July is on its way and The African Continental Free Trade Area (AfCFTA) is already gaining momentum. Oxford Business Group is not failing to spur the moment. The Group’s latest survey says about 72 % of African CEOs believe the AfCFTA will have a positive impact on intra-regional trade , and by extension their businesses.
The survey also revealed that 84% of them have positive expectations of local business conditions in the coming twelve months.
The respondents’ companies are based in eight African countries namely, Morocco, Kenya, Nigeria, Egypt, Ghana, Djibouti, Algeria and Côte d’Ivoire.
78% of them indicated that their firms were planning at least one significant investment in the next twelve months.
38% think that the factor that will most likely affect their economy would be a rise in oil prices.
The second factor is political or security instability in neighboring countries, according to 23% of the respondents.
Interrogated on the most needed skills in their countries, 36% of the respondents revealed that leadership was most needed while research, development and engineering were chosen by 14% as the most needed competence.
The Business Barometer of OBG is according to data collected obtained from companies that fall into the following parameters, among others:
-17% of companies surveyed were based in Morocco -16% of companies surveyed were based in Nigeria -15% of companies surveyed were based in Egypt -13% of companies surveyed were based in Côte d’Ivoire -13% of companies surveyed were based in Ghana -12% of companies surveyed were based in Algeria -11% of companies surveyed were based in Kenya -5% of companies surveyed were based in Djibouti
Ghana, Egypt Lobby For Continental Free Trade Headquarters
Ghana is one of the six African countries that is bidding for CFTA to be hosted by them.
Aside Ghana, other countries bidding to host CFTA Secretariat are Ethiopia, Eswatini (formerly Swaziland), Madagascar, Kenya, and Senegal.
Ghana’s Information Minister, Mr Kojo Oppong Nkrumah, on behalf of the Ghanaian government, received the 10-man AU delegation led by Ambassador Rosette Nyirinkindi Katungye, an advisor on Regional Integration at the Bureau of the office of the AU Chairperson, shortly after they arrived at the Kotoka International Airport.
Mr Nkrumah said Ghana was looking forward to grabbing the opportunity which comes with several benefits, including the creation of jobs.
“In the coming days, Ghanaian officials will take them round on an inspection to show our preparedness. If you have the secretariat in your country, it is a huge deal which will bring many opportunities for the growth of this country,” Mr Nkrumah said.
The Africa Continental Free Trade Area is a planned free trade area outlined in the Continental Free Trade Agreement among 49 of the 55 AU nations.
Ghana’s President Nana Addo Dankwa Akufo-Addo, in March last year, appended his signature to the three legal instruments, namely the agreement establishing the Continental Free Trade Area; the Protocol on Free Movement of Persons and the Kigali Declaration which have brought the CFTA into fruition.
(c) American Shipper
Charles Rapulu Udoh
Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
In his usual collected demeanour, Mr Gene Maxon Adigu, a top leader in the Network Marketing Professionals of Nigeria, does not see himself giving up soon on network marketing.
He is the business and the business is his friend. Out of school since 2010, Mr. Adigu now boasts of an annual base income in millions, as well as other fleet of investment and acquisitions. All from network marketing since the last eight years. For a man who read from Robert Kiyosaki to John C. Maxwell to other bestselling business and crazy books while in school, it appears the journey is still far from over.
‘‘ Entrepreneurship is not for babies,’’ Mr. Adigu told AfrikanHeroes . ‘‘I didn’t just focus on reading only the academic books while in school. And that helped me so much psychologically and mentally. It prepared me well for the world out there, after school. So when I graduated with no job in sight, I resorted to a network marketing business because it was the only business I could start then with small capital. Network marketing is a business that has helped me, and today I am living the life of my dream. ’’
‘‘Network Marketers Are Also Entrepreneurs’’
For a business model that was once valued at US167 billion (2012) globally, engaging at least 89 million network marketers with the Asia-Pacific region of the world forming the largest market with a share of 44 per cent followed by North America, Central and South America (20 per cent share, each) and Europe (15 per cent), Mr. Adigu said network marketing is your regular business with all the structures and the organisation and the workforce and the strategies of established businesses, and not a Chit Fund or some Ponzi Schemes.
