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Ecommerce Sector to Shrink As Nigeria Begins Collecting 5% Online VAT Next Year

By
Ndubuisi Ekekwe
-
11

The Head of Nigeria’s tax agency has spoken: online 5% VAT is coming next year.  The Federal Inland Revenue Service (FIRS) Chairman, Tunde Fowler, was clear, “We are thinking that maybe early next year, we will advise banks to start deducting five percent VAT for all online purchases done locally.” Forget that “maybe”, this is a concluded matter; banks will hit you 5% for any transaction processed online via your Nigeria-issued debit/credit card.

“With the existing laws in Nigeria, we can appoint the banks as agents. First of all, all those who make payments for purchases online using bank cards and instruct their bankers to pay, we will tell the banks that, going forward, everyone who gives instructions for service for purchase online, they should deduct five per cent VAT,” he said.

“We are thinking that maybe early next year, we will advise banks to start deducting five percent VAT for all online purchases done locally,” he added.

This is good for Nigeria but would be challenging for digital companies and online-anchored fintech companies. People, why pay 5% more online when open markets (Alaba, Ariara, Kano) sell without collecting VAT from customers. Simply, 5% more will be a privilege to buy online in Nigeria!

But Nigeria needs this money, and we cannot afford the American experiment where they tactically “waived” collection of taxes by ecommerce companies like Amazon to help the then-nascent sector blossom. By not requiring them to collect sales taxes, buying online became artificially cheaper when compared with brick-and-mortar (physical) stores.

See it this way: if you shop in Best Buy, an electronic store chain, for a $1,000 laptop, you will be expected to pay extra $80 as sales tax in some states with 8% sales tax. But buying from Amazon, that tax is not collected and you just pay $1,000 for the same product. With Amazon free shipping and next day delivery, you have saved $80. 

Due to this, physical stores evolved into showrooms to many Americans. Yes, visit them to see the items and then buy online to save taxes. Of course, governments expect you to declare and pay that tax when filing your annual tax returns. Unfortunately, few people do that. As the online redesign accelerated, many physical stores started collapsing in America because they could not compete on price!

But U.S was fine until they got ecommerce to the level they needed.Today, that regulation has been updated and Amazon now collects sales taxes for governments in most jurisdictions.

Between the growth of the digital economy and more tax revenue, Nigeria is going for more money right away. The ecommerce market will shrink marginally once this is implemented. Most smaller ecommerce players will collapse because if you have money in Nigeria, the problem is never where to shop; paying extra 5% to wait may not work for many people!

The ecommerce sector will experience a minor slowdown as government begins implementing automatic and direct collection of VAT on online transactions in Nigeria. See it this way: if a physical open market sells electric iron for N8,000 and Jumia sells the same for N8,000, because Jumia’s customer will be required to pay VAT (5% of cost), the price will jump to N8,400. This extra N400 for online purchase will inflate the price against the open market which typically does not collect VAT. (In U.S., the reverse was the case: ecommerce firms were originally not required to collect taxes unlike physical stores even though the ecommerce companies expect customers to self-report during tax filing. The non collection of online taxes helped Amazon significantly when it started.)

Simply, ecommerce firms will lose many price sensitive customers, and some online payment fintechs may have to be concerned also. But Nigeria needs this, as a poor nation, and we cannot allow the privileged few to shop untaxed! I do not care about the sector-growth: whether it is online or offline, it is all commerce. We just have to grow while paying the taxes required to power Nigeria.

Take ACTION – Raise the Bar

By
Ohemu Godwin Pius
-
5

“There has never been a recession period that everybody was poor. And there would never be a prosperous year that everybody would be rich.” Poverty and prosperity are products of choice. 

Trace it as far as you can, and you will find, that success has never lowered its standards to accommodate anyone. You have to raise your standards to achieve it. 

God provides food for every bird but not in its nest. Greatness is not reserved for any particular race. Success is not a native of America and Europe. Success is in you. It is available in abundance everywhere for everyone who is willing to pay the price.

Nothing is impossible for the human spirit.  The “can do” spirit of many has brought them from living in poor houses to flying their own jets. There’s no limit to what you can do and achieve as a man or woman. If you can dream it, if you can grind for it and if you can pursue your dreams with the force of a bulldog after a cat, you can achieve it. 

Prayers does not cancel ignorance. It is insane to keep doing the same thing over and over again expecting a different result. To succeed in life, you need knowledge, you need understanding and you need wisdom. 

