Feature/OPED
E-commerce’s Contribution to Nigeria Economy, the Challenges and Need for Government Intervention
By Ezedi Udom
E-commerce platforms have proven to be critical enablers of economic growth and social development for Nigeria in spite of the myriad challenges occasioned by the tough operating environment.
A key player, Jumia is fostering cashless and financial inclusion by encouraging Nigerians to move from brick-and-mortar malls to selling and shopping online and making payment for goods online thereby promoting the digital economy.
With Jumia online marketplace, usage of electronic transactions in Nigeria continues to increase, banks are becoming more innovative with electronic banking products and services while more fintech companies are investing in the economy.
Jumia is promoting the growth of MSMEs and large businesses by offering sellers its online marketplace, logistics, and last-mile platforms to increase their customer base, reach the target market faster and become more competitive, profitable, and sustainable.
Support for enterprises and the Jumia system are solving the critical high unemployment problem, especially among the youth by creating direct and indirect jobs. Jumia’s over 5,000 employees form a significant critical mass of employment.
National Bureau of Statistics (NBS) reported that SMEs in Nigeria contributed about 48% on average to the national GDP in the last five years and accounted for about 50% of industrial jobs and nearly 90% of activities in the manufacturing sector.
E-commerce is becoming a potent tool for the government to optimize digitalization as a key component of economic diversification, and also to meet the new compelling need of enforcing social distancing as a key measure in flattening community transmission of COVID-19.
The Presidential Task Force on COVID-19 has issued several warnings of increasing number of unsuspected asymptomatic carriers of coronavirus with Nigeria now at “active community transmission” stage.
Thus, online shopping, digital payment/virtual transactions and online interactions hold the ace for the future to promote social distancing and avoidance of crowded places such as brick-and-mortar shopping malls, supermarkets, open markets and banking halls where the possibility of contracting the virus is high.
COVID-19 outbreak has significantly disrupted global supply chains among other activities. The Economist indicated that online retailers including Jumia boomed in the wake of the Ebola outbreak in Nigeria, in 2014, as more consumers shopped online for fear of contracting the deadly disease. Orders on Jumia reportedly tripled due to increased demand for hygiene products like hand-wash, bleach and other cleaning products.
The same trend also played out recently during the peak of lockdown in Nigeria. Scarcity of protective items like hand sanitisers, facemasks, gloves and reagents, and hoarding and price gouging of essentials like tissue paper and sanitary products was reported in some parts of Nigeria due to surge in demand amidst supply shortages.
Through its online marketplace and partnership with sellers such as Reckitt Benckiser, Procter & Gamble, Unilever, The Coca-Cola Company and other sellers, Jumia helped to mitigate supply crisis by facilitating movement of inventories from the factories to its warehouses and online marketplace and then to the consumers.
Jumia also ensured the sellers maintained fair pricing policy while it reported some sellers to the Federal Competition and Consumer Protection Commission over price gouging.
Jumia defied constant harassment of its field workers transporting groceries and other agricultural produce from the hinterland to the cities, by security agents enforcing interstate border movement restriction, who ignored government’s designation of e-commerce and logistics operators as essential service providers.
Jumia Food was on the move delivering food packages to millions of Nigerians observing lockdown, thanks to partnership with third parties like QSR outlets and kitchens.
With JumiaPay and Contactless Delivery platforms, social distancing and cashless transactions were significantly promoted, thereby limiting person-to-person contact and containing further spread of COVID-19.
Jumia’s Q1 2020 financials indicated that the e-commerce and e-payment system indeed increased demand for brands and caused uptake in delivery of essentials to more people. Sellers also sold faster while more brands and sellers were eager to join the Jumia marketplace and logistics/supply value chain to boost access to market.
There was also strong demand from offline convenience retailers to join the Jumia on-demand platform and increasing advertisers’ interest for online channels as a result of consumption shifting online.
Visa in a June 2020 survey affirmed that 71% of consumers interviewed among the banked population in Nigeria shopped online for the first time as a result of the pandemic.
However, despite showing high growth potential and occasional spikes in online shopping in crisis times, these cannot be interpreted as long-term sustainability for Nigeria’s retail e-commerce.
E-commerce operators are faced with challenges that are inimical to their growth and the larger economy given the interplay between e-commerce and MSMEs.
Dearth of critical infrastructure like roads, inefficient transportation and insecurity inhibit movement of groceries from rural areas where food crops are planted to the cities and movement of goods across distant locations. Erratic electric power supply and multiplicity of tax also increase the cost of doing business in Nigeria.
