COMMONWEALTH EXECUTIVE MASTERS IN

BUSINESS ADMINISTRATION
SCHOOL OF BUSINESS AND HUMAN RESOURCE MANAGEMENT
NATIONAL OPEN UNIVERSITY OF NIGERIA

A TERM PAPER ON

ASSESSMENT OF THE TECHNOLOGICAL

CAPACITY FOR THE IMPLEMENTATION
OF E-COMMERCE IN NIGERIA
By

Kabiru A. Diso
COL 150001117

Lecturer: Dr Samaila Mande

April, 2016

Table of Contents

Page

Abstract

Introduction

Economy

Technology

Media

Policy

Foreign investment

Intellectual property

Consumer protection

Contract law and dispute resolution

Basis of taxation

Classification of e-commerce transactions

Compliance and enforcement issues

E-BUSINESS IN NIGERIA

KEY ISSUES

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Human Rights

Strife and sectarian violence

National well-being

Conclusion

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Recommendation

13

References/Bibliography

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ABSTRACT
E-Commerce is not just about setting up computers and businesses, but encompasses a larger
scope. It is about doing business with an entirely different mind-set, using a medium that
challenges the very basic rules of traditional ways of doing business. E-Commerce is all about a
perfect interface between business management, strategy and technology with a view to serving
the customers more satisfactorily. Electronic commerce has the potential of improving the
efficiency and productivity of any economy. This paper focuses on Nigerias technological
capacity to adopt the idea of E-Commerce in the country. Also the infrastructure and market
issues and a thorough examination of the countrys consumer attitudes, adoption, and behavior as
well as business adoption and trends within the country is also provided in the research.
INTRODUCTION
Electronic commerce is a process of buying and selling products, services and information using
computer networks and the internet. E-Commerce accelerates global commercial trend by
removing the boundaries facing international trade. It benefits from economic advantages such as
market expansion, reduction of product source prices, promotion of productivity, reduction of
transaction costs and inflation, lowering uncertainty, sharing market information, and aiding in
distribution channel efficiency and plays a vital role in an endogenous economic growth. E-

Commerce can be a source that improves domestic economic and rapid globalization of
production, and development of available technology.
E-Commerce is just a relatively new concept to push trough in Nigeria. E-Commerce in Nigeria
is steadily growing because of the constant improvement in the countries technology and
telecommunication services. Telecommunication industry in Nigeria is exponentially growing in
the previous year since its first introduction in the country. Alongside this growth, private
telephone operators increase, offering wireless service with data transfer, increasing the number
of internet users in the country. The recent advances in the telecommunication industry, and the
increase in number of subscribers, show the possible market for information communication
technology services in Nigeria.
ECONOMY
Historically, the economy of Nigeria was based on agriculture, and more as of today, more than
half of the countrys workforce is engaged in farming and raising livestock. But in the recent
years, crop production in the country had fallen and the country must now import food.
Todays economy in Nigeria was based in Petroleum production. Petroleum is the leading
mineral produced in Nigeria. Petroleum production on an appreciable scale began in the late
1950s, and by the early 1970s it was by far the leading earner of foreign exchange. The
development of the petroleum industry in Nigeria greatly increased export earnings and allowed
massive investments in industry, agriculture, infrastructure, and social services. Many of these
large investments, often joint ventures with private corporations, failed.

