Mobile Technology, Social Media and a 180 million peopled Market

Introduction

“Information technology has for sometime been a wildcard in business, a source of opportunity and uncertainty, of advantage and risk” (Applegate, Austin, & McFarlan, 2007). Advanced economies of the world have in the past three decades taken advantage of Information Technology in all facets of life especially in the utilization of IT to drive efficiency in organizations as well as the linkages between the organization and its internal and external stakeholders. Though technology in advanced economies of the world has become embedded in the everyday life of people especially in the way they define strategy and how business is defined, not much can be said for the advancement of such new technologies in developing Nations due to so many reasons. The main reason for the hitherto poor penetration and utilization of IT in developing countries can be attributed to various factors including poverty, inadequate infrastructure, poor Internet penetration, high cost of energy, corruption and an unstable political system. However the trend seems to be changing since the mid 2000s.

Economic index and a potential growth market

Nigeria is an example of a developing economy that is embracing IT systems in organizations due to the rapidly growing trend of consumers utilizing the Internet. Internet usage has increased as a result of the increasing use of smart phones, which has in recent years become more accessible to a mostly young and educated population. With a 2013 estimated population figure of 173,615,345 (The World Bank, 2015) and a population growth rate of 2.47% (CIA, 2014), a 2013 figure for GDP of over $502 billion and a GDP growth rate of about 5% (CIA, 2014) Nigeria stands out as Africa’s largest economy. With an estimated $4.9 billion inflow of Foreign Direct Investment (FDI) in 2014, companies such as MTN, Airtel, Proctor and Gamble, Cadbury, and Lever Brothers have continued to invest in the economy whose population is expected to reach about 300 billion people by the year 2050. This is despite the fact that FDI seems to have slowed down in the past three years (The Economist, 2015). The decline in FDI seems to be from the investors watch and wait attitude from the current Boko Haram terrorist attacks in the North Eastern region of the country and the 2015 Presidential elections, which seems to be heating up the polity of the West African nation.

Electronic communities started becoming popular in the late 1990s in Nigeria. International Airlines such as British Airways, Lufthansa and KLM operating in the country are well known examples of early starters. Nigerians slowly started the utilization of the Internet in the 1990s by using e-mails and chat rooms. Mostly students of tertiary institutions quickly adapted to Internet cafes which started becoming the new vogue of business. Chat rooms became heavily populated with this type of young users whose ages were between 14 and 28. During this period, the quality of Internet connection was poor, slow, unreliable and expensive.

Demographics and Room for Growth

The huge market of Nigeria seems however to create the potentials organizations seeking growth markets continue to look for. The demographics also indicate a young and educated population. Figures from the CIA World fact book shows that 43% of the population of Nigeria is between the ages of 0-14 years, 19.3% are between the ages of 15-24 years, 30.5% are between the ages of 25-54 years, 3.9% are between the ages 0f 55-64 years while only about 3% of the population is over 65 years of age (CIA, 2014). Though the generation X (those born between 1965 and 1984) usage of the internet in Nigeria was more prevalent from the mid 1990s, however due to government policies and massive computer education, changes have occurred to not only include these group but other older groups.

Internet Usage in Nigeria

Current usage cuts across demographics especially with the IT revolution that occurred in the new generation financial institutions from the 2000s. With the banks using online banking and the advent of social networks, it is becoming more obvious that most age groups from the baby boomers (those born between 1946-1964) to the millenials (those born between 1982 and 2004) more users have learnt how to access the internet using handheld devises and computers. Just as it is happening in most advanced economies, majority of internet users in Nigeria use the internet at least once a month for social networking, searching for information, shopping or for entertainment purpose. This usage is more prevalent amongst the generation X and Millenials who are mostly hooked on social network sites such as Facebook, Instagram, LinkedIn, Skype and Twitter. The millenials most especially are seen to access the internet on a daily basis, while baby boomers will usually use this medium for work related activities, internet banking and purchase of airline tickets. The generation X and Millenials however are now doing more of internet shopping using sites such as Jumia.com which is increasingly becoming popular. It is however interesting to note that all age groups tend to show possibilities for growth due to the recent upward rise in the usage of smart phones, improvement in internet connectivity and a wider reach to the rural areas.