PricewaterCoopers in its June MSME Survey 2020 with the theme, Building to Last: Navigating MSME Growth and Sustainability – A New Decade, noted that lack of infrastructure, inadequate skilled manpower, multiplicity of taxes, high cost of doing business among others still persist and hindering SMEs growth and development.
Barriers to obtaining bank loans is a major obstacle to small businesses including e-commerce operators thereby limiting their capacity to expand their infrastructure. “In emerging markets and developing economies, 55% to 68% of formal SMEs are either unserved or underserved by financial institutions, leading to a total credit gap estimated to be USD5.1 trillion,” PwC noted.
It estimated the financing gap for Nigerian MSMEs to be about N617.3 billion annually (pre-COVID-19 pandemic), adding that, based on analysis of data from the CBN annual statistical bulletin, small businesses accounted for less than 1% of total commercial banking credit in 2018. The NBS added that less than 5% of SMEs have been able to access adequate finance for working capital and funding business growth/expansion.
Low consumer trust about the quality of online goods and the activities of cyber fraudsters as well as low purchasing power of Nigerians as a result of loss of income or job due to COVID-19 inhibit new customer acquisition and retention. Many times, ROI for huge marketing and advertising spend on customer acquisition is nil.
E-commerce platforms’ fatality has been recorded within the last eight years. For example, Efritin.com, an online marketplace, shut down after barely 16 months in Nigeria. Its Swedish investor, Saltside, attributed that they “didn’t get desired returns on their investment.”
Nevertheless, the time looks good to spur e-commerce growth in Nigeria. Forecasts show that online retail stores will grow due to expected influx of online shoppers due to post COVID-19 new normal.
But governments must promote an enabling environment for e-commerce and MSMES to thrive. Fix critical infrastructure such as roads, transportation, power and telecommunications. Ease of doing business initiatives including tax incentives for MSMEs, harmonisation of taxes, improved security and increased access to credits must be implemented.
Encourage adoption of online shopping and electronic payment among Nigerians, and digitisation of businesses to strengthen cashless and financial inclusion policy.
In light of the expected take-off of Africa Continental Free Trade Agreement (AfCFTA) regional trade market come January 2021, the growth of e-commerce directly impacts SMEs capacity, competitiveness and quality of services they render.
With Nigeria’s current online commerce estimated at $12 billion, and projection to reach $75 billion in revenues per annum by 2025, according to McKinsey, the economic outlook for the country looks good post COVID-19 and beyond. But removing barriers in the way of e-commerce and SMEs is exigent.
Ezedi Udom, a Business and Communications Expert, writes from Lagos
By Blaise Udunze
Daily, the world watches Nigeria through a familiar lens in what appears to be a gory situation. Especially in cases when the news headlines tell stories of farmer-herder clashes, bandit attacks, kidnappings, villages reduced to ashes or deserted by the dwellers, as thousands of Nigerians have been displaced across states such as Zamfara, Plateau, Benue, Niger, Kaduna and Nasarawa. Subliminally, this is about to become a similarly ugly occurrence in southwestern Nigeria, which is fast becoming obvious if not nipped in the bud quickly.
Recorded data have shown that bandits, Boko Haram, and others killed over 190,000 Nigerians in 17 years and displaced 3.7 million people.
A human rights organisation, the International Society for Civil Liberties and Rule of Law (Intersociety), in its fearful revelation, has said that no fewer than 190,150 Nigerians have been killed by bandits, Boko Haram insurgents, and suspected armed herdsmen between July 2009 and March 19, 2026, as this calls for concern.
The dominant explanations often point to ethnic tensions, religious divisions, climate change, shrinking grazing routes or weak security institutions. No doubt, those factors are certainly part of Nigeria’s complex security crisis. Yet another question deserves serious examination.
What if, in some locations, the violence is also serving another purpose? What if some of the territories experiencing repeated displacement are the same places sitting atop some of Nigeria’s most valuable mineral deposits? More importantly, if such a pattern exists, who benefits when communities disappear?
Of a truth, these questions are uncomfortable, but undeniably they deserve careful investigation rather than dismissal.
For ages, Nigeria has been naturally endowed, and it is estimated to be rich in enormous significant reserves of gold, lithium, uranium, tin, columbite and other strategic minerals increasingly sought after in the global transition to clean energy technologies. As international demand for battery minerals continues to rise, these resources have become far more valuable than they were only a decade ago.
If one overlays publicly available geological information with maps showing persistent violence, some observers argue that striking geographical overlaps appear in several regions. Such overlaps alone cannot establish causation. Correlation is not proof of conspiracy. However, they raise questions worthy of independent scrutiny.