The growing oil industry attracted many agricultural centers to urban centers, which caused the
detriment of the agricultural sector. In the 1980s a decline in world oil prices prompted the
government to bolster the agricultural sector. Nonetheless, both refinery capacity and agriculture
have not kept pace with population growth, forcing the nation to import refined petroleum
products and food. Other minerals extracted include tin, limestone, columbine, coal, low-grade
iron ore, and gold. Except when oil prices are low, Nigeria generally earns more from exports
than it spends on imports. Other important exports from Nigeria include cocoa, rubber, and palm
products. The main imports are machinery, chemicals and refined petroleum products, motor
vehicles, manufactured consumer goods, and food. The leading trade partners of the country are
Great Britain, the United States, Japan, the Netherlands, and France.
Production in Nigeria is mostly for domestic use, either to meet the needs of the farmer's family
or for sale inside the country. Exports, nevertheless, hold a key position in the economy.
Overseas sales of cocoa, oil palm products, groundnuts, and other commodities have been the
main source of public funds and have made possible the expansion in recent years of a wide
range of imports. Thus, the export economy, small though its share in total production, has been
leading the way in the development of the country. [Oxford, 1960]
TECHNOLOGY INFRASTRUCTURE
Nigeria is a country with all transportation capability. The country has railways, highways,
waterways, airports, and ports and harbors. There are 70 total numbers of airports in Nigeria as
of today. Transportation is not a problem in the country, as well as communication, there are
telephone and cellular phone services in the country. As of the year 2000, there are 11 internet
service providers in Nigeria that provides internet service to 100,000 internet users.
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At independence in 1960, Nigeria had only 18,724 telephone lines. Since then till today the
installed capacity has risen to about 700,000 lines. What this indicates is that the subscriber base
has grown at an average rate of only 10,000 lines per annum nationwide over the past forty
years. The picture is even worse when you realize that only about 400,000 lines are actually
connected to subscriber. Also in mid. 1980's cellular service was commenced in Nigeria and
today the number of cellular lines actually connected is just over 20,000 representing an average
annual growth rate of 1,250 subscribers per annum, A most regrettable situation. In fact if we
back-step a bit and analyze the present 400,000 connected subscribers base critically it may be
reasonable to assume that at least half of that number are actually lines to corporate and
government organizations who have multiple lines. It might in fact be that not up to 200,000
individual Nigerian family units actually have telephone lines in their premises.
For decades the telecommunications market in Nigeria was dominated by monopoly, the
Nigerian Telecommunications (NITEL). According to NITEL, as of June 2004 it had 720,000
lines installed, although only around 500,000 were activated. Instead, the market underwent a
major transformation only when with the arrival of mobile-phone operators in 2000, followed by
the introduction of a second national provider of fixed-line services since 2003 (which also had a
mobile license). An indication of the scale of change under way is the rate of mobile-phone
penetration, which quickly surpassed that of fixed lines and is expected to continue to grow
rapidly. Although Nigeria is far behind other countries in providing technology at an affordable
cost to its population, there are signs that a take-up of new technology is now moving ahead
In terms of international and/or global comparison, Internet usage in Nigeria is still
comparatively low and e-commerce, including e-banking, is still in an undeveloped stage. There

it is unquestionably an increasing awareness in Nigeria of the benefits and potential opportunities

arising from e-commerce. The modern advances in the telecommunication market, especially
GSM telephones, and the enthusiastic uptake of the services by the people, show the possible
market for information communication technology services in Nigeria which, when combined
with Nigerias population and its history of enterprise in both domestic and international trade,
confirm that Nigeria is a yet to be fully tapped but potentially very lucrative market for electronic
commerce services. Telecommunications and information technology therefore present copious
opportunities for the creation of unprecedented wealth for Nigeria especially the whole f Africa.
What is required is the political will to create the right environment for investment in this sector
so that investors continue to invest in order to improve the technology of the country. The
technology of Nigeria is at continuous development because of the acceptance that it gains from
the people. Nigerians are becoming more aware of the benefits of technology in life. ECommerce in the country has been accepted by the people, the way they accept technology.
Technology in Nigeria is becoming a part of the countrys culture. Mobile phone users are
increasing as well as internet users in the country, showing the increasing awareness of the
people in E-Commerce in the country.
MEDIA INFRASTRUCTURE
Nigeria is one of the most free and outspoken media in African country. Media is credited for its
helped in Nigerias transition to civilian government. Media in Nigeria has always been the target
of harassment by pass military dictators and civilian presidents. Even under the somewhat lessoppressive current civilian government, journalists have continued to come under fire. However,
as with most other countries, internet bogging has increasingly famous in Nigeria, because it is

