Value of Electronic Transactions hit N48.9tr in Nigeria

Study identifies barriers limiting further growth
Although, it is still plagued by inadequate levels of awareness, poor banking culture, lack of trust and a love for the status quo, the value of e-transactions recorded in 2015 hit N48.93 trillion, up by 11.6 per cent from 2014 in Nigeria.

This disclosure was contained in a White Paper report titled “Africa on the Verge (AoV) Convergence Series”, put together by AfricaPractice, a strategy and communications consultancy firm, with offices in Nigeria and abroad. A copy was made available to The Guardian.

The report, which observed that the establishment of the e-commerce industry has taken place as the wider digital value chain has expanded, with the availability and efficiency of e-payments becoming a crucial load bearing segment, observed that based on the significant link between the e-commerce and e-payments sectors, an adoption of similar advocacy methods supported by favourable government policies could help customers feel protected when electronically purchasing goods and services.

While noting that there has been a rise in the number of firms providing these services (e-Commerce and e-Payments) in Nigeria the report said “the value of e-transactions recorded in 2015 hit N48.93 trillion, up by 11.6 per cent from 2014.”

According to it, the Nigerian retail sector is evolving fast, with the emergence of large, modern malls arriving at the same time as Internet-hosted markets that are linking businesses to consumers without the need for physical movement or interaction by the customer.

The report observed that the traditional markets, where the vast majority of Nigerians have historically purchased goods, have not embraced modernization. “Local shopping centres are often large open spaces with poor physical infrastructure – lacking even the most basic amenities and services while being over crowded, chaotic and hectic. Such deficiencies in Nigeria’s traditional markets have set the scene for the opportunities and growth currently being enjoyed by both the modern malls, and fast emerging and growing e-commerce industry.

“Developing trust in the e-commerce and online transaction space is a difficult task as most citizens are wary of online platforms due to the high rate of cyber-crime. Nigeria is consistently amongst the 20 nations most prone to online criminal activity, according to a recent report developed by Check Point Software Technologies Ltd. However, this distrust comes mostly from those unable to weigh the disadvantages against the advantages of online transactions because of a lack of access to information about online security investments and protocols and how they protect the consumer”, it added.

The AoV study pointed out that in order for these perceptions to change there was a need to highlight the importance of improving online security measures. It stressed that better communication between consumers, producers and the government can significantly reduce the trust deficit, adding that greater security measures and increased supervision by regulators must also be employed towards establishing an atmosphere of trust.

In the report, it was disclosed that across several developed countries an emerging trend used to increase trust in e-commerce are trust seals that are simply emblems or badges from a reputed player in the market identifying that the website displaying the seal is legitimate. It however, noted that although, this has not been fully adopted by e-commerce players in developing markets such as Nigeria, it might be a useful approach to adopt these certificates of trust as they offer a guarantee regarding reliability and trustworthiness of an e-commerce site.

Boosting the telecommunications sector, the AoV study, which said despite the outstanding growth experienced by the industry, there is a substantial gap in the level of trust between telecommunications players and their customers.

“The quality of services (largely voice) provided by the operators’ remains an issue of significant frustration for customers and includes the relatively high costs of services, non-transparent tariffs and pricing, weak network in certain locations, the speed of Internet connectivity, and unprofessional customer service. According to NOI Polls, this reality has caused a significant number of Nigerians to adopt the use of multiple phone lines either from the same network provider or from two different operators, and the trend increased from 40 per cent in 2013 to 49 per cent in 2015. In order for Nigeria’s telecoms sector to reach global standards the issue of Consumer-Producer Trust has to be effectively addressed by the private operators as this serves as a conversion rate booster and heavily influences loyalty of customers”, it stated.