E-Business
eCommerce and the Nigerian Amazon
For long muted on Wall Street, the signal is now clear.
Amazon, global e-commerce giant, is on the verge of not only overtaking Apple as the world’s most valuable company but the first company worldwide to hit the $1 trillion mark.
Bullish projections indicate that this could happen in late August 2018 if Amazon’s stock, which has surged 83 percent over the past one year, continues its impressive revenue growth.
Aided by an astronomical increase in online shopping and growing patronage of cloud computing by businesses, an area in which Amazon Web Services dominates, Amazon has continued a remarkable run which saw it dislodge Microsoft Corp. as the No. 3 U.S. company by market capitalization in February 2018.
A few analysts have, however, attempted to douse the enthusiasm, citing the fact that stock gains are not a reliable predictor of future performance and also in view of the fact that Amazon’s recent streak has been quite outstanding.
For these, the expectation is that Amazon’s stock will rise 10 percent within the next year to reach $1,700, which would give it a market value of $823 billion.
Furthermore, data from Thomson Reuters shows that Apple’s stock price will expectedly rise 11 percent and reach $195 within the next 12 months, which would put its market capitalization at $989 billion, keeping it just ahead of Amazon.
The overwhelming view though remains: should Amazon’s stock keep up the exceptional growth trajectory seen over the past year, the company’s market capitalization would hit $1 trillion in late August while Apple would reach $1 trillion around a week later if its stock price continued to rise at the same pace seen over the past year.
There is no denying the fact that Jeff Bezos, founder and owner of Amazon, has shown the world just how far ecommerce and a disruptive approach can go in leading a business to record-shattering heights.
To a smaller extent, a certain Jack Ma who failed repeatedly in school and now the brains behind Alibaba, another e-commerce giant making waves in Asia, has also shown what can happen when e-commerce meets opportunity and a conducive/supportive business environment.
To put Amazon’s mind-blowing strides into sharp relief, it is worth considering a few facts.
Nigeria’s 2018 fiscal budget, which was recently passed by the National Assembly is about N9.1 trillion. This figure, which covers the country’s entire spending for the year, is just about $25b – a paltry 2.5 percent of Amazon’s projected $1 trillion worth.
Also worth considering is the identity of the first five most valuable companies in the world.
Of all the most similar attributes displayed, one thing binds Apple, Amazon, Microsoft, Alphabet (Google) and Facebook: they are first and foremost technology companies, all of whom, as described by Forbes in its recent valuation, have successfully consolidated their power in recent years by leveraging cutting-edge technology, driving huge profits and soaring market values.
There is indeed no doubting the power of technology as a leveler and game-changer. Technology can produce power-houses, global conglomerates with market capitalization figures that can make the annual budget of several nations pale into insignificance.
What has remained perplexing is the inability or refusal of the Nigerian government to see/appreciate the power of technology as perhaps the country’s best chance of closing the ever-widening gap between it and the advanced countries of the world.
Why is there hardly any meaningful form of government support for tech start-ups and other players in Nigeria’s technology sector?
Entrepreneurship in Nigeria is not a task for the faint-hearted.
The Nigerian business terrain/economy, blessed as it is with an overwhelmingly youthful population and the potential to catapult a business overnight sadly, still remains a very tough and challenging one. Start-ups here face a herculean fight staying afloat.
A recent survey showed that over 70% of start-ups in Nigeria go down under before reaching their fourth anniversary. Many of these go unannounced due to the stigma associated with failure in these parts. Indeed, one of the biggest fears of an entrepreneur in Nigeria is the fear of failure.
This is opposed to the case in advanced climes where business failure is treated as a cathartic process, one that is chronicled and encouraged as a learning curve for the person involved and others.
It is worse when you are a start-up entrepreneur in Nigeria’s technology sector, an industry in which the government has so far shown little more than a passing interest in and no demonstrable commitment; a battle of attrition for many.
It is a conundrum that has defied all forms of rigorous introspection, especially considering the seeming willingness of the government to commit sizeable funding and support to agriculture.
Perhaps, we are better reminded that we live in the 21st Century, one in which knowledge has become a right; where new technologies such as Robotics, Artificial Intelligence, Big Data and Machine Learning, among others, is redefining the scope of work, business and human engagement; where electric, driver-less or flying cars could soon see fossil-fueled ones become an anachronistic relic; where the power of technology and industrialization has made China, once derided as a paper tiger, a major world power giving the United States of America a good run for its money and where technology has transformed the four (actual) Asian Tigers of Hong Kong, Singapore, South Korea and Taiwan to global hubs of innovation and manufacturing excellence.
