Nigeria’s fast growing youth population, expanding consumer power, and increasing smartphone penetration, provides a strong basis for online commerce and financial technology in Nigeria. The current e-Commerce spending in Nigeria is estimated at $12 billion, and is projected to reach $75 billion in revenue per annum by 2025.
Reports by export.gov on the digital economy in Nigeria, showed the economy is gradually becoming cashless. The report said the adoption of electronic transactions are continuously increasing, with ATM transactions dominating the volume of electronic transactions and the Nigerian Inter-Bank Settlement System Instant Payment dominating in value.
As contained in the report, the cashless policy has resulted in increasing demand for ATM services deployed in major cities and commercial centres across Nigeria to facilitate electronic banking and financial services. Driving the e-commerce section are online shopping platforms connecting retailers and consumers for sales transactions on a daily basis. Millions of retailers in the informal market are also onboarding the e-commerce trains thanks to the likes of Alerzo and others.
This increasing demand for electronic transactions is also attracting facilitators and investors from Europe and Asia who are investing in the Nigerian digital economy projects. “Ecommerce in Nigeria is gaining momentum and there’s optimism of a vibrant digital economy for the country. The necessary pillars needed for the culture to thrive are gradually falling into place. For instance, 50% of Nigeria’s population, that is 104.4 million, are connected to the internet. Between January 2020 and January 2021, over 19 million new users got connected to the internet. This represents a 22% growth YoY.
“Majority of Nigerians now access the internet with their mobile phones. With the increasing internet penetration, mobile phone users in the country and the National Economy Digital Policy and Strategy for Digital Nigeria by the Federal Government, we expect that more Nigerians will imbibe the ecommerce culture,” said industry expert and CEO of Alerzo Limited, Adewale Opaleye.
Successful adoption of electronic payments in Nigeria is also encouraging the entrance of payment service providers such as Visa and MasterCard, which see Nigeria as a promising market. Debit cards from many local banks such as Citibank, Zenith, UBA, and Fidelity, are now used by Nigerian travellers to make payments in advanced markets like the U.S and U.K. There are many online wallet services and start-ups in fintech coming up with groundbreaking ideas which are driving financial inclusion of the unbanked population.
The plan according to the government is to have a digital economy, with a chain of business activities capable of making significant contributions to Nigeria’s GDP. There’s also a digital literacy drive which involves capacity building, towards achieving this. “Within a year, we’ve trained 60,000 Nigerians with different skills. Also we train those that will create the services because we need to have the demand. Also, 2,467 Nigerian youths recently benefited from our digital training which focuses on three areas; digital productivity tools, digital contents creation and digital marketing which are key in driving e-commerce and digital inclusion,” said the Director General of the National Information Technology Development Agency (NITDA), Kashifu Adbullahi.
Commendably, the Nigerian government has shown commitment towards creating a vibrant digital economy for the country. In 2019, President Muhammadu Buhari expanded the mandate of the ministry of Communication to cover that of the digital economy. A lot of investment is also going into the establishment of digital identity for all Nigerians to encourage online transactions.
Nigeria’s digital space is fast attracting business activities, far beyond what obtained a decade ago. Statistics show that more customers are embracing the e-shopping experience, and market innovators are also bringing retailers in the informal market onto the digital space. These are indicators of a good Digital economy future for Nigeria.