One issue attracting increasing attention and adequately yearns for answer is whether prolonged insecurity may inadvertently or deliberately create conditions that make mineral extraction easier.
Under Nigeria’s Nigerian Minerals and Mining Act 2007, mineral resources belong to the Federal Government, while mining rights are granted through licences and leases. Community engagement and land access are expected to form part of the licensing process, although implementation varies depending on circumstances. This raises an important policy question.
What happens when the communities expected to participate in those processes have already fled because of violence?
Displacement changes the dynamics of land ownership, consent and access. While no evidence automatically proves that attacks are orchestrated to facilitate mining, the sequence of violence followed by renewed commercial activity in some locations deserves closer examination by regulators, lawmakers and investigative journalists.
In conflict studies, researchers have long observed that wars often generate economic winners alongside humanitarian losers. Could elements of Nigeria’s insecurity also be producing economic beneficiaries?
Reports over the years have documented concerns about illegal mining operations across parts of northern Nigeria. Government agencies themselves have repeatedly acknowledged that criminal networks profit from the country’s vast mineral wealth. The unresolved question is whether isolated criminality has, in some instances, evolved into more sophisticated alliances involving political influence, financial interests and international supply chains. If so, the implications extend far beyond Nigeria.
Invariably, it is clearly known that lithium has become one of the world’s most strategic commodities, powering electric vehicle batteries and renewable energy storage systems. Gold has always remained one of the safest global investment assets during periods of uncertainty. Meanwhile, it is well confirmed that the global appetite for these minerals creates enormous financial incentives.
Suppose violent displacement reduces resistance to extraction. Suppose shell companies subsequently acquire mining interests. Suppose minerals then leave Nigeria through legitimate-looking export documentation while their true value remains understated.
These scenarios remain allegations unless supported by verifiable evidence. Yet they outline a framework that investigators may wish to test rather than ignore. Financial crime experts frequently identify trade mis-invoicing as one of the most common methods of illicit financial flows worldwide.
Could Nigeria’s solid minerals sector be vulnerable to similar practices? If valuable lithium ore is deliberately but inaccurately described as lower-value material on export documents, substantial wealth could potentially leave the country without reflecting its true market value. Likewise, if unrefined gold exits through privileged channels with limited scrutiny, questions naturally arise about oversight, transparency and accountability over criminal activities which have continued to stunt and disrupt the country’s socio-economic growth and at the same time cause carnage.
Such possibilities are not accusations against any particular institution or company. Rather, they illustrate why stronger monitoring systems are increasingly essential. Another question concerns logistics.
With the high level of criminal activities, industrial mining requires heavy machinery, diesel supplies, transportation networks and specialised personnel. These are not operations that can remain invisible indefinitely.
If certain territories are genuinely too dangerous for security agencies, how do industrial-scale extraction activities reportedly continue in some remote locations? If they do, who protects those operations? Who authorises their movement? Who verifies what is extracted? Who ensures royalties and export revenues reach public coffers? These are governance questions that demand institutional answers.
Equally important is the international dimension. Minerals extracted in Nigeria ultimately enter global supply chains. Gold may pass through international refining hubs before entering financial markets. Lithium may become part of battery manufacturing destined for electric vehicles, which are being sold across Europe, North America and Asia.
One known fact is that consumers purchasing products containing these minerals rarely know the full story of where they originated.
Increasingly, however, investors and governments are demanding ethical sourcing standards that trace minerals from extraction to final manufacture.
A critical factor that must be taken into cognisance is that if insecurity is creating opportunities for illegal or unethical extraction anywhere in the world, multinational companies have responsibilities alongside national governments, of which the onus falls on the Nigerian government.
Transparency cannot stop at the mine gate. Nor should accountability end at national borders. Another issue requiring attention concerns beneficial ownership.
Across many jurisdictions, shell companies can obscure the identities of individuals ultimately controlling commercial assets. If politically exposed persons or powerful business interests are hidden behind complex corporate structures registered offshore, identifying beneficiaries becomes significantly more difficult. This challenge is hardly unique to Nigeria.
Findings showed that from Latin America to Central Africa and Southeast Asia, resistant corporate networks have frequently complicated efforts to combat corruption and illicit resource extraction. That is precisely why open corporate registries, beneficial ownership databases and transparent mining licence disclosures are becoming global governance priorities. For Nigeria, the stakes could hardly be higher.
The country stands at the centre of the world’s emerging critical minerals economy. The Nigerian government can’t feign ignorance of the fact that, when handled transparently, these resources could finance infrastructure, education, healthcare, and industrial development for generations.
