Hachem: Nigeria’s e-Commerce Market Worth $12bn

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  • Nigeria’s e-Commerce Market Worth $12bn

Aramex, one of the leading global providers of e-Commerce, logistics and transportation solutions, with a presence in 60 countries, recently expanded its operations to Nigeria. Its Global Chief Executive Officer, Hussein Hachem, in this interview with Obinna Chima, expresses confidence in the ability of the Nigerian economy to regain its place as Africa’s biggest and fastest growing economy despite the headwinds. Excerpts:

At a time when a lot of foreign firms are exiting the country as a result of the shortage in foreign exchange, Aramex has decided to expand its operation to Nigeria. What is the attraction of your firm to Nigeria?

Firstly, for us, our strategy is a long term strategy. Look at Nigeria, it has a population of over 180 million people. Out of this, 62 per cent are youths and they are highly connected on the internet and there is massive usage of mobile phones. So, we believe that the time is ripe to really connect the Nigerian communities to the global revolution of e-Commerce. What we want to do is to ensure that a lot of Nigerians are able to access the global connection of e-Commerce and be able to buy anything he or she wants from the global e-Commerce market and we would do the supply chain.

That is one component. We believe Nigeria is the hub of the region and we would like to connect more Nigerians to their neighbors. So, that is the value we are looking for. Foreign exchange scarcity is a global issue. The challenge in Nigeria is also what they are facing in South Africa, the same thing in Europe as well. If you look at the Pounds, it has depreciated by 22 per cent. So, it is a global phenomenon. However, our outlook is beyond the short-term. We have a long-term business strategy for Nigeria. Foreign exchange scarcity is just a short-term challenge.

So, Aramex has been public in the Dubai financial market. We have been in operation for the last 35 years. Our core geography is the Middle East, North Africa, Sub Saharan Africa, Asia specific, with footprints in Europe and the United States. We believe growth markets are quite interesting and we believe Aramex’s footprint in this market would help facilitate trade. However, trade is changing and it is changing because of technology and acceleration of technology is changing lives.

We believe that through the quantum leap in technology, there are lots of opportunities to be captured globally as well as in Nigeria. So, we believe there are lots of interesting business opportunities within the Nigerian economy. Through start ups, Lagos is becoming in Silicon Valley of Africa. There are great ideas happening here and we would like to support that. Similarly, Nigeria is the largest economy in Africa and there is a lot of trade happening between Nigeria and its neighbours, Nigeria and China, Nigeria and South Africa, and we want to be involved in that. So, Nigeria is the latest in our African expansion.

We have been covering Africa for several years and we currently operate all across East Africa, with Kenya as the hub. We are in South Africa and Angola. So, out of 53 African countries, we have a direct and 100 per cent presence in 28 of the countries and we connect the rest through partnership agreements. We believe in this economy and we believe that the GDP of the Nigerian economy has the possibility of becoming $6 trillion by 2050 because the economy has all the right components for growth and we are willing to participate and accelerate that growth.

Clearly, you must have done your research before coming into the country. What are the opportunities you see for e-Commerce in Nigeria?

The e-Commerce market in Nigeria is in the range of $12 billion. But, that is only at the tip. The challenge is in ha aving a proper payment gateway that would allow people to pay online. We are working on that and I think a partnership between us, the payment gateway and the telecoms would do that. You will see more people participating in the e-Commerce solutions that we are bringing into the country.

What is your partnership with the Nigerian Postal Service all about?

We work very closely with the public sector, not only in Nigeria, but wherever we operate and NIPOST is one of such. So, we look forward to expand our relationship with the post. We believe the post is evolving globally. We believe the post office is the natural solution for e-Commerce because it has the reach. The postman is highly recognized by the community and he is a secured person by design.

Everybody knows him and they have the network. So, it is quite natural for us to work with several post operators to ensure that an e-Commerce shipment is delivered to the right address anywhere across the country. We believe in an ecosystem whereby Aramex would work very closely with the post so that we can extend our solutions and technology across Nigeria. We have done something similar in Australia. We have an agreement with Australia Post, which is a joint venture, whereby we are filling the global capacity of e-Commerce through a hybrid system. So, we recognise the importance of post and we are exploring the opportunity of a partnership with NIPOST.

We have other firms in the sector you wish to play in, what is the unique selling point of Aramex and what is that special offer you are bringing to the Nigerian market?

We understand that the demand on service is changing, we understand that supply chain is evolving and we do understand that our current model, which is the traditional model, where you have a company that controls technology and its deployment, does not fit into the digital economy. So, what is different is that we are working on a concept that would involve the communities. That means you would see us investing in startups and working with technology start ups to enhance the ecosystem. There is a problem we are having presently and it is not a Nigerian problem.

It is a global shortage of capacity. And we believe that the growth of e-Commerce is surpassing the growth of infrastructure. What we have built is a technology that allows anybody to become and Aramex delivery man. We have an online billing system that is sophisticated and that would be extended and deployed in Nigeria. We are launching our addressing system, so you don’t have a challenge on your address anymore. It is an app that is fully integrated and as soon as you get into any street.

So, I think the technology component is unique, the mindset that we have about the Nigerian market is unique, the idea of youth and community participation are unique. So, that is what we are bringing into Nigeria. If you go to Amazon right now and you do any online transaction, there is 99 per cent probability that if would be an Aramex delivery. We have mail box solutions that allow anybody in Africa to shop from 18 cities and we would bring the package to you. We have really passed on the power to our agents and they can do third party billing. That is a great way of exporting our service and also part of efforts of encouraging Nigerian companies to do either imports or exports.

How would your service support the activities of exporters and how do you intend to drive awareness of your brand with the stiff competition in the industry?

There are thousands of courier companies in Nigeria as well as thousands of logistics companies. And we have been going from city to city meeting with the CEOs and management. The main issue we see today is that a lot of companies are focused on domestic deliveries, whereas Nigeria is known to be an import-dependent nation. We have already started listing multiple agents. What we have done is that we have installed our technology, we have given them access to be able to operate in training and today any company that is linked to our system is able to independently request a pick up to any of our globa, distribution lines. We have really passed on the power into our agents and they can do third party billing, which means that if a customer or company has a shipment they want.

For awareness, one way that we can reach everybody is through mobile and digital. The economy has changed, so social platforms and digital tools are the best ways to drive awareness. You can authorise from Twitter, Facebook and different platforms and from there reach everyone.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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