Today, Amazon has created jobs for over half a million people in America – a figure that is still rising. And in recognition of the company’s contribution to the United States’ economy, the e-commerce giant paid zero federal taxes in 2017. It is also being rewarded with further tax breaks at the state and local level.
How many potential Amazons would emerge from the Nigerian tech sector, should the Nigerian government toe the path its United States’ counterpart did with Amazon? Possibly enough to place our technology narrative and Nigerian tech companies/start-ups on the path of global reckoning.
Leo Stan Ekeh
Here in Nigeria, the country can boast of Leo Stan Ekeh, founder and Chairman of the Zinox Group – a technology conglomerate that has empowered thousands of Nigerians and through which he has created direct and indirect employment opportunities for millions – the closest entrepreneur in Jeff Bezos’ terms in these parts. It is instructive to note that he has also remained true to his chosen field of technology in spite of the considerable lure of quicker returns or existence of more institutional support in other sectors such as banking and the once-mighty oil/gas industry.
In Konga, one of Nigeria’s most prominent e-commerce pioneers which Ekeh acquired from erstwhile investors Naspers and AB Kinetic and which recently merged forces with another bold entrant Yudala, the country can also count on a business that has clear designs on improving the lot of Nigerians through a suite of creative avenues and expansionary moves.
One of these is a well-publicized impressive retail roll-out plan which is bound to see Konga establish a presence in Nigeria’s 774 local governments, a cost-intensive feat that will create tons of employment opportunities for residents in these various locations.
Renowned for its uncompromising stance on quality, a tradition that Yudala, which it merged it, was well-known for; the new Konga that emerged in May 2018 is now widely recognized as the best source for genuine products in Nigeria’s e-commerce space – a burden that has also reportedly seen the owners of the business invest in massive warehouses nationwide to enable it scale inventory/stocking, another investment that is bound to throw up additional jobs for Nigeria’s teeming unemployed youths.
But can an Ekeh, for instance, count on the government for tax breaks, tax holidays or any other form of incentives to encourage him to do more?
Your guess is as good as mine…
Against the backdrop of struggles by small and medium enterprises in Africa to scale their businesses because of lack of formal processes, Ovaloop Technologies has unveiled an inventory solution aimed at supporting retailers across Nigeria and Africa to formalise their businesses.
Combining inventory management, payment processing, accounting and business intelligence, the platform enables retailers to generate accurate financial records, improve operational efficiency, reduce internal fraud and strengthen their ability to access credit.
The company said the expansion of Nigeria’s digital payment ecosystem has created the need for solutions that go beyond processing transactions to helping small and medium-sized enterprises (SMEs) manage their day-to-day operations.
Speaking during the company’s launch event in Lagos on Monday, Princewill Mba, CEO and co-founder of Ovaloop Technologies described the platform as an indigenous technology designed to grow and formalize Africa’s retail economy
“Ovaloop is an inventory management system, but we like to always define it as a retail operating system, so think about it as your Microsoft Office. For us, the whole idea is to manage how businesses are being run. So Ovaloop manages your business operation end-to-end, from how you’re taking stock, to how you manage your stock, how you make sales, and how you collect payments,” Mba said.
Mba further noted that the company aims to change the conversation from building products that simply process payments to developing technology that helps retailers manage their entire business operations.
According to him, the formalisation of retail operations will also bring onboard unbanked SMEs, unlocking access to credit facilities which remain one of the major challenges facing SMEs in Nigeria and Africa.
“Most of these retailers are not bankable. They make a lot of money but when they come to collect loans from financial institutions, they struggle, because their cash flow statement is not very accurate, the data they provide to the banks or other financial institutions is not very accurate, and then they can’t work with that data.
“But with Ovaloop, we can generate useful data for them that they circulate to these institutions to help them access funding, and you can’t shy away from the fact that funding is very imperative for businesses to operate smoothly,” he said.
Acknowledging the gap in the inventory space, the CEO disclosed that the company took time to understand business operations across Africa and has built a solution that manages business operations end-to-end.
Mba said there is a huge gap in inventory management solutions across Africa, noting that many businesses still rely on manual record-keeping or disconnected software.
“What we’ve built and why we took this long was for us to understand how Africans operate business, because whether you would like it or not, most businesses are still taking inventory and stock using basic books while others use fragmented tools.
