Nigeria’s $550m e-Commerce sector grapples with logistics, funding challenges. (Source From: The Guardian Wednesday, 08 October 2014 20:17 Written by Adeyemi Adepetun) ALTHOUGH Nigeria’s electronic commerce industry is projected to have a market potential worth about $10 billion, the sector is said to be grappling with some challenges, which now requires urgent attention. Chief of the challenges facing the $550 million sub-Sector are the issues of logistics; payment system and local funding for the business. Speaking with The Guardian yesterday, the Chief Executive Officer, Gloo.ng, Dr. Olumide Olusanya affirmed that 97 per cent of investments in the sector come from foreigners. Indeed, at the Centre for Value Leadership (CVL) organised award for achievers and inventors in Nigeria’s ICT industry in Lagos fortnight ago, the Minister of Communications Technology, Dr. Omobola Johnson said the e-Commerce sector has attracted over $200 million foreign investments till date. Though, Johnson listed cost; insecurity; lack of options and delivery time as some of the challenges the sector is facing, Olumide corroborated these, when he said the issue of logistic, payment and local funding are threatening further growth of the sector. Logistics challenge, according to the Gloo.ng boss lies on poor road networks and traffic gridlocks, associated especially with the Lagos environ. “These challenges lie on poor road network; traffic gridlock among others, which hinders smooth delivery. This is also reason why it takes between five to seven days for some major players to deliver goods to customers. But we at Gloo, we deliver on same day because we have found ways around it. ”In terms of payment, especially the e-payment part of it, the process is still very cumbersome. You will need to go from one link to another, several processes in all. But abroad, especially in the USA, payment is just one click. I will also say that there have not been local source for funding, 97 per cent of investments in the sector come from abroad. Nigerian banks have not really been a source of investment for the sector.” Reports have it that the sector is has attracted significant foreign investments as two of the leading players in the sector received $50 million (N8.25 billion) investments in the last 18 months. Olusanya, a medical doctor by profession said the Nigerian market is still very robust and open, lamented that Nigeria was yet to meet the standards of countries including China; India among others. Olusanya, who said Gloo.ng clocked two years on October 6, disclosed that Nigeria represents 45 per cent of Africa’s addressable market in the e-Commerce industry. The minister, who disclosed that the sector, which was worth $35 million in 2012, now worth about $550 million and has moved from 1000 daily orders to about 15, 000 currently, added that the sector has since two years ago created 15, 000 jobs. She appreciated the works of players including Jumia, Konga, Gloo.ng; DealDey; OLX; Cheki.ng among others. According to an online researcher, emarketer, while e-commerce across the rest of the world is growing at 16.8 per cent, Africa’s e- Commerce space is growing at a rate of 25.8 per cent – making it the fastest growing in the world. This growth has also been seen as fuelling a massive consumer behavioural change in favour of electronic commerce. Olusanya said the middle and high-income classes are still the major driver of e-Commerce in the country, “but going by the trends in the country, the low income class are gradually upgrading and moving into the middle class. We believe that this growth will further expand e-Commerce in Nigeria cum Africa. It has also been projected that more people will move from the rural areas to urban. With all these forecasts, we see tremendous growth in the industry.”
Posted on: Thu, 09 Oct 2014 10:01:11 +0000
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