Feature/OPED
How SMEs Can Leverage e-Commerce to Reduce Overhead, Increase Profitability
By Olukayode Kolawole
“I am now able to keep my overhead very low, and profit margin widened.”
“Unable to get a job after my youth service, I started an electronics business 4 years ago. Today, the business has grown quadruple.”
These are first-hand views of some business owners who have experienced the power of e-commerce to drive profitable demands for businesses today; small, medium or large.
These individuals are leveraging e-commerce to conquer new territories and acquire new customers that they likely might not have had access to, such that their businesses have become reinvigorated. In the last six years of e-commerce debut in Nigeria through Jumia and many others afterwards, many businesses have been created, and those existing prior have become bigger, better, and more profitable. Although, some big businesses are hesitating to embrace e-commerce because it conveniently breaks all the structures that these behemoths have perfected, and it touches every single part of the business, and being nimble is a huge benefit.
The framework for e-commerce operations is pretty simple, using Jumia as a case study: (1) seller shows interest in listing his products/wares on the platform. (2) e-commerce platform: verifies the authenticity of the products, and checks if the seller has all the legal prerequisites to sell, especially for products sold only if recommended by an expert. (3) Trains the seller on how to use the website and make revenue. It’s as simple as ABC.
Little wonder, there is a remarkable influx in the number of businesses and entrepreneurs signing up daily to have their products listed on the e-commerce platform. Unknown to many, there is no fee – either hidden or expressly charged – required from any business owner who is looking to speed up the growth process of his business.
Surprisingly, you can also sell anything, just anything – from products as small as a tissue paper to items as big as a refrigerator, or even perishable items, such as fresh tomatoes, onions, and so on. Pretty much, anything can be listed on the platform.
For many businesses, e-commerce has become the fastest route to reducing overhead, breaking even and becoming profitable. There are four major reasons to justify this claim.
Marketing Investment: All the funds required to promote a seller’s products are borne by the e-commerce platform. Such marketing costs include, but not limited to, online and offline advertising, CRM, PR, search engine optimization, and social media. Promotional and special campaigns are created periodically to drive sales; they also come at a cost.
Marketing requires a huge investment, and many SMEs today do not have sufficient capital to combine marketing costs with overhead. As a result, the business either bites the dust, or the company goes out to secure a loan from a financial institution in order to survive. The latter usually ends up tragic.
Sellers are provided with a unique opportunity to participate in some of these special campaigns, at no cost to them. Most of these campaigns run for a period of 30, or 45 days at most. Some of the notable campaigns that rapidly come to mind include Jumia Mobile Week (one full month dedicated to the sale of mobile phones at the best prices), Back to School (school essentials for students), Black Friday, Home Makeover, and many more. Campaigns as these provide the sellers with a unique opportunity of making huge returns with fewer efforts and zero spending.
Limited Workforce: Selling on e-commerce platforms helps sellers to keep their workforce very lean because only a few people will be needed to carry out the day-to-day running of the business. The largest chunk of the efforts required to drive the business to profitability rests squarely on the e-commerce platform. They ensure the seller’s products are: delivered to the customers on time and in good shape; packaged with the right material to protect the products during fulfilment. The overhead costs for hiring qualified individuals to implement these tasks are borne by the e-commerce platform.
Warehouse Storage: Rent is an important consideration for most brick and mortar businesses. Depending on the business model, most businesses need a space to warehouse their products, especially those who sell high-value items. The cost of rent is huge in most urban areas and cities. For a business that’s struggling to find its footing, expending money on rent might be a bit burdensome on the business. Most e-commerce companies have large warehouses in almost all the major cities. For instance, Jumia has its largest warehouse in Lagos, providing shelter and insurance for its sellers’ products. There are other storage warehouses owned by the company in other cities like Port Harcourt, Abuja, etc. Sellers on the platform, therefore, might not need to incur cost to hire a storage warehouse. Their products are immediately shipped to any of the Jumia warehouse facilities, where they are guaranteed of safety and insurance cover. One obvious advantage that this provides, beyond saving the sellers’ some bucks, is that it aids faster shipping and saves time. Once an order is placed, Jumia, for instance, does not need to wait for the seller to ship the product to its warehouse; rather, the product is shipped directly and on time to the customer. Once the fulfilment cycle is completed, everyone is happy – the customer especially.
Digital Visibility: Most of the big e-commerce platforms have hundreds of millions of customers. There is no amount of capital an offline business can have that will expose them to millions of views in just a week. Businesses benefit incredibly from the cloud and exposure that these platforms offer, and at no cost to the sellers. Today, Jumia is regarded as the number one shopping destination in Nigeria, and Africa at large. The visibility it provides for sellers on its platform is the major prerequisite most businesses today need to grow and prosper. Millions of dollars are expended on driving traffic to the site – all to the benefit of the sellers.
Feature/OPED
The Future of Payments: Key Trends to Watch in 2025
By Luke Kyohere
The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:
1. The rise of real-time payments
Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.
2. Cashless payments will increase
In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.
3. Digital currency will hit mainstream
In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.
The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.
4. Increased government oversight
As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.
5. Business leaders buy into AI technology
In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.
6. Continued AI Adoption in Payments
In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.
When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.
7. Rise of Super Apps
To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.
8. Business strategy shift
Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.
As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.
Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq
Feature/OPED
Ghana’s Democratic Triumph: A Call to Action for Nigeria’s 2027 Elections
In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.
In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.
“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”
The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.
Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.
The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”
The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.
As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.
In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.
“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.
Feature/OPED
The Need to Promote Equality, Equity and Fairness in Nigeria’s Proposed Tax Reforms
By Kenechukwu Aguolu
The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.
One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.
A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.
In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.
The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.
The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.
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