Thursday, January 22, 2015 8:46 AM / FBN Capital Research
Nigeria’s e-commerce market continues to experience robust growth on the back of increased internet access and improved mobile connectivity. As reported by the Nigerian Communications Commission (NCC), active internet subscription in Q3 2014 stood at 73.9m. This represents an internet penetration of 43% in the same quarter.
The CBN’s cashless policy has also played a role in facilitating growth in electronic commerce by placing emphasis on the utilisation of e-payment systems.
According to the telecoms minister, Omobola Johnson, Nigeria’s electronic commerce market has the potential to generate US$10bn annually. Based on industry reports, 300,000 online orders are placed daily.
While electronic transactions remain dominated by the use of ATMs, there has been very strong growth in online purchases through leading industry players such as Konga, Jumia, Wakanow and Quickteller.
However, online retail shops still have challenges with payment methods as customers prefer to pay for products when delivered (cash on delivery). This is particularly due to concerns over fraudulent activities. Jumia disclosed that 60% of its orders come from Lagos with mobile phones and fashion products dominating purchases.
The rise in processed orders by online retailers as well as the need for efficient delivery of products has led to an awakening of Nigeria’s postal and courier industry. Online retailers are partnering with courier operators to meet customer demands.
On a macro note, strong growth in e-commerce could increase visibility while reducing cost for SMEs, as well as generate jobs. It also bodes well for fiscal revenue collection (through an expansion of the tax net).