How Many Are Nigeria’s Total Online Customers?

How Many Are Nigeria’s Total Online Customers?

I like political polling because unlike most polling types, there is a result at the end. Yes, at the end, there will be an election and quickly, we will know who has the best technique to have gauged the sentiments of the people through polls. Your economic polls, your happiness polls, and your everything polls are all nice. But they cannot be validated like the ways we can use elections to validate political polls. Without elections, Hillary Clinton would be somewhere right now as the President of the United States as you read. But that is not the case as the elections invalidated the polls.

Now, how many digital customers do you have in Nigeria? How many online customers do you have there? We like big numbers and I know someone will begin with 3 million because the Nigerian Communications Commission (NCC) drops those numbers on the number of Nigerians with internet access. Last year, a report from the biggest investor in Konga showed that the ecommerce operator has less than 200,000 active customers, not millions, as many had expected. It was surprising after all the advertising and efforts the company had invested in the ecosystem.

According to Kinnevik’s report, its 34% stake in Konga is worth SEK 101 million. That’s about US$12 million at the current exchange rate. The report goes further to state that Konga has 184,000 active customers – that is customers who have bought from them in the last six months.

I can tell you that if you see hard numbers, Nigeria has less than 400,000 digital customers who are shopping and buying things online today.  The 190 million citizens miss the whole point and that is why when you see some projections on market opportunities in the digital space, in some business plans, you marvel at the disconnection. Some of our entrepreneurs will tell you how they can on-board millions of paying users within two years because Facebook has excess of 20 million Nigerians. They need to read what drives scalable advantage (SA) and how Facebook enjoys SA of “1”.

Today, we have one of those “election data” and it is coming from Uber. Despite spending huge amount of money and advertising across Nigeria, it has 267,000 active riders in Nigeria.

Taxi hailing firm Uber has 363,000 active users in Kenya, according to the latest statistics released by the company to mark its fourth year of operation on the continent.

The statistics by the San-Fransisco-based firm show South Africa as Uber’s biggest market in Africa with 969,000 active riders, while Kenya is second. The data, released Thursday, also showed that 5,000 and 12,000 Uber drivers are signed up in Kenya and South Africa, respectively.

Kenya remains Uber’s most vibrant market in the region as Uganda and Tanzania have 48,000 and 53,000 active riders, with each country signing-up 1,000 drivers.

Ghana and Nigeria have 140,000 and 267,000 active riders respectively. About 7,000 drivers are on Uber platform in Nigeria while Ghana has 3,000.

If you play the population game here, Nigeria has 190 million people, Kenya has about 50 million. That is a factor of 3.8. So technically if  Kenya has 363,000 riders, Nigeria should have about 1.4 million riders. Of course, from Uber, we have 267,000 Nigerian riders. Kenya has a population of roughly 50 million and tops Nigeria with about 100,000 riders. You can argue, of course, that Nigerians may have alternatives to Uber and that is why not many people are riding it when compared to Kenya. I do not think that is the case, though. The transportation systems in Nigeria and Kenya are largely at parity. The difference is mainly due to parity of being online with trust to spend money online. Here, online includes apps and web apps.

As you move from one ecosystem to another, you will see the real story: the numbers are consistent and we are far from having millions who are happily buying and paying online. Our big population without empowering the citizens with opportunities may not matter much digitally. This is one of the reasons most foreign firms begin from East Africa as they map their digital strategies. Nigeria’s population does not correlate to our performance online except when it is free services like Facebook and WhatsApp. But when it comes to spending money online, the game changes. If Kenya has more than 100,000 active Uber riders, that is a big lesson that we are making the transition slower as many had projected.

Sure, we are making progress. We will get there. But right now, you need to be aware to ensure you invest proportionally to the potential market size online. Do not make the mistake of directly translating our 190 million people into an online equivalent. Even the NCC data will not help you because it does not capture how many are really open to spend a kobo online. Your business is probably still offline as of this morning in Nigeria. You need to work a hybrid model, serving today’s offline customers while plotting how to take advantage of the slowly emerging digital ones for tomorrow. That way you can cushion risks to your cash flow.


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2 thoughts on “How Many Are Nigeria’s Total Online Customers?

  1. This is insightful, indeed “data does make sense” compared to ex post assumptions on market realities.

    Thank you Mr Ekekwe for taking such time to analyze our online ecosystem, dissecting how people utilize it to solving their daily problems.

    The sense unraveled by your article can’t agree less with my over 7 years of experience as an online entrepreneur in Nigeria. Indeed our behaviour changes when it comes to true patronage in Naira and by kobo measures.

    But I have a reservation as to why Nigeria has 7,000 registered drivers with Uber and yet having just about 267k users. I would in most sincerity argue that Nigeria has many percentage of drivers who cheat the Uber system, render the service and part with Uber’s %. And this is from experience.

    Internet usage in Nigeria is related to tractability of various other actions – offline alike. Nigeria lack systems to tract, control and uniquely identify people’s actions, especially online.

    In the case of konga, many Nigerians still patronize online shopping platforms through agents. By this I mean they pay to agents in cash who th n orders these goods via konga; in so doing it becomes impractical to associate various purchases to individuals. Konga would record 1000 purchases by same agent as patronage by a single person.

    We as a people have lots to do to overcome our scare for technology and trust for online platforms and businesses. To do this, Nigerians need to build more trust in themselves too.

    Once again thanks, I can’t agree less with your findings.

    Reply
  2. Awesome – thanks for adding more value to the insights. My position is that the ecosystem should form a lobby group to work together for government support. Imagine if govt says that any online purchase will not attract VAT, online business will take off because trade will move online.

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