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Why online offering halted operations in Nigeria

Why online offering halted operations in Nigeria

This week Nigeria's tech ecosystem was rocked with the news that online classifieds platform had ceased local operations and was focussing on other markets.

Amid growing speculation, ITWeb Africa spoke to Nils Hammar, CEO of Saltside, owners of Efritin, who said that the high cost of data in Nigeria was a major issue.

Paul Adepoju: What is behind the decision to shut down Efritin?

Nils Hammar: It basically has to do with the fact that we didn't get desired returns on our investment, so we decided to scale back on our investments in Nigeria and that means we are forced to let many people leave the company. I would like to clarify that the site is not going to be closed, it is still up and running and working just fine as it has been. It doesn't mean that we are never going to start investing in Nigeria again. I think that's definitely a possibility. Our view is that the Nigerian market for ecommerce and classifieds is a tricky one at the moment for a few different reasons. We didn't see it was worthwhile our investment at the moment.

Paul Adepoju: Speculation is that Efritin did not maximise unique product offerings, including same day unique delivery, and the company failed to test the industry's waters outside Lagos before deciding to shut down. What is your response?

Nils Hammar: I don't think you should think about it as closing down, (dumping) and leaving the country; it's more a pause in the investment to describe it. We do think that we have some promising signs in a few of the initiatives that we are doing. We have a lot of users and one of the exciting things to come forward is the delivery service as you said. I'm the co-founder of Saltside. If you look at the group, we are operating in several countries including Sri Lanka, Bangladesh, Indonesia and we also have by far the biggest classifieds site in Ghana.Even though we see some good signs in Nigeria, right now we see some stronger actions in other markets and we want to focus the company's resources on those markets where we see better returns on the investment.

Paul Adepoju: Is it true that the decision to close shop was linked to several court cases?

Nils Hammar: I can't comment in a legal process – whether or not they are true or what the status is. I just want to make sure it's clear that this is not the reason why this is happening. I saw somewhere that there were some rumours that we are leaving Nigeria because of the legal issues. That is absolutely not the case, it has nothing to do with the decision to pause our investment in Nigeria.

Paul Adepoju: From the policy perspective, did it play any role in the circumstance surrounding Efritin's downsizing in Nigeria?

Nils Hammar: As a classified business, you're detached from the local infrastructure to some point because most of the transactions are happening between the buyers and the sellers offline without us being involved. But I do think that the data cost is an issue. Nigeria is a huge country but it still has very low internet penetration. With internet penetration, I'm not talking about public figures, I'm talking about the data – the number that we actually see and hear about on the market.

Paul Adepoju: What is your comment on financial misappropriation accusations leveled against the company's former MD?

Nils Hammar: I'm not commenting on any legal issues whether it's true or its status. I understand the question from your point of view, but I cannot comment on it.

Paul Adepoju: Arguably Nigerians use more data to watch videos on YouTube and on Facebook than they will need when on Efritin. How much did you invest in Nigeria and, instead of pausing your investment in the market, why didn't you pivot instead?

Nils Hammar: I cannot comment on how much we lost and on pivoting. In our other markets, we have a very strong position. If you look at Bangladesh for instance, it is a market that is roughly equal in size to Nigeria and we are one of the top three local sites with great engagement metrics. We are doing well in terms of monetisation. I don't think our product is the issue, I don't think we have a bad product, I don't think we have a weak offering. Of course there is always a case for redoing your business, but for us, we have three markets where we have seen that this kind of product works really well but in Nigeria we've seen that it's been slower. That's why we are not really keen on doing big pivots on our business model.

Paul Adepoju: Let's talk about the Nigerian experience for you, particularly the struggle to survive in the classified space. What do you think is still lacking in the market?

Nils Hammar: The main issue I believe is becoming more obvious over the years. To me, I think the data cost in Nigeria is very high. In comparison to other parts of West Africa, Africa and the rest of the world, it is very expensive to use the internet for the vast majority of the people. It is very difficult for ecommerce and classifieds because they are quite late in the evolution of the internet industry. I think what needs to happen in Nigeria – but unfortunately we don't see signs of that at all, instead we see the opposite – what needs to happen is that data cost for regular users has to radically drop. All the ecommerce platforms – Konga and Jumia, and the classifieds like Olx are all struggling partly because of this. I still think if you look at Nigeria, there is still a lot of potential, eventually and in the long run, it is one of the biggest opportunities in the world.


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