E-Commerce Industry Could Reshape Nigeria’s Economy

Nigeria presents an intriguing situation. Despite the country’s limitations, both the very rich and the very poor show strong demand for e-commerce.

Nigeria currently has over 100 million internet users and 216 million connected telephone lines, out of which 180 million are active. A significant increase in users is expected over the next few years as information and communication technology becomes more widespread, and the country’s population of over 200 million embraces the ability to run businesses online.

Having a mobile phone or access to the internet does not necessarily translate to interest in online business because factors like lack of trust can interfere. However, statistics show that Nigerians in both urban and rural areas are interested in e-commerce, and we can see a significant increase in this sector.

The Coronavirus Pandemic – A Catalyst for Online Sales

The retail industry in Africa had a difficult year in 2020, but the pandemic has pushed more people on the continent to do their shopping online – many for the first time.

Investors who haven’t already set their sights on Africa should do so since the local market rivals that of Europe and Asia.

A recent report by PayU emphasizes unprecedented growth in consumer spending across major countries in Africa. According to this report, Nigeria has the largest business-to-consumer e-commerce market in Africa, both in terms of shoppers and revenue. This may be due to a mix of a young, fast-growing population that is used to shopping online and high smartphone penetration, making it appealing to any retailer trying to expand.

Federal Government Looking to Expand Nigeria’s Digital Economy

Isa Pantami, Minister of Communication and Digital Economy, has said that the federal government is actively working to develop the country’s digital economy.

Panatami commented on the unprecedented expansion in internet penetration across Nigeria over the past year. The current rate is at 50%. He remarked that internet became available in the country around the year 2000, and by 2019, penetration had reached 33%.

However, in 2020 it catapulted to the current rate, which is a very encouraging development. As access to internet becomes more widely available, economic activity in the e-commerce sector will increase.

The government is actively working towards giving internet service providers and mobile network operators a supportive environment to expand in by addressing issues like multiple taxation, right of way, and infrastructure vandalism.

E-Commerce Expansion Driven by Nigeria’s Young Population

Indeed, the growing trend in mobile and internet technology is being driven primarily by Nigeria’s large young population. This is reinforced by an increase in importing new and used smartphones, computers, and other communication devices, which are popular among Nigeria’s price-conscious younger generations.

Over half of Nigeria’s population is under the age of 30, and statistics show that the demographic between the ages of 14 and 54 is the most active online.

This also explains why the most popular areas of interest among Nigerian online shoppers in 2020 were fashion, beauty products, electronics, video games, food, and digital music. The fashion and beauty industry recorded total e-commerce spending of $1.8 billion and $199 million.