much safer, and much easier, medium for Nigeria's growing Internet-enabled minority to express
their dissatisfactions with the current state of affairs in Nigeria.
While newspapers (and, most recently, internet bogging) have long thrived through both thick
and thin in Nigeria, radio and television has not received as much recognition, because of the
limited resources and the press restrictions on all of radio or television services in the country.
However, such restrictions are being worked around in order to reach larger audiences both
within and without Nigeria, such as with the growth of satellite television (which has long been
preferred throughout the African continent due to the geologically and financial investment of
laying ground cables).
PUBLIC POLICY

Foreign investment: Present legislation stipulates that businesses wishing to provide

Internet services must be 70% locally owned.

Intellectual property: There is no specific legislation concerning intellectual property

and e-commerce, although Nigeria is a signatory to six international treaties relating to
intellectual property.

Consumer protection: There is no specific legislation concerning consumer protection

and e-commerce in Nigeria.

Contract law and dispute resolution: There is no specific e-commerce legislation

relating to contract law and dispute resolution in Nigeria.

Basis of taxation: The present tax law in Nigeria does not specifically account for ecommerce transactions.

Classification of e-commerce transactions: Present tax laws do not specifically classify

e-commerce transactions in Nigeria.

Compliance and enforcement issues: Since e-commerce is in its infancy in Nigeria,

legislators have not finalized legislation concerning compliance and enforcement. The
Nigerian Communications Commission is an independent regulatory body that promotes
growth in information and communication technologies.

E-BUSINESS IN NIGERIA
Until 1998 Nigeria had only a few dial-up e-mail providers and a few Internet service providers
(ISPs) that operates using slow links in the country. Present ISPs provide online advertising
opportunities, as well as Internet banking security and VAST (very-small-aperture terminal)
services. The number of Internet users per 100 persons grew from 1.25 in 2004 to 1.82 in 2005.
Nigerians are becoming more aware and knowledgeable in terms of internet usage. E-Commerce
will be well accepted by the people because of their increasing improvement in technology. As
technology improves the users also tend to improve. E-Commerce is a business improvement
that incorporates technology, the impact and acceptance of technology to Nigeria shows that ECommerce will be well accepted by the people.
Despite the fact that Nigeria has an unstable economy, the country has still attracted Foreign
Direct Investments in the ICT sector. Foreign investments are growing increasingly secure and
popular in Nigeria because of the investment friendly atmosphere established in the country.
The countrys size and population are very conducive to such goals.
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The increasing numbers of internet users in Nigeria, as illustrated by cyber-cafs that started to
grow up even in some of the more remote parts of the country. Lagos alone has more than 1,000
cyber-cafs. Businesses appreciation of the value of online communication is growing rapidly.
But with low household disposable income and a restrictive infrastructure, Internet penetration in
households may still take sometimes.
One are of E-commerce, Electronic Banking has been proven to be successful in Nigeria. Banks
operating in Nigeria, virtually, offer online, and real time banking services. Banks that cannot
offer this kind of services are losing their customers. Online banking had been accepted in
Nigeria because of the flexibility it offers in operating the account of a customer in any branch of
the banks network. This allows a customer to conduct various banking activities in anywhere.
These services include, among other things, deposits, withdrawals and the issuing of drafts.
Banks are also starting to develop card-based payment solutions beyond the commonly used and
accepted electronic purse, including debit and credit cards, but development these services are
slow. The most common service to provide by most banks on a large scale in Nigeria is an ATM
system. A few banks started using ATM Consortium in 2003 to set up ATMs across the country,
and it is gearing up to raise finance.
On March 3rd 2004 the federal government launched a joint initiative between private-sector
operators, which operate under National e-Government Strategies Ltd (Nest) and the National
Information Technology Development Agency (NITA), an agency of the Federal Ministry of
Science and Technology. The project aims to improve organizational performance, service
delivery and the participation of ordinary citizens in the day-to-day activities of government with
information and communication technologies. This project allows people to conduct government
transactions through internet.