In no way would the government claim not knowing that when handled poorly, they risk becoming another chapter in the well-documented “resource curse,” where extraordinary natural wealth coincides with persistent poverty, insecurity and institutional weakness.
The ultimate challenge, therefore, is not simply about mining. It is about governance. It is about whether public institutions possess both the independence and capacity to ensure that natural resources benefit citizens rather than narrow interests. It is about whether conflict zones receive genuine peacebuilding efforts instead of becoming forgotten frontiers. And it is about whether international markets demand accountability with the same enthusiasm they demand raw materials.
None of these questions should be answered through speculation. They require rigorous investigations, forensic financial analysis, satellite imagery, mining license audits, customs records, beneficial ownership disclosures and courageous journalism.
They require governments willing to open their books. They require international cooperation capable of tracing money across borders. Most importantly, they require asking questions that have too often remained unasked.
Perhaps Nigeria’s security crisis is exactly what it appears to be: a tragic convergence of historical grievances, weak institutions, criminality and environmental pressures. Or perhaps, in some places, another layer of economic incentive deserves closer scrutiny.
Until those questions are thoroughly investigated, one possibility will continue to linger. Maybe the world’s attention has been fixed on the blood spilt above ground, while too little attention has been paid to the extraordinary wealth lying beneath it.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: bl***********@***il.com
Feature/OPED
What Does Nigeria’s $51bn Reserves Milestone Mean if Most New Foreign Money Can Leave Quickly?
Nigeria’s foreign reserves have climbed to about $51 billion, a decade-plus high, according to the Central Bank of Nigeria (CBN). EBC Financial Group (EBC) notes that this reflects stronger investor confidence, but the second half may show whether it holds, as the build rests on three cyclical drivers: oil earnings, short-term foreign money and a narrowing official-to-street naira gap.
Reserves rose from about $32 billion in April 2024, during a dollar shortage, to about $51 billion now, near the CBN’s target. Much came from two cyclical sources, strong oil earnings and money chasing high-yielding naira assets, so EBC expects the pace to slow or reverse. Fitch Ratings, a major international credit rating agency, expects a marginal decline to about $47 billion by the end of 2026, citing higher spending and external pressures.
David Precious, Senior Market Analyst at EBC Financial Group, said, “Nigeria’s reserve build is real but may not be durable yet, because nearly all of the new money is the kind that can leave quickly. Of the $10.37 billion that came in over the first quarter, the overwhelming majority was short-term portfolio funds rather than long-term investment, so a shift in oil prices, global interest rates or confidence in the naira might pull a large part of it straight back out.”
Most New Money Can Still Leave Quickly
The composition of the foreign inflows explains the caution over how long the build can last. The country attracted $10.37 billion in foreign investment in the first quarter of 2026, up 83.83 per cent year-on-year, according to the National Bureau of Statistics (NBS). Of that, $9.86 billion or 95.09 per cent, was portfolio money, largely short-term naira debt such as Treasury bills that investors can sell at the next auction, while foreign direct investment, the long-term kind that builds factories and jobs, was $135.08 million, or 1.30 per cent. Put simply, of each dollar coming in, about 95 cents can leave quickly, and barely one cent stays.
That money supports reserves while it stays. Dollars brought in to buy naira assets add to market supply, letting the CBN hold more reserves and steady the naira. It leaves when conditions change. Nigeria earns most of its export dollars from oil and gas, so lower oil prices mean fewer dollars, and as a member of the Organisation of the Petroleum Exporting Countries (OPEC), it cannot simply produce more, output capped by quota and reduced by theft and ageing fields. Higher global interest rates draw money toward safer returns abroad, and a weakening naira prompts investors to sell early. When oil fell in 2016 and 2020, foreign investors withdrew and could not convert naira to dollars as supply dried up, leaving the CBN to clear more than $7 billion in trapped obligations into 2024.
The Oil Boost is No Longer Certain
Oil looked like a dependable source of the dollars behind the reserves only months ago. Earlier in 2026, concern over disruption around the Strait of Hormuz lifted crude prices, and stronger receipts flowed in, with crude oil export earnings of $8.11 billion in the first quarter in the CBN’s balance-of-payments data. That support is now easing. The tension has subsided, and Brent traded near $72 on June 29, down about 24 per cent over the month, back to pre-conflict levels. With the price boost gone and output constrained, reserves are more exposed, leaning on non-oil earnings and investor patience rather than oil.