Knowledge is information. It is gotten through reading and research. The solutions to most of the problems that we have in business, relationships and personal development are hidden on the pages of books. But as simple as this exercise is, nine out of ten will never participate in it, and three out of five are ready to give a defense of how too busy they are to partake in it. Little wonder there’s so much at the disposal of a few number of individuals and so few is at the disposal of many. There’s no denying that 90% of the world’s wealth is in the hands of 10% of the world’s population.

Understanding is comprehension. When you read or mine information, you must be able to comprehend what you have read. This step is necessary because without it, you can’t do number three.

Wisdom is application. It is action. And that’s what makes the difference. Your success in life is in direct proportion to what you do after you do what you’re expected to do. Nothing works in life without action.  If learning about success is all it takes to do great things with your life, then your success would be guaranteed. The bookstores are full of self-help books, each one of them is loaded with ideas that you can use to be more successful. The fact is, all of the best advice in the world will only help you if you can motivate yourself to take persistent, continuous action in the direction of your goal until you succeed. Raise the bar!

To be successful in life, the acceptable is never enough! You must resolve to get up a little earlier, work a little harder and stay up a little later. You must resolve to do today what others won’t do in order to have tomorrow what others won’t have. It won’t be easy but it is a hard grind for a worthwhile future.

Enough of blame game. Cease from it. Your parents are not to blame in totality for what you are today. You got your independence, and become responsible, and accountable for your life the moment your umbilical cord was cut off in the labour room. You’re responsible!

Arise O’ Nigerian youths. Pick up your sickle. Do more than you’re paid for. Do more than others expect of you. Go the extra mile. Get busy. Get going. Take action. Don’t waste time. Rise up to the challenges ahead of you, conquer your fears and never look back. That’s how winners are made. 

August is another 31 days of awesome opportunity. It is a clean sheet given to us by our Creator for us to correct the mistakes that we made in the past. It is not too late for you to become the best that you can be. Whatever your hand findeth to do, do it with whole of your heart and bet the best at it.

Raise the bar! 

See you at the top!!

“Spread the Word” – How Businesses are Winning with Grassroots Marketing in Nigeria

By
Nwaka Osakwuni
-
5

Recently, I escorted a friend of mine to a mechanic workshop – one of the largest in town. When we arrived, I noticed a small crowd gathered somewhere at a very conspicuous spot. Some car owners and a few mechanics were there, and there was an umbrella in the middle.

I noticed a guy doing some serious explanations to the crowd. So, as a curious individual, I moved closer. I needed to see what’s going on.

It was a lotto game spot. And the guy was explaining how the numbers he has “forecasted” are winning numbers, and started convincing people to play. In fact, he advises that if you needed a better return, you need to play with N100 and above. People were playing.

It was fun. Though I didn’t understand a thing about lotto games, I asked the guy if he was the owner of the stand, and he said yes. So, I brought out N100 and played the game he was preaching about. I knew I wouldn’t go back there again but I played anyway. I played because I understood what the owner was doing business-wise.

A few minutes later, I was chatting privately with the young man. And he explained to me that he needed to “boost” that spot which is fairly new. He said he had to convince those mechanics that they can win and the moment anyone wins, that spot will continuously “vomit” money for him. I asked him how, and he said I shouldn’t worry that the mechanics will “spread the word about that stand”.

The guy was implementing what we call grassroots marketing. Perception drives actions and results. From my perspective (forget what the textbook says), grassroots marketing is when you target those at the grassroots level. Just like grassroots politics.

Who are those at these levels? Those market women, mechanics, Okada drivers, etc. These set of businesspeople or services-oriented people makes up a large chunk of the 37+ million MSMEs in Nigeria and if your business does not have a strategy to target them, you are losing out.

See why…

  • The sports betting industry in Nigeria came into the limelight a few years ago, and players in this sector have understood the importance of grassroots marketing. Forget the top shots who can afford anything. Market your product to those who struggle to make N1,000 daily. The sports betting and gaming industry is now a N4 billion a day industry in Nigeria. They make use of extensive agent networks that sell to the common man.
  • In my state, if you can convince just 5 Okada men or Keke drivers that your product is good, in one week, you will have more than 300 people buying your product. They are the masters of word-of-mouth advertising.
  • MSMEs contributed N38 trillion to the national GDP in 2015. The federal government does not joke with them. If you want to boost your revenue, create a grassroots marketing strategy.
  • Companies in the sports betting industry can survive for the next year without spending a dime on ads, and they’ll still make billions. Why? Their market segment does not need paid ads. They just need agents located in the streets where Okada drivers or mechanics can easily locate them.

 John E. Lincoln, the CEO of Ignite Visibility, observed this.

