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Nigeria emerges as e-commerce leader

Nigeria emerges as e-commerce leader

According to news and research firm, Disrupt Africa, Nigeria has emerged as a leader in e-commerce and is home to 40% of Africa's e-commerce ventures.

Gabriella Mulligan, co-founder of Disrupt Africa says the extent of Nigeria's dominance of the African e-commerce landscape is one of the most exciting findings from its recently published report Afri-Shopping: Exploring the African E-commerce Start-up Ecosystem Report 2017.

"For the first time, we have clear evidence of the outstanding trajectory of the country's e-commerce space as being driven by entrepreneurs.

"While South Africa and Kenya have typically stolen the limelight hitherto in conversations about tech entrepreneurship, this research makes it clear Nigeria is on the brink of huge e-commerce success - and will become the first African country to truly take retail online at a similar scale to Western markets."

The company also found that funding for e-commerce start-ups has proven inconsistent throughout the continent as investors are put off by the long wait for returns

Despite this, the company says the African e-commerce space is growing at an exceptional pace, with the number of start-ups entering the market growing year-on-year to reach a total of 264 ventures operating continent-wide.

Scramble for funding

According to Disrupt Africa's statement, less than 30% of African e-commerce start-ups are profitable, as ventures tackle issues such as lack of funding, shortage of trust and logistical difficulties.

"Funding for e-commerce start-ups declined sharply in 2016," according to the statement, "though there are signs that investor interest is picking up again in 2017, the funding available is not well distributed, with 90% of funds raised going to start-ups in just five countries."

"South Africa, whose start-ups compete with their Nigerian rivals for fundraising capabilities, and Kenya also have developed e-commerce markets."

Dobek Pater, Managing Director at Africa Analysis, said, "Some of the challenges are market-specific while others are specific to start-ups across various industries, irrespective whether they are active in the e-Commerce or other markets."

Pater says limited access to funding is a challenge as it would allow start-ups to survive the first few years of operation until such time as they have good cash flow and/or have become profitable and sustainable.

He says greater access to technology is needed to further drive e-commerce. "Improved internet access, telecoms broadband infrastructure, access to IT terminals (eg. PCs), greater data affordability (in some markets), can help drive the e-commerce market in the continent."

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