The Naira Still Trades at Two Prices
The naira has traded at two prices, an official rate and a higher parallel-market rate, and closing that gap into one trusted price is what many investors might watch most. Before committing funds, they may want assurance they can convert naira to dollars at a fair rate when they exit, and a wide gap revives the fear of being trapped that lingers from earlier shortages. The gap has narrowed to roughly N20 to N30, with the CBN’s official rate near N1,380 per dollar on June 26 against parallel-market quotes around N1,400. The International Monetary Fund (IMF) 2026 Article IV review urged Nigeria to depend less on this fast-moving portfolio money and to keep phasing out its multiple exchange-rate practices. The CBN’s Foreign Exchange Manual, in force from 1 June, is intended to make the market clearer, though such rules build confidence only once investors can freely trade dollars at the posted rate.
What could Make the Build Durable
A few signs that may show the build turning durable include a smaller gap between the official and street naira rates, more long-term foreign investment, and steadier oil earnings. A gap that stays small, now roughly N20 to N30, may mean investors trust the official rate and no longer need the street market. A clear rise in foreign direct investment, only $135 million last quarter against $9.86 billion of short-term money, might mean lasting capital is replacing funds that can leave at the next auction. Oil earnings that hold up, rather than sliding from the low $70s, should help keep reserves steady, since oil and gas bring in most of Nigeria’s export dollars.
“Reserves built on money chasing high yields can fall as fast as they rose, as they did after the last two oil shocks, when investors left, and the CBN spent years clearing a foreign-exchange backlog,” Precious added. “What holds through a downturn is slower money, direct investment, steady oil and non-oil export earnings and one credible naira rate, and that is the shift Nigeria has yet to make.”
By Olajumoke Bello
Across Nigeria, small and medium enterprises remain the backbone of economic activity. They drive trade, create jobs, and sustain millions of livelihoods. Yet, despite their importance, many SMEs continue to operate below their full potential due to persistent structural challenges.
Access to finance remains one of the most cited constraints. However, the issue today goes beyond the availability of capital. Many businesses struggle with financial readiness, weak documentation, and limited understanding of what lenders require. This often leads to missed opportunities, even when funding options exist.
At the same time, SMEs face gaps in market access and visibility. Business owners operate in highly localised environments, with limited exposure to broader networks that can unlock partnerships, new markets, and growth opportunities. This isolation can constrain scalability and reduce long-term competitiveness.
Equally important is the capability gap. Many entrepreneurs grow through resilience and experience but lack structured knowledge on critical areas such as financial management, export readiness, and digital adoption. Without this, even well-capitalised businesses can struggle to sustain growth.
These challenges point to a clear need for a more practical and integrated approach to SME support. It is no longer sufficient to offer standalone solutions. SMEs require ecosystems that combine knowledge, access, and direct engagement in ways that reflect how they actually operate.
A key shift is the move from centralised interventions to localised engagement. SMEs are deeply influenced by their immediate environments, whether markets, industrial clusters, or trade corridors. Solutions must therefore be brought closer to where these businesses function, allowing for more relevant support and stronger relationships.
Another important shift is from awareness to action. Business owners do not only need information; they need insights that they can apply immediately. This includes understanding how to structure their finances, how to access trade opportunities, and how to connect with the right partners to scale their operations.
There is also a growing need for continuity. Many SME-focused initiatives deliver strong initial impact but lack follow-through. For support to be effective, it must extend beyond one-off engagements into sustained relationships, with clear pathways for onboarding, advisory, and growth.
For financial institutions, this presents both responsibility and an opportunity. Supporting SMEs now requires moving beyond transactional banking to deeper partnership models. It requires understanding businesses at a granular level and co-creating solutions that evolve with their needs.
At Stanbic IBTC, this perspective continues to shape our approach to SME development. Our focus is on delivering practical support that translates into real business outcomes, helping enterprises grow, compete, and contribute more meaningfully to the economy.
As part of this commitment, we are extending our SME engagement to the regions through the Nigeria Business Summit Regional Tour. The tour will take structured, on-ground activations into key commercial hubs, where SMEs can access funding guidance, trade insights, advisory support, and direct engagement with financial experts.
The regional tour will take place across five strategic locations, bringing these solutions closer to business owners in Aba, Onitsha, Ibadan and Kano.
This approach reflects an important principle. When support moves closer to businesses and when solutions are delivered in ways that are practical and continuous, SMEs are better positioned to grow sustainably. In turn, this strengthens not only individual enterprises but the broader economy.
Olajumoke Bello is the Head of Enterprise Banking at Stanbic IBTC Bank