‘‘Network marketers are also entrepreneurs, Mr. Adigu said‘‘Network marketing is not a different business model. In every business in this world, there is network marketing. Network marketing is a profession. Network marketing is a normal business, like every other business on Earth.’’
The World Federation of Direct Selling Associations (‘WFDSA’), which is the global body concerned with the business, and which has the membership of 60 national associations and one regional federation, defines network marketing as “the marketing of products and services directly to consumers in a person-to-person manner, away from permanent retail locations”. An important objective in a Network Marketing model is to generate sales by constant interaction with customers along with engagement of new distributors down the line.
‘‘Network Marketing Business Is A Sustainable Business Model’’
Mr. Adigu does not see the network marketing business model ending soon.
‘‘ Network marketing is a system through which you market your business. It is not the type where you, for instance, pay CNN to run adverts for you. Network marketing is word-of-mouth marketing, which makes it a unique system and can never be outdated. Network marketing will always be a reliable business; in fact, for the next 100 thousandth year. It is a system of referring some other persons’ products and services to your friends and families and you get paid for doing so.’’
Mr Adigu may not be so far from the truth. Vorwerk & Co. KG, a German network marketing company was founded in 1883, and is still in existence 136 years after. The company has presence in over 76 international markets across the world and reported revenue of $3.7 billion in 2013 alone. United States’ Alticor (Amway) founded in 1959 is the world’s leading network marketing company, posting a revenue of $11.8 billion in 2013, and has presence in over 100 countries.
‘‘Network marketing business lasts,’’ he said. ‘‘ The question is the company you are partnering with: are you going to last with that company? You are not supposed to ask whether network marketing business would last. The question should be: would the company you are partnering with last? Are you going to last with that company till you succeed? This question is very important.’’
‘‘The Greatest Challenge of Most Network Marketers Is That They Take Things Personal.’’
For a business that involves selling a consumer product or service from one person to another, in an environment that is not a permanent retail location, Mr. Adigu expects that this would not come without a fight.
Hence, when the mind-spinning, rapid and unexpected rebuff comes, he also does not expect network marketers to swallow it hard. But they have to do so, anyway, if they would want to get ahead. And because most network marketers don’t usually do so, he sees it as a major challenge.
‘‘When you start a network marketing business, learn how to recruit the right network marketers. You need to keep teaching them how to market their products effectively,’ he said. ‘Also, learn how not to take things personal. If somebody tells you that he is not interested in your deal, learn how to swallow it calmly. Don’t take things personal.’’
Mr Adigu also pitched some advice for marketing products. Marketing products is fun, he said, as long as you believe in them and make some research about them. You have to also study why the products are necessary before passing them over to your network.
‘‘ I was promoting a business back then, about some coffee products. Nigerians don’t normally take coffee, but my team researched about these products and we started building the business. It was surprising to suddenly see Nigerians using the products, making coffee from them. In fact, the business was so successful that I averaged over a million naira a month from it. This happened because we were interested in the coffee products; did some research on them and tabled the products’ exceptional health benefits to our target customers,’’ Mr. Adigu said.
Breaking The Ice and Making Profit From Network Marketing
Earning from the Multi-Level Marketing or Network Marketing usually follows an arch: each direct seller recruited can potentially recruit new distributors and create a down line of direct and indirect distributors or sellers. Distributors purchase products to sell to the consumers. They receive commissions and bonuses on the sales made by them and the sales made by their down-line sellers and retail markups.
Mr. Adigu said network marketing business is so profitable that he once averaged over ₦200 million ($556,000) from the business in a year.
‘‘In a year, for starters, depending on the work you put in, you can earn two to three million naira ($6000), with additional earnings depending on how hard you work,’’ he said.
