribute to Nigeria’s economy.
This includes enforcing fair taxation on digital commerce, strengthening local manufacturing, and incentivizing consumers to support homegrown businesses to achieve long-term economic sustainability.
*Oluwaseun Olajide, a senior communications expert writes from Lagos
