- 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.
Brent Crude Oil Extends Gain to $86.66 a Barrel Amid Tight Supply
Tight global oil supply pushed Brent crude oil, against which Nigeria oil is priced, to a multi-year high of $86.66 per barrel on Monday at 3:30 pm Nigerian time.
Oil price was lifted by rising fuel demand in the United States and tight global supply as economies recover from pandemic-induced slumps.
“The global energy supply crunch continues to show its teeth, as oil prices extend their upward march this week, a result of traders pricing in the ongoing rise in fuel demand – which amid limited supply response is depleting global stockpiles,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
Goldman Sachs on the other hand is predicting a further increase in Brent crude oil to $90 a barrel, citing a strong rebound in global oil demand due to switching from gas to oil. This the bank estimated may contribute about 1 million barrels per day to global oil demand.
The investment bank said it expects oil demand to reach around 100 million barrels per day as consumption in Asia increases after the devastating effect of COVID-19.
“While not our base-case, such persistence would pose upside risk to our $90/bbl year-end Brent price forecast,” Goldman said in a research note dated Oct. 24.
Earlier this month, the Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+ agreed to continue increasing oil supply by 400,000 bpd a month until April 2022 despite calls for an increase in global oil supplies.
The decision bolstered the price of Brent crude oil above $84 per barrel and expected to push the price even further to $90 a barrel. Low global oil supply amid rising demand for crude oil will continue to support oil prices in the near term.
“Despite the recent power cuts and impacts to industrial activity in China, oil demand is likely instead supported by switching to diesel powered generators and diesel engines in LNG trucks, as well as by a ramp up in coal production,” Goldman Sachs stated.
U.S. and Ghana Inaugurate New $64.7 Million Energy Infrastructure Investment at Pokuase
U.S. Ambassador to Ghana Stephanie Sullivan joined the President of Ghana H.E. Nana Akufo-Addo and other Ghana government officials to formally inaugurate the Pokuase Bulk Supply Point (BSP) in Accra today. The U.S. Millennium Challenge Corporation (MCC) funded the $64.7 million (GH₵ 391.9 million) electrical infrastructure project under the Ghana Power Compact.
“The Pokuase Bulk Supply Point represents sustainable infrastructure investment by the United States with Ghana that will benefit hundreds of thousands of Ghanaians now and into the future,” remarked Ambassador Sullivan at the inaugural event. “It will help deliver more reliable power to the people, places, and businesses of Accra that drive increased economic activity benefitting families, businesses, and communities.”
This represents a flagship investment under the Millennium Challenge Corporation’s Ghana Power Compact. The Pokuase BSP will reduce outages in the power system, help stabilize voltages, and improve the quality and reliability of power supplied to the northern parts of the capital city of Accra. It will also reduce technical losses in the power transmission and distribution system, contributing to the financial viability of the Electricity Company of Ghana (ECG) and the Ghana Grid Company (GRIDCo) in the long term. The Pokuase BSP is now the largest-capacity BSP in Ghana at 580 megavolt amperes (MVA) and will directly benefit 350,000 utility customers.
The Government of Ghana implemented the project through the Millennium Development Authority (MiDA). MiDA formally handed over the new power substation to ECG and GRIDCo in today’s ceremony.
The Pokuase BSP is the first major construction project to be completed under the Ghana Power Compact. The $316 million compact is helping the Government of Ghana improve the power sector through investments that will provide more reliable and affordable electricity to Ghana’s businesses and households. The compact is also funding a BSP at Kasoa and two primary substations at Kanda and Legon, in addition to other power sector investments, energy efficiency programs, and women’s empowerment programs within the power sector. The compact program will officially close on June 6, 2022.
Oil Falls Slightly as China Steps in to Curb Rising Coal Prices
Global oil prices moderated slightly on Wednesday following the Chinese government’s decision to curb high coal prices and ensure coal mines function at maximum capacity.
Brent crude, against which Nigerian oil is priced, dropped to $83.98 per barrel at 11:00 am Nigerian time. While the U.S. West Texas Intermediate (WTI) crude fell by 80 cents or 1 percent to $81.20 a barrel.
“China is planning to take steps to combat the steep rises in the domestic coal market … which could put considerable pressure on the coal price there and reverse the fuel switch to oil,” Commerzbank said.
Prices for Chinese coal and other commodities slumped in early trade, which in turn pulled oil down from an uptick earlier in the day.
China’s National Development and Reform Commission said on Tuesday it would bring coal prices back to a reasonable range and crack down on any irregularities that disturb market order or malicious speculation on thermal coal futures. read more
Oil markets in general remain supported on the back of a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation.
But the market on Wednesday was also pressured by data from the American Petroleum Institute industry group which showed U.S. crude stocks rose by 3.3 million barrels for the week ended Oct. 15, according to market sources.
That was well above nine analysts’ forecasts for a rise of 1.9 million barrels in crude stocks, in a Reuters poll.
However, U.S. gasoline and distillate inventories, which include diesel, heating oil and jet fuel, fell much more than analysts had expected, pointing to strong demand.
Data from the U.S. Energy Information Administration is due later on Wednesday.
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