Global direct selling was a USD 167 billion market in 2013 and employs around 90 million people worldwide. While the industry grew at a low rate of 5.4 per cent in 2012, over 2011 (growth rate of 19.7 per cent), due to global economic slowdown, the long term growth prospects of the industry remain robust. Cosmetics and personal care is the biggest category capturing more than 35 per cent share globally in the network market, followed by wellness products and household goods.
‘‘If You Don’t Have The Stamina To Grow A Business, Just Go and Get A Job’’
Mr. Adigu does not see himself giving up any time soon. He has other plans, though; to work harder and live the best of his life.
‘‘Being an entrepreneur is not for people who easily give up,’’ he said. ‘‘ When you start a business, be prepared that you would give it all your best. Sometimes, giving all your best doesn’t even work. The only thing that usually works in the end is consistency. Consistency is the ice breaker.’’
Charles Rapulu Udoh
Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
‘‘Years ago, when I was fighting for the cell phone license in Zimbabwe, a friend of mine who ran Coca-Cola Africa, heard about my plight, and made me an interesting offer: “McDonald’s is looking for a master franchisee for Africa. I would like to put forward your name. You will have to go to their university for a year.” I declined the generous opportunity. I only had one regret from my decision: This was the equivalent of a young soccer player from a small African team being invited to train with Barcelona for a year! It would have honed my craft skills as an entrepreneur. There are about 40,000 McDonald’s restaurants worldwide. Just imagine what it takes to build an operation like that?’’Writes Mr. Strive Masiyiwa Zimbabwe’s richest man, and the eight richest man in Africa.
A franchiseis a type of license that a party (franchisee) acquires to allow them to have access to a business’s (the franchiser) proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’ name. The next KFC or ShopRite on your street may not actually be a direct investment from KFC or ShopRite, but the hard work of a franchisee who has been licensed by the brands to run such businesses in their names within any locality they may choose. Below, we discuss why your may consider procuring a franchise to run your next big business.
Why Franchise?
Franchise is a good business model for entrepreneurs for many reasons.
You Require Little Or No Experience To Run A Franchise Business:
You do not necessarily need business experience to run a franchise. Most times, the franchisors provide the necessary training you need to operate their business model.
Franchise Has a Higher Rate of Success Than Most Startup Business.
This is mostly because you are opening an already established business with a good business plan already in place. Hence, there is less chance that the business will fail. When you sign an established and well-known brand, you can benefit from the name and goodwill, much more than small businesses or most startups.
It Costs Less To Own A Franchise Than You Think
Most financial institutions may be more ready to grant you loan or other forms of debt finance than would be the case if you start your own business of the same type.
Although I turned down the opportunity, I was intrigued by the franchise model and began to study it closely. I later used it when launching Econet stores. There are some of you struggling with any of the following challenges: #1. You do not have capital to start and expand a business; Or #2. You don’t know how to run a big business with more than one outlet; Or #3. You don’t know how to innovate a product or service continuously to keep customers interested; Or #4. You don’t know how to attract the best people to join your business; Or #5. You want to be an entrepreneur but you are risk-averse. The answer for you lies in franchising from a tried and tested business with an established brand. Franchising opportunities [as a franchisee] are found in almost every industry. If you are shrewd, you can develop your business as a franchisor, and use other entrepreneurs and their capital to grow your business,’’ Mr. Masiyiwa continues.
Financial Benefits From Owning a Franchise:
Franchise can be profitable if all the franchisees within your locality use the same suppliers in which case you can negotiate lower costs for the items you sell. You also have access to existing business infrastructure as well as the franchisor’s network which you may not have if you set up an independent small business. Most times, this includes preferential rates — discounts given to franchisees due to the large numbers using that particular supplier. All this means that you have a higher profit.
As entrepreneurs, there is no point in discussing an idea unless we are prepared to put it into practice. Real entrepreneurs are practical! We learn to DO!!
