Reminiscing of Dr. Ola Brown’s article on Nigeria market size in Nigeria for all who cares to know, and the recent comment of Tosin Olaseinde about “massive market for affordable, simple, ready furniture and home décor” in Nigeria, it appears to me that there seems to be a lag in articulating what market size in Nigeria.

Tosin compared 5 million customers to be somewhat about one-third of the population of Zimbabwe’s market in reply to Dr. Brown. While that might sound juicy on a face level a further breakdown of the distribution of 5 million market size from a population of about 200 million will reveal a thing relative to a market size of 5 million with a population of 15 million.

Let’s think about it this way, what is the addressable market per land mile in Zimbabwe relative to Nigeria?

*NB: this is assuming 5m as the Total Addressable Market of Zimbabwe.

As our data reveals, per km square travel in Nigeria, you will meet approximately 6 of your customers, while the same distance travelled in Zimbabwe will bring you close to 13 of your addressable market. This is highly important especially when you factor in the concept of distribution cost. What will it cost you to reach your last mile customer? This dilemma of what to characterize as one’s customer plagues the e-commerce ecosystem in Nigeria and it simple anchored on a broken distribution system.

Moving on to distribution cost with from a perspective of last-mile delivery. Think about what distribution option is available to cater for our addressable market. The last-mile delivery cost in Nigeria is greater than 3,000 naira (about $10 – by extrapolation). While it will cost much less in Zimbabwe – I can simply conclude on this based on my calculation on % reach per km square which is higher than that of Nigeria. But a comparison of Zimbabwe with Nigeria is not the focus of this article.

Now note that what the addressable market participants are purchasing here is key and there is a point in which it is not economically viable to make purchases where distribution cost is involved. Take this, for example, let’s say an item cost of production is N3,000 and an e-commerce platform chose not to make a profit on this item if purchases are made on her platform i.e. sale at total full cost if you but on say Jumia. The same vendor chooses to make a 30% margin (N3,900) in retail outlets. Invariably, it means the total cost of making purchases online cannot be more than N3,900 or it will be absolutely off point to make purchases online than the kiosk beside my house.

The truth is what it will cost to reach the last mile customer in my scenario will be way above the price ceiling of N3,900 (it will actually cost + or – N6,000). And in effect, the erstwhile person mapped as part the addressable market will be automatically ousted from the cluster. 5 million minus one already and minus one more and more.

The above analysis begs the question of the addressable market in Nigeria, especially where physical delivery of goods is required (mainly e-commerce). What really can be regarded as Total Addressable Market (TAM) in Nigeria?

Broken Logistics, Nigeria Business Bane

In my time of working with Opeoluwa Shea Butter, one of the major issues we have to constantly battle is logistics; balancing cost with value. The selling price of the product cannot allow us to utilize formal logistics outlets like GIG Logistics (even though they were ready for concessions). Hence, we had to constantly innovate around our distribution cost and delivery. In the end, we refuse to take up some order because it is not economically viable to do so. The problem we faced at Opeoluwa is faced by all businesses in Nigeria and we all attend to the challenges differently.

In light of a broken logistics system, the question of TAM becomes more fluid, what will constitute an addressable market to one will be different to another even if they operate in the same industry.

What a lot of e-commerce (and other businesses) has done to mitigate the downside of last-mile delivery is to limit the circumference of operation, in other words, limit their addressable market. Yes, that may look like, why will you limit the number of people you want to potentially sell to. But when you factor in the cost of selling to that person relative to what the person would get it for otherwise, you realize that it is not an adventure worth pursuing. In effect, the addressable market of Nigeria is not as huge as we may think it to be based on distribution cost paralysis.

While thinking about the associated cost of running an e-commerce or any business that requires physical delivery of goods that utilizes technology or otherwise, this video by Ndubuisi Ekekwe detailed out a breakdown of your adventure and needed considerations while providing more perspective into why e-commerce is not yet a viable adventure in Nigeria.

Imagine a scenario where you are able to obtain real time traffic information from your mobile operators (on your mobile device) for various travel routes, as a service. This would no doubt save you time, enable you to decide whether to work from home or step out and prevent you from being stuck in traffic.

A common sight that meets the eye in Lagos is the proliferation of cell towers within the city. This is obviously an attempt by mobile operators to achieve a universal wide coverage within the city. Infact, the Nigeria Communications Commission (NCC) recently disclosed that the country has achieved a 90 percent coverage in terms of 2G (Global System for Mobile communication (GSM)).

Can we therefore put to good use the data being gathered from these cell towers, scattered at various locations within the country? The answer is in the affirmative.

Data from cell phone towers could be used for various applications e.g. monitoring of traffic congestion on Lagos roads. Traffic monitoring can be achieved by understanding how mobile phones communicate with cell phone towers.

Usually, when a phone is either in use or not (sleep state), the phone constantly transmits or receives radio signals from cell towers (antennas). For example, if a cell phone tower, say tower A, is located on Ikeja road, all users close to Ikeja road would communicate via tower A. This means that, using tower A’s data, one can easily predict that there is a large/fewer number of road users on Ikeja road, at a particular point in time.

