ECOMMERCE IN NIGERIA AND AFRICA

FROM THE ECONOMIST INTELLIGENCE UNIT 

Forms of e-commerce 

Until 1998 Nigeria had only a few dial-up e-mail providers and a few Internet service providers (ISPs) operating on slow links in the country. Present ISPs provide online advertising opportunities, Internet banking security and VSAT (very-small-aperture terminal) services. The Economist Intelligence Unit estimates that the number of Internet users per 100 persons grew from 1.25 in 2004 to 1.82 in 2005. 

There is progress in the sector, as illustrated by cyber-cafés springing up even in some of the more remote parts of the country. Lagos alone has more than 1,000 cyber-cafés. Businesses’ appreciation of the value of online communication is growing rapidly. But with low household disposable income and a restrictive infrastructure, it will still be a while before Internet penetration in homes reaches a significant level. 

On March 3rd 2004 the federal government launched a joint initiative between private-sector operators, which operate under National e-Government Strategies Ltd (NeGSt) and the National Information Technology Development Agency (NITDA), an agency of the Federal Ministry of Science and Technology. The project aims to improve organisational performance, service delivery and the participation of ordinary citizens in the day-to-day activities of government with information and communication technologies. 

Growth of e-commerce 

Growth in e-commerce is slow but steady. The vast improvement in telecommunications services in the country, as illustrated by the explosion of subscribers and users of GSM (global system for mobile communications), is further underscored by a surge in private telecom operators (PTOs) offering “fixed wireless services”, which offer data and voice transfer. Hence, this supports Internet use even in some of the more rural parts of the country. This phenomenon not only lets Nigerians communicate with the rest of the country and the world from areas that had been completely cut off, but they are also getting used to the phenomenon of modern communications, including GSM, short message service (SMS) and e-mail. Furthermore, with the reduction in tariffs already implemented by Nigerian Telecommunications (Nitel, the national telecoms carrier) and further cuts expected, telecoms service is becoming more affordable and essential to many Nigerians. 

According to the Economist Intelligence Unit, the stock of personal computers (PCs) per 1,000 persons grew from 10.66 in 2004 to 11.09 in 2005. The biggest impediment to the growth of e-commerce is low PC penetration. But cheap Asian technologies and falling microchip prices have fuelled a market in clones as well as branded PCs. 

The introduction of e-commerce services is hampered by a lack of public awareness on how to use the technologies. GSM phone technology (introduced in August 2001), however, is gradually drawing consumers, and there has been a rapid growth in electronic-cash-transfer services such as Western Union, Moneygram and Travelex in recent years. 

Electronic banking is one area of e-commerce that has proven successful in Nigeria. Virtually all banks in Nigeria offer online, real-time banking services. Moreover, banks that cannot offer these services are increasingly losing their customers. Online, real-time banking systems have now become commonplace as customers are offered the flexibility of operating an account in any branch of their bank’s network. The online service lets customers conduct a variety of banking activities in any location of a particular bank. These services include, among other things, deposits, withdrawals and the issuing of drafts. 

Banks are also increasingly looking to card-based payment solutions beyond the widely accepted electronic purse, including debit and credit cards, but these are slow to take off. The most likely service to roll out on a large scale in Nigeria is an ATM system. A few banks started the ATM Consortium in 2003 to set up ATMs across the country, and it is gearing up to raise finance. 

Foreign investment 

Present legislation stipulates that businesses wishing to provide Internet services must be 70% locally owned. 

Intellectual property 

There is no specific legislation concerning intellectual property and e-commerce, although Nigeria is a signatory to six international treaties relating to intellectual property. 

Consumer protection 

There is no specific legislation concerning consumer protection and e-commerce in Nigeria. 

Contract law and dispute resolution 

There is no specific e-commerce legislation relating to contract law and dispute resolution in Nigeria. 

Basis of taxation 

The present tax law in Nigeria does not specifically account for e-commerce transactions. 

Classification of e-commerce transactions 

Present tax laws do not specifically classify e-commerce transactions in Nigeria. 

Compliance and enforcement issues 

Since e-commerce is in its infancy in Nigeria, legislators have not finalised legislation concerning compliance and enforcement. The Nigerian Communications Commission is an independent regulatory body that promotes growth in information and communication technologies.