Remember when I started talking about “the digital shared economy” model and my excitement about the “Uber model”? You should have known that I was working on something. Now we have our own business called Vaya Mobility and Logistics!
We are already scaling it in two markets: Zimbabwe and Nigeria! (Remember what I said about “execution”? Always start in one or two markets, otherwise you create execution risk).
Uber has almost 4m cars on its platform. The cost of so many cars would be over $60bn if Uber had to buy them! This would obviously been totally prohibitive for any #StartUp.
Franchising can be used in many different types of industries. We are currently developing a very interesting franchise model for Waste Collection!
# We have already recruited 10x private contractors (franchisees) and we have assigned them each an area of the city of Harare (franchise area).
# Now we have begun to equip them with resources to collect waste from homes and businesses.
# In this model, we provide each franchisee with access to vehicles (using the Vaya Truck platform).
# We are using our #process# to ramp up these small companies so that they can handle 1m homes within three months, something they could not do on their own!
__We call this initiative: “Clean City Africa!”
Imagine if we could scale this to cities like Lagos and Kinshasa!
Who knows… maybe you will be one of our franchisees!
My question for you: Can you ReImagine your business (model) today, as either a franchisor or franchisee?
Why Not Franchise?
Owning A Franchise Is Highly Costly
Most of the time, franchisors only specify the cost for getting franchises from them, but there are other hidden costs such as rent and tenancy fees to your landlord, travel, lodging expenses when attending franchise training; legal, insurance and accounting cost the franchisor may require you to obtain. In all. you may end up spending, on average, $50,000 to $200,000 to acquire a franchise. However remember, as have been noted above, that it is easier to obtain debt financing for most well known franchises. It is left for you to do the calculations based on your budget.
The Length of Franchise Agreements
The nature of franchise agreement is such that it can be extremely limiting. In most cases, once the franchise agreement ends, the franchisee may be prohibited from running the franchise independently. Most franchise terms provide for franchise duration anywhere from 5–10 years, often with an option to renew (at an additional cost). A better strategy for franchisees is to have an exit plan in place before the franchise ends, unless you desire to keep the franchise going.
Not Much Freedom In Owning A Franchise
Franchise agreements dictate how you run the business; so there may be little room for creativity.
There are usually restrictions on where you operate, the products you sell and the suppliers you use.
Buying a franchise means ongoing sharing of profit with the franchiser.
Bad performances by other franchisees may affect your franchise’s reputation.
Franchisers often limit their franchisees to a specific geographic region, preventing them from moving outside the area. If you cannot see yourself staying in the same place for 15 years, a franchise may not be a good fit for you.
The profit may not be glamorous, after all. This is because though it takes hard work to start your own business, if it became successful, the profit would be yours. This, however, is not the case for a franchise; you will owe a fee to the franchiser, and repeat customers might frequent other franchises of the same brand, rather than your particular store.
How To Get A Franchise Across Africa
First find what business you need to have its franchise depending on local needs for it. Study your locality and the franchise opportunities in it. You can check the franchise directories of these countries: Nigeria|South Africa | Congo | Egypt | Mauritius | Zimbabwe| Malawi |Ghana |Kenya and others.
Execute a franchise agreement after due diligence has been conducted on the franchiser, and the terms of the contracts are acceptable and agreed by the parties.
Make sure that the Franchise Agreement is executed in accordance with local laws.
Nigerian Law on Franchising
Nigeria does not have a specific law on franchise. A Bill on Franchise has been passed by Nigerian Parliament but has not been signed into law.
The Bill intends to provide a mandatory requirement of 20% minimum local content for all franchise operators in Nigeria. However, Nigeria regulates technology transfer and commercial agency agreements, which may impact on franchise agreements depending on how the franchise is structured and the sector it operates in. Such agreements are regarded as involving the transfer of technology and so is regulated by the provisions of the NOTAP Act. To know the guidelines you have to follow to register your franchise which has a touch of technology in Nigeria, click here.