Also, the road user would typically be connected to the closest tower (tower with the least distance from the user) and this implies that on a congested road, say Ikeja road, all road users’ phones would be communicating with tower A, assume tower A is the closest tower on Ikeja road.

Now, when users move at high speeds, which occurs when there is no traffic, the closest cell phone tower (tower A) hands over to the next closest tower to the user (say tower B); whereas, when users are stationary for a long time, hand over does not occur, i.e. their phones would continuously communicate with Tower A.

In essence, by observing the data of road users (anonymised, in order to obey data privacy laws) communicating with various towers and specifically monitoring the rate of handovers between towers located along a specific road and the volume of data handled by the cell tower located on the road, all within certain time frames, one can easily predict whether there is traffic on a certain road or not.

With the advent of 5G which would involve a densification of antennas within traffic hotspots, indoor areas, public areas etc., the accuracy of tower data obtained to predict real time traffic update would significantly increase.

Of course, this idea may require testing, modifications, some clever design from MNOs to perhaps aggregate such data, where it could easily be mined/analysed, and an output where such information can be communicated to road users, at a specific charge.

If implemented, this service would help road users avoid traffic hotspots, take alternative routes and assist MNOs in generating additional revenue.

Earlier this week, Moradeun Balogun, a graduate of Obafemi Awolowo University (OAU) was robbed and stabbed in the neck around Gbagada area of Lagos. The report stated that Moradeun was rushed to a nearby hospital by passers-by but was denied attention because those who brought her couldn’t provide police report.

An eye witness recounts: “I was around the scene of the incident, the doctor came out immediately and on seeing the stab wound, he said they wouldn’t handle it in their hospital and she should be taken quickly to Gbagada General Hospital.”

This is just a situation of one case too many. Prior to 2017, it was the norm for hospitals in Nigeria to reject gunshot victims owing to police mandate that police report should be issued before treatment could be administered. The reason for such a rule was based on the claim by the police that hospitals were providing a safe haven for armed robbers who escaped with gunshot wounds.

It was a brutal rule that resulted in preventable deaths of many gunshot victims in Nigeria. In 2017, the 8th senate looked into the matter and enacted the Compulsory Treatment and Care for Victims of Gunshot Act 2017, mandating hospitals to attend to gunshot victims irrespective of police report.

Notable sections of provisions of the Act are highlighted thus:

Every hospital is to receive and treat victims of gunshot wounds with or without police clearance and/or payment of an initial deposit, but are duty bound to report to the nearest police station within two hours of commencing treatment on the victim.

The police may only receive a gunshot victim upon certification of fitness by the chief medical director of the hospital where he is receiving treatment.

The High Court of a State or the FCT may in deserving cases order a person convicted under the Act in addition to other penalties, to pay damages to the victims as restitution for injuries or loss sustained by the victim and such order is enforceable by the victim or by the prosecutor on behalf of the victim.

Any authority or person, whose omission results in the unnecessary death of a gunshot victim shall be liable to imprisonment for a term of not more than 5 years without the option of fine.

Any person who commits an offense under the Act, especially when the offense does not lead to death of victims but led to substantial physical, mental, emotional and psychological damage shall be liable on conviction to imprisonment for a term of not less than 5 years without the option of fine.

Where an offense (under the Act) is committed by a corporate body, the corporate head shall be prosecuted.

Post 2017, the Compulsory Treatment and Care for Victims of Gunshot Act, should have made cases of hospitals refusing to treat gunshot victims a story of the past, unfortunately, it didn’t happen.

In July 2018, the effectiveness of this Act was put to the test when a Channels TV reporter, Precious Owolabi sustained a gunshot injury while on duty covering the fracas between the Nigerian Police and members of the Islamic Movement of Nigeria (IMN). There was a public outrage over the incident for many reasons; one being that he was shot undeservedly by the people who should have protected him, two being that the hospital refused to attend to him because he was a gunshot victim – alas he died.

So the Act failed to protect victims of gunshot even though there are punitive measures stipulated thereof to deter hospitals and medical practitioners from flouting it. The questions many keep asking are: Why have Nigerian hospitals refused to comply with the Compulsory Treatment and Care for Victims of Gunshot Act 2017? Could it be that a section of it mandated hospitals to report a case of gun wound to the nearest police station within two hours?

Many claim there has been a little publicity about the law, and many hospitals don’t really know that it’s no longer business as usual. But that’s far from the truth. There have been many notorious instances of hospitals’ abandonment of gunshot victims that prompted police intervention and public clarification on the matter.

In 2018, robbers broke into one Mr. Akinwunmi’s house, shooting him on the rib before making away with his valuables. He was taken to two hospitals and each of them rejected him citing “police clearance” as reason. In the wake of the outrage that ensued, the police in Lagos publicly ordered hospitals to treat gunshot victims without prejudice, and that has been the case in many other states. There was also a presidential directive to re-echoing the order to hospitals.

The recent ordeal of Moradeun Balogun showed that it’s no longer about police clearance, that hospitals are deliberately abandoning weapon-violent victims to their death. It is believed that the impunity emanating from the lax of enforcement of the Compulsory Treatment and Care for Victims of Gunshot Act has emboldened hospitals to the abandonment of the victims.

And until the law becomes effective to a deterrent degree, many more people are going to fall victims.