Driving Growth Through Digital Economy

By Ayomide Oriade

The outbreak of COVID-19 and preventive measures enforced by authorities across global borders has further extolled the importance of technology-based connection and communication between people, businesses, organizations and processes; a convergence that makes up a digital economy.

At the last World Economic Forum, global economic leaders predicted that by the year 2022, over 60% of the world economy will be digital, while it was also projected that about 70% of new value created in the economy in the next decade will be based on digitally-enabled platforms. This signals the fact that those saddled with economic policy formulation and implementation in different countries of the world are focusing on the digital economy as the next growth driver. Nigeria also stands a good chance of boosting economic growth by leveraging the potential of the digital economy. In 2019, the World Bank stated that Nigeria is uniquely positioned to benefit from the digital economy, with half of the 200 million population of the country being below the age of 30.

Commendably, figures released by the National Bureau of Statistics in May 2020, showed that the digital economy is already making a significant contribution to Nigeria’s economic growth. Non-oil sectors combined contributed over 90% to Nigeria’s GDP in the first quarter of 2020, with ICT accounting for 14.07%. In what could be seen as a move towards actualising the digital economy projection, a National Digital Economy policy was recently initiated by the Federal Ministry of Communication and Digital Economy. According to the Minister of Communications and Digital Economy, Dr. Isa Pantami, the policy is aimed at developmental regulation; digital literacy and skills; solid service infrastructure; promotion of digital services; software infrastructure; digital society and emerging technologies.

Reports have it that the federal government is set to receive a loan of N127 billion from the China Exim Bank for telecoms infrastructure development. While there is an urgent need for investment in solid and service infrastructure in the ICT sector to further drive digital growth, the crucial space occupied by ecommerce in the digital economy cannot be overlooked. In the thick of lockdown and movement restrictions, firms and businesses with digital presence were having field day. It was a period of business boom for telecommunications companies and internet service providers. The online marketplace gained prominence like never before, even on the African continent. The sector was arguably what was left of the economy during the lockdown. Those doubting the feasibility cum viability of ecommerce on the continent must be having a rethink after seeing the exploits of Jumia, Konga, Jiji, and the likes during the period. Hence, it is pertinent that the aspect of the policy that concerns promotion of digital services is given the needed attention.

From all indications, one of the ways to a robust national digital economy is to encourage more entrepreneurs to bring their business online, and Nigeria already has existing platforms to serve as springboard. Thanks to the activities of ecommerce platforms, Jang in Plateau is able to put his wares in the face of an audience based on Imo State. The tailor in Onitsha, and Shoe Cobblers in Abeokuta are able to sell to customers in Kogi. Sellers and customers are already connecting in a virtual marketplace courtesy of these online stores. All needed is enabling and supportive policies to bring more customers and sellers to this space.

More so, some digital offerings of ecommerce platforms will help to further drive some policies and could also be a revenue collection avenue for the government. For instance, the ecommerce industry leaders in Nigeria, Jumia and Konga have fintech solutions that enable customers to pay seamlessly for purchases made on their platforms. With JumiaPay, customers can also pay electricity bills, Pay TV subscription, and mobile recharge. These fintech products will help drive the cashless policy of the government and also make VAT collection and remittance easier.

Government promoting digital services will also help to entrench healthy market competition, competitive pricing and customer relations needed for improved services and economic vibrancy. When the market is made attractive, there will be more investment in the sector. These will most likely spring stronger competition among online stores, product manufacturers and sellers. “We are always informing our sellers on why they need to provide value to customers with competitive pricing. What customers want especially at this period is best deals at affordable prices. They will go for products that help them save more, and one of the advantages of online stores like Jumia is to provide a wide range of assortments to customers at the best market prices possible,” said Operating Officer, Jumia Nigeria, Omolola Oladunjoye.

Another crucial reason why promoting digital services should be prioritized is the immense spiral impact it will have on the logistics business. Many people will agree that an average delivery agent became a lifesaver during the pandemic. People became more conscious of the crucial role of logistics, and this is mostly down to an upward trend of ecommerce activities. A good example of this is the sudden surge in logistics investment in most commercial cities of Nigeria. Investments of ecommerce players such as Jumia, Konga, Jiji has further opened up the space and is also initiating employment opportunities.

It is thus not surprising that Jumia Logistics and Konga’s Kxpress have grown beyond servicing only businesses on their platform. “In 2019 we were able to achieve 25% deliveries in rural areas through a network of direct agents. What this means is that we can accomplish even greater success by opening up our logistics services to the public. We have the right infrastructure people, partnership and technology required to help third parties and partners,” said Jumia Nigeria CEO, Massimiliano Spalazzi. According to Konga CEO Prince Ekeh, the company has built its logistics platform working with local people to empower them to deliver to the last mile. “This is where you add value by providing service open to the entire industry,” he said.

The pandemic has no doubt shown the importance and inherent potential of a digital economy to national growth. For Nigeria to achieve the digital economy projections and be part of the emerging global economic trend, the pivot role of ecommerce in the chain needs to be properly addressed and fully harnessed.

Ayomide, a Public Relations Executive writes from Lagos