“So there’s a tool that collects your payment. There’s a tool that runs your business and another tool that runs your accounting. But when we talk about Ovaloop, it’s taking all these activities into cognisance. So, from end to end, we can manage your inventory.”
Daniel Kilanko, co-founder and CTO of Ovaloop Technologies commenting on the platform noted that it is easily accessible with strong security software that verifies payments and detects fraud.
“Our Ovaloop Pay Protect will tie every sales transaction to verified payments. So with that, you don’t have to deal with fragmented tools. The tools you are using for your inventory, payments and everything synchronise properly.
“So no transaction can be completed unless a verified payment is linked to that transaction. And with this, we also hope that we will be connecting with other local technology so that you just have one central system that does everything for you end-to-end.”
Kilanko said Ovaloop can be accessed through the web, Android and iOS mobile phones which gives users a complete business overview from anywhere in the world.
The platform will also be linked to various supply chains, enabling users to access products within and outside the country.
Also speaking, Titilope Ejimagwa, chairperson, Ovaloop Technologies, inventory losses and employee theft remain major operational challenges for many entrepreneurs
Ejimagwa recalled losing inventory to trusted employees despite maintaining close oversight of her business, citing nearly four decades of experience in marketing and entrepreneurship.
She noted that technology such as the Ovaloop platform, which can track inventory, verify payments and improve operational transparency, could significantly reduce such losses for SMEs.
“As entrepreneurs, one of our biggest challenges is fraud and inventory losses. Having one platform that helps monitor operations and reduce those risks is a major advantage for businesses,” she said.
Jumia Nigeria, the country’s e-commerce platform, has introduced a new instalment payment option on its marketplace through a partnership with Buy Now, Pay Later (BNPL) provider Klump, giving customers another way to pay for purchases without bearing the full cost upfront.
The new option allows eligible customers to spread payments for selected purchases over a period of up to 12 months after making an initial deposit of between 20 and 30 percent. The partnership is expected to widen access to products such as smartphones, electronics, home appliances, and other everyday essentials for consumers who may prefer structured repayment plans over one-time payments.
Customers selecting the option at checkout can compare financing offers from participating financial institutions, complete a digital credit assessment, and, once approved, begin repayment through fixed monthly instalments. The introduction of instalment payments comes as digital commerce continues to evolve in Nigeria, with retailers exploring payment options that respond to changing consumer spending patterns and the growing demand for financial flexibility.
Commenting on the partnership, Chief Executive Officer of Jumia Nigeria, Temidayo Ojo, said the initiative reflects the company’s commitment to making online shopping more accessible to a wider range of consumers.
“We are constantly looking at practical ways to remove barriers to online shopping. For many customers, affordability is not always about the price of a product but about having payment options that fit their financial reality. By introducing instalment payments with Klump, we are giving customers greater flexibility while making quality products more accessible.”
He added that expanding payment choices forms part of Jumia’s wider effort to improve the overall customer experience and support the company’s ambition of becoming Nigeria’s everyday retail destination.
“Whether we are strengthening our logistics network, expanding product selection, or introducing new payment solutions, the goal remains the same: to make shopping on Jumia simpler, more convenient, and more accessible for customers wherever they are,” Ojo said.
Founded to simplify access to goods across Africa, Jumia has continued to invest in technology, logistics, and payment solutions to make digital commerce easier for consumers in both major cities and emerging markets across Nigeria.
The addition of instalment payments complements the range of payment methods already available on the platform and comes at a time when consumer demand for flexible financing options is increasing across the retail sector.
Celestine Omin, Co-founder and Chief Executive Officer of Klump, said the partnership aligns with Klump’s objective of expanding access to responsible consumer credit.
“When we started Klump, our mission was simple: to give Nigerians access to affordable credit wherever they shop. Today, we’re pleased to partner with Jumia to bring flexible instalment payments to one of Africa’s largest e-commerce marketplaces, making it easier for more customers to access the products they need,” Omin said.
Under the arrangement, Klump will provide the financing infrastructure while customers complete the application process digitally during checkout. Financing offers are provided through participating financial institutions, subject to approval.
For Jumia, the partnership represents another step in expanding the range of services available on its marketplace while supporting broader efforts to deepen digital commerce and financial inclusion. As more Nigerians turn to online shopping, the availability of flexible payment options is expected to lower one of the barriers to e-commerce adoption, particularly for higher-value purchases.
Customers can access the instalment payment option by selecting Klump at checkout on eligible products available on the Jumia platform.
