- Nigeria’s Evolving E-commerce and Diversification Drive
Electronic commerce, commonly called e-commerce, is the trading or facilitation of trading in products or services using computer networks, such as the Internet or online social networks.
It has been a strong catalyst for economic development in Nigeria- led to the creation of jobs; boosted productivity; hugely reduced the cost of doing business; and provided access to new markets.
For consumers, it has made more goods available at competitive prices, leading to significant gains in the general standard of living. It has also added convenience, because a click of the button in the comfort of the bedroom will cause a delivery at the doorstep. Yet, many others have benefitted from the initiative.
Of course, the Deposit Money Banks have played an essential supporting role in the country’s burgeoning e-commerce industry, which has indeed been the toast of both local and foreign investment.
It has helped local technology companies thrive, as well as enabled global technology players from Silicon Valley to Europe looking to capitalise on Nigeria’s large population and its potential as a hub on the African continent, to successfully operate.
Payments
The contribution of the banking sector to e-commerce has taken several forms. Firstly, as financial institutions, they have provided the technology infrastructure critical to the flow of payments to and from the agents participating in e-commerce.
The backbone of e-commerce is payments, and as e-commerce continues to grow, and online transactions soar, users should rely more on the robustness, security and convenience that this financial infrastructure provides. E-commerce is only able to grow when ease, convenience, and security is ensured.
Due to the efforts of deposit money banks in ensuring safety and trust, the inhibitive fear customers have in conducting online transactions has been significantly allayed, leading to the inclusion of more users and the expansion of the e-commerce ecosystem.
Promotion of activities
Additionally, deposit money banks have supported organisations in leveraging e-commerce technology to engage with their customers. Stemming from their industry experience, banks have assisted businesses in adopting e-commerce in their delivery of goods and services, especially in setting up the infrastructure and payment capabilities for them to successfully engage in e-commerce, thereby enabling such clients receive payments efficiently for the goods and services they offer.
Due to this vital support, customers are conveniently able to pay for services such as electricity and water bills, Internet and cable subscriptions; airline and cinema tickets; even financial services like insurance and payment of taxes from the comfort of their homes.
Some of the benefits that businesses have gained from implementation of e-commerce are increased revenue as they are better able to reach more customers, achieve higher customer satisfaction, cost reduction, and overall improvement in efficiency.
Deposit money banks have contributed to the growth of e-commerce by gradually pulling customers away from offline branch banking onto online banking, which includes e-payments and mobile transfers. By encouraging the use of payment technologies, and offering more of their products digitally, banks are discouraging customers from standing in long queues, thereby ensuring their convenience.
Apart from the infrastructural role that banks have had to play in the sector, they have also continued to provide their traditional services to players in the sector such as financing support to e-commerce enterprises in the form of working capital, financing for expansion, among others.
Some of the higher profile funding support includes Access bank’s assistance to Uber’s expansion drive in Nigeria. Access bank established a financing scheme in conjunction with KIA motors and Hyundai to grow Uber’s footprint by increasing its drivers by as much as fivefold. First bank also pushed this drive forward by helping drivers acquire used cars at relatively low interest rates.
Jumia Nigeria also partnered with First bank to set up a consumer finance scheme, where customers can purchase items on credit from the online retailer through a First Bank Naira Credit Card.
Konga likewise partnered with One credit, a Nigerian micro-finance bank to launch the “Buy Now Pay Later” scheme, an affordable consumer credit facility that enables customers pay for online purchases in equal monthly installments.
GT Bank also recently launched “The SME MarketHub”; an e-commerce portal for Small and Medium Scale Enterprises (SMEs). The portal is designed to enable Nigerian entrepreneurs migrate their businesses online and take advantage of the vast international and local sales opportunities within this space.
Fidelity Bank also recently launched The Fidelity GreenMall, an online marketplace with fully integrated e-commerce capabilities for online payments, delivery logistics, advertising, and business networking opportunities, amongst others.
Financial Inclusion
Deposit money banks have been greatly instrumental in enhancing financial inclusion in the economy. With the use of internet enabled mobile phones and SMS (leveraging the telecoms sector), mobile devices are increasingly being used for financial services in Nigeria, thereby making it possible for customers to conduct financial transactions using these channels.
As more bank customers become financially included and access banking products through digital and mobile platforms, they become more amenable to e-commerce, thereby expanding it further.
• This article, written by the Bankers Committee of Nigeria, is the fifth in a series, focused on raising awareness around Nigerian banks’ efforts and most importantly educating the public on opportunities available to them to foster their active participation in our nation’s diversification efforts.