South African Law On Franchising
There is no specific law on franchising in South Africa. The Consumer Protection Law of 2009, regulations pursuant to the law and the common law regulate franchising in South Africa. However, there is no registration requirement relating to franchising in South Africa. All the law requires to be done is that the franchiser shall disclose certain material information to the franchisee at least fourteen days prior to the signing of the franchise agreement. The format of the disclosure is prescribed by the regulation to the Consumer Protection Law.
Kenyan Law On Franchising
Kenya has no specific legislation on franchising. It, however, has laws regulating franchise agreements, including; the Competition Act, Consumer Protection Act and the Trademarks Act. The Competition Authority of Kenya (CAK), being a regulatory and supervisory institution, draws its powers from the Kenyan Competition Act in carrying out is mandate. There is no requirement for the registration of franchises in Kenya, although certain franchises may fall under the supervision of the CAK on requirements regarding market entrance on competition.
Egyptian Law On Franchising
There is no specific law on franchising in Egypt. All that is needed is a franchising contract between parties which shall be subject to industry related laws in Egypt. However, the main law to be resorted to in franchising is the Civil Code. In addition to the Commercial Law, some relevant provisions can be found within the Intellectual Property rules, Taxation law, Labor law and Insurance law covering many aspects in the franchising contracts.
Angolan Law On Franchising
In Angola, if a franchise agreement contains service provisions [that is, part of the agreement relates to ‘services’ (such as initial training, guidance on the use of trademarks, etc.)], it is likely to be classified as a Technical Assistance and Management Agreement, which must satisfy certain criteria (including the requirement that the services cannot be obtained within Angola, and that the provision of the services will bring significant benefits to the ‘franchisee’ and the Angolan economy), must be licensed by the Ministry of Economy, and any fees paid thereunder will be subject to a higher tax burden. Other than that, there is no specific law on franchising in Angola
Charles Rapulu Udoh
Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
The day is a regular one, and the sun is burning hard. People are staggering back to city bus terminals in a desperate hope of finding their way home after a long day at work. The place is, of course, Lagos Nigeria, and the usual jarring animosity and aggressiveness still hang on the faces of these people. They are not ready to wait; dragging, pulling and pushing are the next lines of action. With a population of over 17 million and the searing thought of queuing up to face traffic, the earlier they board the buses, the better.
In fact, according to a report by the National Association of City Transportation Officials, a coalition of the Department of Transportation in the U.S, up to a third of the time of cash-based transit buses was spent in “dwell time” delays just because customers have to pay for their fares in cash before movement can begin.
Interswitch, a digital payment solution in Nigeria has studied and understood this story perfectly, and is now on the move to revolutionize the Nigerian transport system for good.
Here Is The Deal:
Interswitch Group has worked out a technology that lessens the time Nigerians spend on long queues waiting for buses.
The company has launched three products — the BeCard, the BeVal, and the BeReader — exclusively for the Nigerian market, which are expected to save Nigerian public transport users the stress of the Nigerian public transport system and increase their life expectancy by a percent.
While the BeCard is your regularly shaped card — like any bank card or the Oyster card in London, the BeVal is the device which is installed on the buses where the passenger can tap on — just like on the London buses. The BeReader is the mother system that makes the BeCard and the BeVal work.
But Interswitch is way smarter here: the company has taken the erratic power and internet availability in Nigeria into consideration. That is why none of the three products would be needing any of the above. The BeReader would be solar-powered and will not require network connection all the time to function.
Innovation and The First Timer Strategies
“Interswitch believes that the transport system in Nigeria, Africa’s largest consumer market, is ready for innovation,’’ said Akeem Lawal, divisional CEO for payment processing at Interswitch. ‘‘This partnership is a key and timely milestone in our industry vertical markets’ focus. It is highly compatible with our vision for Interswitch Transport Solutions (Smartmove) which is essentially to progressively facilitate a multi-modal and multi-operator transportation system underpinned by best-in-class technology.”