Remember Occupy Wall Street? The 2011 movement eventually involved millions of people attempting to cleanse the dirty practices of Wall Street.

But it all started with just a few – a spontaneous group of people who were fed up with the process. That was a grassroots movement.

Grassroots marketing follows the same principal. Using grassroots campaigns, marketers work to purposefully target a niche group of people in hopes that they will spread, or propagate, their campaign message organically.

“The focus of the campaigns is on intent and audience. Your audience = the niche group, your intent = motivation to spread the word.

A man sets up a chain of restaurants around town, and his company’s revenue now exceeds N200 million annually after expenses not because his services are the best, but he implemented grassroots marketing. He used an interactive marketing strategy driven by Okada riders. “Bring up to 4 people to come and eat here, and you’ll get a free meal.” The strategy worked. In a few months, he started opening new branches.

Grassroots or guerrilla marketing starts from the bottom and works its way up. It is the art of advertising using word-of-mouth, and its effectiveness starts the moment you bring in those market women, okada or keke riders, mechanics, etc on board. It is cost-effective and can make your products or services go viral.

Uzoma Dozie Unveils A Startup, Sparkle.

By
Ndubuisi Ekekwe
-
1
Photo by: Kelechi Amadi-Obi (www.kelechiamadiobi.com)

No Comment – the full press release below. 

Uzoma Dozie, one of Nigeria’s leaders in the financial sector and the last Group Managing Director of Diamond Bank, Nigeria, today announces that he is launching a new financial technology community and ecosystem, Sparkle; a mobile-first platform focused on the country’s retail sector.

Sparkle will tackle how retailers can achieve their daily objectives and scale their businesses, providing a suite of innovative lifestyle services, in addition to typical current and savings accounts that exist in the market. In particular, Sparkle will deliver customer experience-led support services, ranging from inventory management and invoicing statements to foreign exchange services and a POS-via-mobile function.

Powered by AI and Machine Learning, Sparkle is building a dynamic community around Nigeria’s retailers and consumers, influencing purchasing decisions based on user-generated behavioral purchase data. This will actively support retailers in navigating a better route to market by directing the right consumers their way. In a bid to drive wider financial inclusion and regulatory reform in the market, the team is also building a digital framework for retailers to register their companies, register for tax and register domains, as it looks to plug the gap in terms of business advisory and regulatory services for retail SMEs in the country.

Uzoma Dozie, Founder and CEO, Sparkle says “Retailers and consumers in Nigeria are currently disconnected; Sparkle is building the solution around its understanding of the challenges of small businesses, which will help reduce the operational risks small businesses are exposed to in their infancy. Sparkle is a product, a community, born out of necessity for Nigeria’s retail landscape. We will connect millions of retailers on a digital platform, providing a service they can trust, that is seamless, and that allows for frictionless transactions across all activities and business services”.

“Having spent more than 20 years building out the retail arm of Diamond Bank, it is clear that there is a significant gap in the market to incubate and roll out a new approach to services for retailers, and at scale; they need a financial & business services partner, not another finance platform.  This is where we stand out from all others. Sparkle is a collaboration between retailer and customer – a support system that will ensure far greater financial inclusion and much improved access to market, built for many, built to scale”.

Set to launch in 2019, Sparkle will release plug-in APIs for the platform, to enhance convenience & service, whereby outside developers can contribute & build solutions.  The company has also entered into partnerships with Visa, Network International, as well as PricewaterHouseCoopers. They will also be working with Microsoft.

Retailers contribute 33% to total GDP and 45% of total employment in Nigeria and are a critical part of powering the Nigerian economy, however services available to small businesses have not been best suited. Sparkle has identified lack of funding, poor access to market/network and lack of business training as the primary challenges for the sector, which is why the new platform will also provide access to mentorship and development.

Keen to pioneer diversity and financial inclusion, the Sparkle team has also identified women as a key demographic to collaborate with, as they play a key role in the new economy, with high adoption of tech to leverage on the flexibility of driving new businesses. Women are also essential in staying in touch and connecting with their millennial families.

During his tenure at Diamond Bank, Uzoma was responsible for ensuring technological innovation was central to the institution’s growth strategy. From 2014-2018, Diamond Bank’s mobile app adoption rates grew from 206,000 to 3.3M, and he simultaneously focused on aggressively growing the bank’s retail arm to include 18M MSME customers.

