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Improving Nigeria’s trade through ICT (II)

Chukwuemeka Fred Agbata Jnr.

The social media week was on when I wrote this piece. Did you get to attend any of the scheduled events? This year’s week-long event was bigger than last year’s, and it showed how much disruption the digital revolution has had on the traditional landscape.

I witnessed the meetings attended by hundreds of people just to learn and share knowledge and for many of them, it was really exciting. The only problem, however, is that the issue of security is still being treated lightly, maybe because we have yet to come to terms with where the rest of the world is. Well, I’ll hopefully write more about this experience in the weeks ahead, but for now, let me conclude last week’s piece.

The pace and scale of today’s globalisation are  unprecedented due to the rapid emergence of the global value chains as production processes become increasingly fragmented geographically.

Information and Communication Technology has made it possible to slice up the value chain and perform activities in any location that can help to reduce costs.

As markets liberalise and information technology advances change the nature of communication and competition, most successful governments have developed strategies and institutions that not only manage the effects of these global trends, but leverage them for increased effectiveness. At the same time, most successful businesses, which of course, are the economic engines of nations, are those that have integrated ICT into their operations to create sustainable and defensible strategies to deliver complex products to demanding customers at the cheapest cost obtainable.

Part of their strategies has been to create the enabling infrastructure that greatly eliminates the bureaucracy associated with international trade by introducing paperless trade policies and instruments.

Among the instruments that have emerged recently, perhaps, the one that presents the greatest potential for increasing productivity, efficiency and competitiveness at all levels of productive development is that of paperless trade.

The advent of e-Commerce coincided with increased efforts to achieve paperless trade. These efforts are usually the result of cooperation between the private and public sectors, which are working together to develop paperless environments where important savings in time and cost can be obtained. E-commerce enables organisations of all sizes and in all market sectors to improve their competitiveness. One striking example of paperless trade as manifested in e-Commerce is the eBay phenomena.

Founded in September 1995, eBay.com is a global online marketplace where practically anyone can trade in anything.  As of June 2013, the company had a global presence in 39 markets and approximately 124 million active users worldwide.

In the second quarter of 2013, eBay Incorporated enabled more than $52bn worth of transactions worldwide. eBay.com users worldwide trade $2,361 worth of goods on the site every second.

Being a global phenomenon, it is impressive to note that the level of e-Commerce that eBay alone generates for the economy of India through eBay India (www.ebay.in) is very high. It is India’s leading e-Commerce marketplace, a 100 per cent subsidiary of eBay Inc with over five million registered users from over 4,306 cities across India.

The eBay India has over 2.3 million Facebook fans. Over 90 per cent of all eBay India shoppers pay via Paisa Pay, a secure online payment gateway enabling credit cards, debit cards, net banking, EMI, mobile payments and cash cards.

Approximately 30,000 sellers sell on eBay India annually. These include agricultural and industrial concerns as well as small local artisans in remote corners of the country.  At any given time, there are over two million live listings on eBay India across 2,000 categories of products in electronics, lifestyle, collectibles and media verticals.

In China, it was a rather daunting challenge for western online platforms to gain a foothold on the over 485 million online consumers due to concerns of counterfeited products and underhand tactics from local operators.

However, eBay.com was able to establish a presence and compete alongside existing local e-Commerce brands like Alibaba.com, thus, opening Chinese exporters up to the global market with eBay’s subsidiary, PayPal as the default payment platform.  In 2010, PayPal handled over $4.4bn transactions in the greater China area, an increase of 44 per cent over 2009.

In spite of its remarkable gains in the proliferation of mobile devices following the deregulation of the telecoms sector over a decade ago, Nigeria has yet to register a significant presence in the global e-Commerce landscape.

Apart from some local brands that are leveraging the vibrant population of online shoppers in the country, global brands like eBay and Alibaba will most likely block any transaction with a Nigerian Internet Protocol address.

Nigeria seems to have been blacklisted for fraudulent transactions by most global e-Commerce platforms, thereby closing the door against a teeming population of potential exporters from offering their products and services to the international market via the Internet. I must, however, commend what the local brands, led by young and enterprising Nigerians, are doing and it only shows that something good can come out of the country.

However, the problem is not so much about the prevalence of fraudulent shoppers but the lack of enabling policies and legislation to protect both the buyers and the sellers in the Nigerian cyberspace, and the cost and time it takes to get redress in the court. This makes international e-Commerce brands wary of entering Nigeria’s cyberspace. I was on a radio programme a few days ago and a listener phoned in and asked: “Since there are no laws governing Internet purchases, what happens if I pay for a good and the other party fails to deliver?” It was a tricky question because until there is a bill governing e-Commerce trade in Nigeria is passed, it will be extremely difficult to get justice. In any case, most businesses particularly SMEs in Nigeria have yet to latch onto the world of opportunities that ICT offers to project their businesses into the global market.

The e-Commerce platforms only provide the access and ease of secured and standardised payment.  It is the individual registered businesses (mostly SMEs) and buyers that drive the process.

It is widely recognised that SMEs are often the major source of employment in most economies, and that they also play an important role in the development of new sources of innovation and the creation of competitive advantages in new productive activities or service areas.

Only through the strengthening of SMEs can a country claim a more equitably balanced productive sector (goods and services), as large national or transnational firms do not provide the same catalyst for jump-starting other sectors of the economy.

In a globalised world, all firms will face competitive pressure at home, even if they choose not to sell abroad due to the influx of cheaper imports especially from Asia.

Therefore, in order to be prepared to meet and beat the competition, Nigerian SMEs must be capable of producing locally and exporting. This means that they must have the quality and competence to participate in the global market place as facilitated by ICT through e-Commerce.

As in the case of China, India, South Africa and recently in some countries in west Africa, the government has key roles to play in improving the competitiveness of trade and investments in the Nigerian economy through policy initiatives that provide a level playing field and easy, cost efficient access to e-Commerce.

Beside a concerted investment in the country’s broadband access, a good place to start will involve a seamless synergy between businesses and relevant government agencies in the evolution of a fast and efficient single window option in the processing of international trade. Luckily, we now have a ministry of trade and investment that must see the development of the Nigerian e-Commerce space as a priority, if we must improve the country’s competitiveness in international trade and investment.

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