Smart Phones and Mobile Money as key drivers

The key drivers for the e-commerce market in Nigeria are smartphone usage and the deployment of mobile financial services (mobile money). Smartphone usage is key because smartphones are now the first point of Internet access (cheaper than a computer) and therefore reach more people. Customers can access the e-commerce platform via its app rather than the full website
Mobile money enables customers who do not have bankcards (i.e. the majority of the Nigerian population) to pay for their e-commerce orders remotely. Major Nigerian e-commerce platforms such as Jumia.ng have incorporated a mobile money payment option for payments. According to Ovum a UK based ICT Research Company, over 20 million smartphones were in use in Nigeria in 3Q14, though this is low when compared to over 130 million mobile phone users in the country at that time. However, the future forecasts by Ovum seem very interesting, Ovum forecasts that the number of smartphone users will reach 95 million in 2019. In Nigeria, like in most African countries, telecom companies do not offer financing for handsets. This has for a long time hampered market growth as paying the full price of a phone upfront is a big investment for the average Nigerian consumer. Now smartphone usage uptake is accelerating on the back of declining smartphone prices. We can now find entry-level smartphones retailing around $50. The recent upsurge however in the increase in smart phone usage in Nigeria and the corresponding penetration of the internet may be said to be the reason for the recent boom in online banking, online shopping and online entertainment in the country.

E Commerce witnesses a boom in Nigeria

Ever since Nigerian banks introduced online banking in the mid 2000s, more opportunities for e-commerce have opened up. Though a late starter to the e-commerce boom, Nigeria seems to be witnessing an unprecedented rise in e-commerce through the sudden rise in the popularity of online shopping since 2012. Researchers have suggested that Nigeria’s e-commerce market potential has a value of over $10 billion creating more than 15,000 jobs in recent years (johnson, 2014). According to statistics carried out by e-marketer, e-commerce in Africa is growing at a rate of 25.8% whereas the rest of the world is growing at 16.8% (KPMG, 2014). This rapid growth is thought to be responsible for cultivating significant contribution to behavioral changes in support of e-commerce. Popular online shopping sites that have emerged in Nigeria include jumia. com, konga. com, dealdey.com, kaymu.com, kara.com and payport.com. Many other start-ups are joining the plethora of such sites. The Internet savvy young generation in Nigeria seems to be comfortable with this form of trading and discerning entrepreneurs have quickly caught up with the trend. PayPal recently partnered with First Bank of Nigeria to join the multi million-dollar online business while amazon.com now allows transactions from Nigeria. Other popular online business gaining grounds in Nigeria include entertainment sites such as iroko.com. With payment platform of companies such as Interswitch and PayPal playing a key role in e-commerce, various consumer companies are cashing into the hitherto cash based Nigerian consumer market.

IT companies, servicing a burgeoning market Information Technology (IT) has become a substantial instrument for gaining competitive advantage in the corporate and social world and as such, it has become an integral part of most organizations in several economies (Olawepo & Joseph, 2014). The growth of the Nigerian Information Technology sector is altering the way social and economic development takes place. In support of this the President of the Nigeria Internet Group, Mr. Lanre Ajayi recently suggested that the recent increase in productivity in Nigeria is enabled by easier and efficient communication, facilitated by increased access to telephone and the Internet. He argued that IT had opened up access to the information resources available on the Internet, allowing us to be equipped and prepared for better opportunities. Further evidence is in the proliferation of Information Technology companies such as MainOne, IPNX, VDT Communications, Hyperia, Smile Communications, Etisalat and Glo1 offer telecommunications services, which include data center, co-location, global video center, metro Ethernet, managed services, global internet services and global Internet Protocol (IP) transit.

Integrating Social Media to the IT Matrix in Nigeria.
Social Media is increasing in popularity in Nigeria. This form of media gained populartity with the recent increased usage of the internet especially among youths in Nigeria. There are a number of social media networks in Nigeria, these includes social sharing sites such as YouTube, Twitter to LinkedIn and Facebook among others. Facebook is the most popular social network in Nigeria. It is also one of the two most frequented websites in the entire Internet. The social media commonly used in Nigeria include Facebook, 2go, yahoo messenger, BBM, Netlog, Badoo, Eskimo, Twitter, Nimbuzz amongst others (Africapractice, 2014).
Various companies are using social media as part of their marketing tools in Nigeria. According to the Social Media research website socialbackers.com, "Facebook for every phone" was the page with the largest number of fans in Nigeria, which were 16.2 million in January 2015, Naij.com is number 2 with 2.5 million fans, while GT Bank had 2.2 million fans and MTN Nigeria had 2.1 million fans. With the kind of numbers of people hitting the social media sites, marketers are finding it as an important media to use in their promotions.

Conclusion

Investors who tend to ignore emerging markets such as Nigeria need to take as a second look at this market. Considering the growing affluence of a young and educated population, Nigeria is readily a market to watch in the ICT sector. Also with the continued rise in Internet usage, the 180 million peopled market seems to be insatiable in the utilization of e-commerce. From ATMs, card payments, smart phones, the new electronic payment system is leading to increases in online transactions. For companies like Microsoft, Google, Amazon, Cisco, and PayPal, having a stake in this huge market is a smart investment move. Though Apple seems to be contemplating a move on the Nigerian market, companies like Nokia, Samsung and Techno definitely have a head start in this multi billion-dollar sector of the Nigerian economy. This learner is of the opinion that any discerning investor in the ICT business interested in emerging markets should take a second look at the Nigerian market.

Reference

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