BAD economy in Nigeria is hitting hard on e-Commerce operators. No thanks to government’s ineptitude on sky-rocketing prices for Data.
One of the big players in the industry has just closed-down its Nigerian office and further investments into the nation’s e-Commerce space.
Efritin (pronounced ‘Everything’) was just Sixteen (16) months old in Nigeria before shutting down its physical presence in the country.
Findings showed that despite good market share and competitor’s edge, the online -classified advert player short-lived because of high cost of data(Nucleus of the Business) and unfriendly operational demands.
The company is already vacating its head office located at Ikeja in Lagos state and its office properties are being auctioned.
Chief Executive Officer, Saltside Technologies, Nils Hammar and owners of Efritin, confirmed the unfortunate closure and blamed the decision on harsh economic conditions in the country and poor investors friendly environment especially on imported technology..
Hammar said that over the last two years, high cost of data has hindered business growth and low investment turnover among players in the industry pointing that there are fears to survive the hard time among other Nigeria e-Commerce investors. The current economic indices (recession) in the country may last till 2017, he added.
Recently, the telecommunications service providers in Nigeria indicated plans to increase data subscription by almost 100 per cent, attributing same to a supposed directive by the Nigerian Communications Commission (NCC), the industry regulator.
The operators have since been carpeted by the Senate, and has stopped the plan of increasing a data plan of N1,000 for 1.5 gigabytes to cost N3,000 at N1,000 per 500 megabytes. However such is not the case with business to business offerings.
“We are reducing our investment in Nigeria. That effectively means we are reducing our staff; everybody has to go. But in terms of using the site, it will continue as before. By investment we mean the investment we made from the launch, it will be reduced,” Hammar said.
“Like I said earlier, data cost is too high and limits the growth potential of the market. If you look at the size of Nigeria and the online activities, there is a big discrepancies. Before e-commerce and classified ad sites will start recouping Return on Investments (RoI) there has to be drastic reduction in cost of data,” the Saltside Technologies boss said.
Though, Efritin is alleged to be involved in 10 court cases in Nigeria that might cost the company over N20million among other things, according to a report by TechMoron, this added to the reason why the company’s central CEO took the final decision to close the company.
Though Hammar confirmed there are court cases, he however denied that the legal tussles were part of the decisions to park out of Nigeria.
He said, “I can’t comment on specific legal cases involving Efritin operations in Nigeria, especially, on whether there are true or not. But I can tell you that has nothing to do with our decision to leave Nigeria. It has zero impact on the decision. This decision is something we deliberated on for a very long time; tried different approaches to see if we can find a better path forward considering the economic challenges- the data cost.”
According to an industry watcher of the Nigeria e-Commerce space who prefers to be anonymous, it will take urgent revamping of the economy for others to survive the bad economy.
He said, “If you will recall Jumia just swallowed all the startups under Africa Internet Group. Africa Internet Group (AIG) – a subsidiary of Rocket Internet- was renamed its companies in the Nigeria market to become part of one huge Jumia brand.
“Basically, their names were changed to Jumia-something. Jovago becomes Jumia Travel, Lamudi becomes Jumia House, HelloFood becomes Jumia Food, Carmudi becomes Jumia Cars, Vendito becomes Jumia Deals, and Everjobs becomes Jumia Jobs. All this happened as a response to the bad economy and working environment in Nigeria. And you should know that its investment portfolio has reduced drastically which is not good for the economy.
A credible source at OLX Nigeria who lamented the recession in the country and how it has taken a toll on the business operation said “Even my budget for this year’s operation has been cut drastically. We will be very dialectical and ready to work with high end portals not because we don’t have good relations with others.
Presently OLX is a leading online classified-ad company with increased number of staff and office presence in Nigeria. It has the great drive to achieve nationwide service delivery but at the messy of the nation’s economy.”
The increasing growth of internet usage in Africa comes with increased number of internet related opportunities across the continent. With Nigeria having significant number of Internet users and a leading economy in Africa, more Internet businessses are having great future and getting international exposture and support.
This was what jiji.ng also enjoyed when he joined the online ad leagues in the country. Having spent few years down the line, but question in the mouth of industry watcher is: What value is Jiji adding to the nation economy? Nigeria is still a big farm that rears millions of unemployed graduates how has the company helped the government to address this through their service offerings?
Konga is just there. Is it growing or stagnant your guess is as good as mine in the light of how the economy has affected tech startups and related Small Medium Enterprises (SMEs).