He concludes, “Technology adoption is the only way retail can scale in Nigeria. We are in a new, digital economy. Retailers, individuals and businesses need the space and bandwidth to be creative and to build their business; we are building Sparkle as a wrap around for what they are already doing and we are levelling the playing field for all Nigerians, democratizing access and helping SMEs create their own luck. Sparkle is for the many, not for the few and as we continue to build out the platform”.

 

-ENDS-

Partner quotes

PricewaterHouseCoopers will design and implement future focused operating models that support Sparkle’s business strategy, while also co-creating disruptive technology solutions backed by the power of PWCs Experience Centre.

Femi Osinubu Partner and Leader, Experience Centre and Emerging Technology, PwC Nigeria says “We are very excited about our relationship with Sparkle and the prospects of working with them to create Nigeria’s first whole digital financial services company. This presents us an opportunity to showcase our thinking around the future of financial services and the ways technology can be innovatively deployed to make a clear difference for businesses in our clime. This is in line with our purpose of building trust in society and solving important problems”.

Network International says “As an established leader in the provision of end-to-end payment solutions across Africa, Network International is pleased to announce its strategic alliance with Sparkle Bank, to become Sparkle’s strategic payment processing partner. With over two decades of experience within payments and with a presence in Nigeria for more than 12 years, Network International is well positioned to support Sparkle Bank in the next exciting phase of their journey”.

Microsoft will also collaborate with Sparkle to leverage their enterprise class security technologies and build a platform that meets each customers security, privacy and compliance standards.

Microsoft says, “In addition, Microsoft provides Sparkle with access to unprecedented storage and compute power that will enable Sparkle provide data and real time analytics in a manner that is easy to digest and process for our users. Microsoft is a trusted partner to organisations around the world and by working together, both companies will continue to build and evolve Microsoft solutions specific to the Nigerian fintech industry.”

Best Practices for Designing Great Mobile Websites for Business

By
Oluwatobi Mayowa
-
0

Just this morning, I came across a post on the Guardian about the possibility of the US government banning ‘addictive’ autoplay videos and infinite scrolling online. The general aim of the bill is to tackle features that ‘capture attention by using psychological tricks’.

While things like this take time to be considered unethical in other regions outside the US, infinite scrolling is just one of many forced content exploration mechanisms that looks good in theory but may be hurting your business practically. In my past experience, as a product design lead in an online travel agency, I have seen firsthand how having a high bounce rate is not automatically a bad thing, there are reasons to look beyond the numbers.

Below is a list of best practices you can explore for your business if you have many customers on mobile.

Homepage/Landing Page

Put key things above the fold

When users visit your website for the first time, they probably came there with some intention, interest or expectation. There are 3 key things that need to be above the fold when designing landing pages for mobile:

  • Value proposition: What are you offering the users?
  • Call-to-action(CTA): How should they start exploring your site?
  • Visuals: What first impression would you like them to form?

A/B Test: Your CTA

Every call-to-action  button is a collection of four things: a placement, a shape, a message and a colour. Always A/B test any of these variables, don’t rush into commitment.

A/B Test: Exposing the search bar on the homepage

Search is one of the main ways people can start exploring your content. Users who search usually convert more. A/B tests have shown that the more prominently you display the search, the more actual searches and clicks you are going to get.

A/B Test: Using static carousel

Automatic rotation is not a great user experience as it is a forced content exploration. Also, quite often they are perceived as ads, and even if users get interested on the banner and want to study it a bit more, it moves away. Statistics have shown that the first banner usually gets most of the interactions and the rest are just being ignored, so try testing a user initiated exploration with animation switched off. On the other hand, moving promotions usually cause a lower page speed and make everything look important.

Navigation

A/B Test: Top sticky navigation panel

Test iteration where the navigation always stay available for users no matter where they were on the page or how deep they scrolled.

A/B Test: Complement icons with text

Complementing icons with texts could increase the clarity of your navigation. Just “call it” what is going to happen when users click on it. Every icon is a room for misinterpretation and because users may probably have different assumptions, different backgrounds or different experiences in the past, it is a good practice to add a text label to icons.

Search

Show search suggestions based on popular

Search results should be easy to scan with a prominent helpful filtering. Allow users to easily delete queries by adding a small x at the end of the search bar.

Once users start typing in the search bar, you can show popular suggestions that will help them make the decision. Also offer for them to just immediately click on one of the suggestions and not type anymore.

Show search suggestions when no matching results

You should never return an empty or a sorry page if the search was performed. This means validating input real-time for item availability. You can always show either popular items or contact us.

In conclusion, data points are just events, they do not have a clear view of the processes behind them; a combination of feedback and analytics can provide the motivations behind these processes and ultimately guide your design and redesign decisions.

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