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E-commerce Boosting the Shift From Cash to Digital Economy


The impact of e-commerce on the Nigerian economy is getting bigger and increasingly prominent by the day. E-commerce has not only given rise to a league of sophisticated digital consumers, but also a league of digital market entrepreneurs, and lately disrupting the informal retail sector, where activities of market aggregators like Alerzo are giving retailers improved market experience. 



Giving credence to this is recent data by Nigeria Inter-Bank Settlement System Plc (NIBSS), which shows that e-commerce brands and fintechs are driving growth in agency banking with Point Of Sale (POS) transactions. According to the body that tracks payment volumes and value through the Nigeria Instant Payment System and Point of Sales terminals, N53.83tn was transferred through the NIP system, while N1.15 trillion was processed through PoS terminals in the first two months of 2022. It said individuals used electronic channels 86.57% more in the first two months of 2022 than they did in the corresponding period of 2021.


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Also, GSM Association, the global body for telecommunication companies, said mobile money transactions hit more than $1 trillion in 2021, with Nigeria and other countries in the Sub-Saharan region contributing N697.7bn to total mobile money value during the year. “Between 2012 and 2021, the number of active agents grew more than 10 times, from 534,000 to 5.6 million, unlocking access to financial services for the most underserved customers,” it said.



Industry analysts have observed this progressive shift away from cash transactions in the economy, which is largely driven by rising mobile internet penetration, investment by banks and other payment-based fintech companies in payment technology infrastructure. “You can’t separate the impact of the e-commerce community from the significant leap in internet based transactions recorded in recent months. There’s a lot of investment going into this sector; e-commerce companies invest hugely in payment service to give their customers a complete brand experience. Not just that, such investment increases financial inclusion among Nigerians,” said Industry analyst Samuel Elegba.


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The Nigerian informal retail sector is a huge market estimated at over $100b, however, transactions in the market are largely done in cash. With B2B e-commerce companies springing up to bridge the age-long digital gap in the sector, the expert said the rate of instant payment and PoS transactions could triple the current figures in the next six months.”If you look at the channels responsible for the improved data by NIBSS, you will see that they are tools that are very much part of e-commerce services. With the recent rate of inroad by B2Bs into the informal market, these transaction figures will keep increasing monthly, and we could have more than triple the current number of transportations within the next six months.



“Like I do say, informal retail will contribute a lot to Nigeria’s digital economy due to the rate of transactions in that sector. Imagine our digital marketplace with just 20% of the cash transactions in the retail market brought onboard. Products like Alerzopay and others coming in, will surely lead to a major boost in the sector. The overall good in this is that the foundation for the digital economy boom is taking shape,” he said.

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According to Per data from research consultancy, Briter, B2B ecommerce ventures in Africa secured more than $256 million in disclosed funding in 2021. Projecting the industry, Statista Digital Market Outlook said e-commerce penetration rate in Africa will continue to increase, and by 2025 reach around 40%, while the overall African market is expected to reach $180 billion by 2025.


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