Interswitch understands the game perfectly: nobody really cares much about the transport system in Nigeria, apart from the government and a few local players who have got used to the straight-minded approach of deploying as many buses as possible to run through some designated routes. Passengers simply have to queue up and purchase tickets if they are interested in traveling through those routes. Now, Interswitch sees a gap here. A recent Visa’s Cashless Cities study shows that digital payment on buses takes 2.6 seconds (on average) across a cross-section of global cities varying by digital maturity. Using cash takes 4.2 seconds, according to the report, and it would be much higher if it does not involve something similar to Bangkok’s system of hiring conductors to collect cash fares when passengers board — which is pretty much what is practiced in most parts of Africa.
The strategy is also in the numbers: Figures released by Nigeria’s National Bureau of Statistics in 2018 revealed that there are 11,653,871 million vehicles in Nigeria. 6,768,756, representing about 58.08 per cent are commercial vehicles while 4,739,939 (40.67 per cent) are private vehicles. Nigeria’s population has recently been projected by the United Nations to have reached a staggering 200 million. The implication of this is that 6.7 million commercial vehicles cannot serve a population of 200 million or more. Out of the 6.7 million commercial cars in Nigeria, only about 200,000 commercial vehicles are on the roads in Lagos alone, with a population of more than 17 million people. Even playing the devil’s advocate with the 5 million total number of cars in Lagos, whether private or commercial ( with the national average pegged at 11 vehicles per kilometer and the daily average of 227 vehicles per every kilometer of road in Lagos), there is still not a sufficient number of commercial vehicles to match the heaving population of commuters.
Interswitch Group knows this and is not afraid to seal the deal of over USD 73,129,560. Charging a service fee of NGN50 (approx. $0.14) per usage assumedly on 12 million daily transport users in Lagos alone over 300 days (65 days off, for irregularity in the frequency of commute) would be a whopping NGN180 billion annual revenue (approx. $500 million), almost seven times the value of the deal sealed by Interswitch.
According to Akeem Lawal, Divisional Chief Executive Officer, Interswitch:
“We have taken all of those technology pieces, and we have put it on the infrastructure Interswitch has built over the last 17 years. We combine the payment technology with those unique technologies that we have done in partnership with a UK company, and we create a solution that will work on Danfo buses, blue buses, in ferries and in trains. It will be all across the country. We will start our proof of concept with some of our selected partners in Lagos and Abuja, and we will extend to the rest of the country when we are done.”
Being the sole operator and the first timer here means Interswitch is going to have a field day counting its blessings.
Interswitch Is Also Relying On The Policy Strategies of the Nigerian Government To Give The Project A Pivot
Nigeria, through its Central Bank, has placed so much emphasis on a cashless economy in recent times. Interswitch is relying on this strategy to pivot this project.
It is A Win-Win Deal For Both The Government and Industry Operators
Lessons and Experience From Across Africa
According to the Visa’s Cashless Cities study, cashless transportation, as envisaged by Interwitch, could bring more, more money for cities and governments. The study shows that transit agencies — including government-owned transit companies and privately owned transport companies — spend an average 14.5 cent of every physical dollar collected. A whopping 10.3 cents from that amount is saved when the digital transport payment system as envisaged by Interswitch is used. This is because only 4.2 cents is spent for every digital dollar, taking into account such constraints as fare invasion, police corruption and pilfering among others.
Rwanda Is A Good Case In Point
When Rwanda had not awarded a cashless transit payment system design contract to AC Group, an indigenous tech startup or deplored the Smart Kigali Initiative, made up of three major bus firms — which partnered to transition to the cashless Tap & Go bus fare system designed by the AC Group — Rwanda was losing up to 40 percent in revenue due to the hurdles presented by paying for fares with cash. Since the launch of the cashless system, buyable cards led to a revenue increase of more than 30 percent and a speedup in daily commutes in Kigali. There are currently more than a million users of Tap & Go in Rwanda, and 100,000 in Cameron, where the AC Group has expanded to.