The Lagos State Government has launched a new financing initiative that will provide single-digit interest loans of up to N10 million to micro, small and medium enterprises (MSMEs), in a major push to improve access to affordable credit and stimulate business growth across the state.
The initiative, known as the Lagos State Access to Finance for SMEs through Cooperatives (LASMECO) programme, offers eligible businesses loans at a fixed 9 per cent annual interest rate, with repayment periods of up to 36 months for term loans and 24 months for working capital facilities. Beneficiaries will also enjoy moratoriums of six months and three months respectively.
The scheme was unveiled on Monday during the opening of a three-day LASMECO Accelerator Training Workshop organised by the Ministry of Commerce, Cooperatives, Trade and Investment, in Lagos.
In her keynote address, the Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs Folashade Bada Ambrose-Medebem, said the programme was designed to bridge the financing gap facing thousands of Lagos businesses that have been priced out of conventional lending because of high interest rates and stringent collateral requirements.
Ambrose-Medebem, represented by the Director of Cooperative Services, Adeyinka Adeyemi, noted that MSMEs account for about 80 per cent of employment and contribute roughly 75 per cent of Lagos State’s Gross Domestic Product (GDP), yet many struggle to access affordable credit as commercial lending rates range between 35 and 40 per cent.
According to the commissioner, LASMECO addresses the challenge by using registered cooperative societies as financial intermediaries and guarantors, allowing entrepreneurs to obtain loans without relying solely on conventional collateral.
Under the financing framework, she said borrowers will provide 10 per cent cash collateral, while their cooperative societies will guarantee 25 per cent of the loan, adding that Sterling Bank Plc would provide a 50 per cent guarantee, creating a layered risk-sharing structure that makes lending more accessible and sustainable.
The programme targets businesses in agriculture, manufacturing, healthcare, the digital economy, creative industries, tourism, environmental sustainability and education.
The commissioner disclosed that the Lagos State Government has released its counterpart funding, while the Bank of Industry (BOI) has matched the state’s contribution, paving the way for loan disbursement, saying that BOI would serve as co-funder and final loan approver, while Sterling Bank would process applications, conduct credit assessments, disburse funds and recover repayments.
The commissioner reaffirmed the Lagos State Government’s commitment to ensuring the success of the initiative, expressing confidence that the programme would unlock affordable financing for thousands of entrepreneurs while boosting employment, productivity and economic development across the state.
Earlier, the Permanent Secretary in the ministry, Mr Babatunde Onigbanjo, said the workshop marked the transition of LASMECO from policy to implementation, stressing that the programme was fully funded and ready for rollout.
He said all necessary groundwork had been completed, including the release of counterpart funding, execution of memoranda of understanding and onboarding of accelerator organisations, adding that participants were now being equipped to begin recruiting and preparing loan beneficiaries.
According to him, the three-day workshop is designed to prepare accelerator organisations to identify eligible MSMEs, assess their credit readiness, compile loan applications and support borrowers from application through disbursement and repayment.
Onigbanjo urged participants to focus on quality rather than quantity in recruiting loan applicants, warning that poorly prepared businesses could increase loan defaults and undermine the programme.
He stressed that accelerator organizations would only be paid when the businesses they support successfully secure funding, saying the arrangement was intended to align their interests with the success of the programme.
The permanent secretary also emphasised that every loan applicant must belong to a registered cooperative society, describing the cooperative model as central to the programme because cooperatives provide a 25 per cent guarantee for every facility while helping to formalise informal businesses.
He disclosed that Lagos has more than 13,000 registered cooperative societies, although only about 1,900 to 2,200 are currently active, adding that reviving dormant cooperatives would significantly expand access to the financing scheme.
Onigbanjo warned accelerator organizations against charging applicants processing, training or evaluation fees, stressing that the only approved deductions are a N200,000 accelerator support fee and a one per cent BOI appraisal fee, both payable only after successful loan disbursement.
He said the state would closely monitor loan recovery, business growth, job creation, cooperative compliance and portfolio performance, adding that only accelerator organisations that deliver strong results would remain in the programme.
The permanent secretary described LASMECO as more than a loan scheme, saying it is also a strategy to formalise businesses, strengthen cooperatives, promote industrialization and drive inclusive economic growth across Lagos.
He urged participants to make full use of the workshop to prepare for immediate enrolment of qualified businesses, insisting that the programme had moved beyond planning and was now ready for implementation.
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