Kenya
The matatu transport system in Kenya meant that transport operators in Kenya would suddenly jack up prices as they liked. In a bid to eliminate this corruption and inefficiency, the Kenyan government adopted the contactless transport system (although it was operated by private individuals) by launching a program in 2013 which mandated all matatus in Nairobi to go cashless. 70 percent of the Nairobi’s 4 million residents subscribed to the deal and got themselves contactless cards.
Bottom Line:
While many others are waiting (and calculating the risk perhaps) or simply comfortable with the status quo, Interswitch is leading the revolution and is going to take jobs away from so many people. It is also going to cut a large, gaping hole in the ways things have always been done in the Nigerian transport sector. The next beneficiaries would be those who are fast enough to understand this deal and how they can be part of its value chain.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
Latest figures from the United Nations’ Conference on Trade and Development show more people are resorting to shopping online around the world. Below is a quick summary of the facts and figures.
.Sales conducted on the internet increased by 13 per cent in 2017, reaching $29 trillion.
This number was made possible because, according to UNCTAD, more people resorted to shopping on the Internet. Hence, the number of online shoppers, moved up by 12 per cent so that a total of 1.3 billion, or one quarter of the world’s population now make sales through the Internet. However, though most Internet buyers bought goods and services from their domestic online shops, the number of people buying from abroad rose from 15 per cent in 2015 to 21 per cent in 2017. A significant percentage of this number came from buyers from the United States.
. More Businessmen are Buying from More Businessmen as against more Consumers buying from More Businessmen
The number showed that when the transactions involved two countries, business-to-consumer (B2C) sales reached an estimated $412 billion, making up for almost 11 per cent of total B2C e-commerce. Other B2C sales happened inside the countries. This represented about 4 percent increase from 2016.
The figures also showed that while
transactions conducted between businessmen in these countries–that is business-to-business
(B2B) e-commerce– has more than 88 percent of all online sales, B2C grew the
more in the year under review. To be sure, B2C sales increased by 22 per cent
to reach $3.9 trillion in 2017.
.More Online Sales Are Conducted in China Than Anywhere else in the world, while more Consumers in the UK are More Willing to Shop Online Instead of Visiting A Physical Shop.
The facts showed that more consumers
in China bought directly from businessmen using the Internet by the accumulation
of numbers over the years, obviously because of China’s largest population. However,
UK consumers were the most likely to shop on the Internet because a staggering
82 per cent of people aged 15 and older made purchases online in 2017.
Overall, however, about 440 million consumers bought from businessmen on the Internet in China, making China the country with the largest number of Internet buyers followed by the United States, while the United Kingdom held on to third place.
.In Terms Of Who Made The Most Money From These Online Sales, US Did.
In fact, with almost $9 trillion, online sales made in the United States were three times higher than that made in Japan and more than four times higher than that made in China. Germany also overtook the Republic of Korea as the fourth largest online market.
.Findings From The Report Showed That There Is Still A Huge Gap In The Ecommerce Market.
The UNCTAD report showed that there is still a huge gap in delivering digital services such as insurance, financial services or business processes, especially in developing countries such as Nigeria, as the sector grew yearly by 7-8% over the decade, and they were worth $2.7 trillion in 2017. . While developed countries still retain the market share, that is 77 percent, developing economies in Asia are seeing the biggest increase in exports over the past decade. Sierra Leone, a small-sized West African country emerged Third in digitally deliverable services, as a share of all service exports.
.What These Figures Mean
“The new figures show that e-commerce is indeed creating export opportunities. But the question from a development standpoint is whether businesses in developing countries are prepared to seize the opportunities,” UNCTAD Secretary-General, Mukhisa Kituyi, said.
“From an economic development perspective, this is important, because it shows the potential of digitalisation for businesses in developing countries that are producing such services,” said Shamika N. Sirimanne, who directs trade and logistics division at UNCTAD.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