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KEY ISSUES
There are some issues in Nigeria needed to be solved for business to succeed. There are some
social issues that need solution not just by the government of Nigeria but as well as the Company
who would do business in the country. Some of these issues are listed below:

Human Rights: Homosexuality is illegal in Nigeria as it runs counter the country's

deeply ingrained cultural and religious mores. Homosexual intercourse is punishable by
imprisonment in the south and possibly death in the Muslim north. Any person who is
involved in the registration of gay clubs, societies and organizations, sustenance,
procession or meetings, publicity and public show of same sex amorous relationship
directly or indirectly in public and in private is guilty of an offense and liable on
conviction to a term of five years imprisonment.
The company should keep in mind that Nigeria is not like those other country that is
liberated in the subject of homosexuality. The company should at all times, avoid any acts
in the business that will offend the beliefs of the people in Nigeria.
Strife and sectarian violence: Due to its multitude of diverse, sometimes competing
ethno-linguistic groups, Nigeria has been beset since prior to independence with sectarian
tensions and violence. This is particularly true in the oil-producing Niger Delta region,
where both state and civilian forces employ varying methods of coercion in attempts gain
control over regional petroleum resources.
Various religions results in various beliefs for different individuals. Religious beliefs
should always be considered by the company. The company should always remain
sensitive to different religions to avoid conflict with people.

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 National well-being: In 2003, Nigerians were reported to be the happiest people in a

scientific survey carried out in 65 nations in 1999-2000. The report considered that the
country's family life and culture were more important than its problems and material
wealth in determining happiness.
Nigerians are happy in nature. They tend to get contented to what they have and be happy
with it. They considered there family and culture more important than the problems they
have and material wealth that they lack.
The main issue that faces Nigeria and its ICT program is the quality manpower that the
country can provide. The main reason that ICT has not developed in the country is
because to the fact that Nigerian workforce lacks necessary and vital computer literacy
and knowledge, and proper IT preparation. Poverty in the country is a problem for the
computer educational program, especially in a country where education itself, has
become highly controversial.
CONCLUSION
The growth of E-Commerce in Nigeria is a slow but steady phase. The technology in the country
is improving as those in any part of the world. The steady improvement in technology and the
acceptance of the people shows that E-Commerce will be accepted by the people. Technological
advancement in the country explains that E-Commerce is becoming a familiar in Nigeria. The
people are improving in terms of using technology. Most of the people are becoming
technologically savvy even though the economy of the country and the peoples social status are
not that wealthy. This just shows that the people in this country are open for technological
revolution and they are willing to embrace it, just like those companies eagerness to promote
technology revolution to the country. The vast improvement of telecommunication in Nigeria

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indicates that internet use even in the countrys most rural areas will be possible, opening a door
for business in the whole country.
Nigeria is at constant development in terms of the countrys technology and the
telecommunication industry. This indicates that E-Commerce will be the next trend in market.
The people are becoming more aware of E-Business. Because of the technological development
that the country is constantly experiencing, more investors are encouraged to do business in the
country. The phenomenal acceptance of the Nigerians to mobile phones and internet states that
they are open for technological improvement.
RECOMMENDATIONS
E-Commerce had been in Nigeria. This simply means that E-Commerce is possible in the
country. Others had been doing E-Business in Nigeria. A company that plans on pursuing EBusiness in Nigeria need not to worry about what will be the impact of the business, but the
Company should worry about the competition that waits. Because E-Commerce is already
accepted and implemented by other companies, this companies means have an advantage to new
companies planning to market in Nigeria; in terms of experience in E-Commerce in the country.
Practicing E-Commerce in Nigeria means a positive competition for the company. A company
should be aware of the competition and the risk involve in the business.
A company planning to pursue E-Commerce in Nigeria should carefully study the competition
that the market offers. The competitors in the market should also be considered. Formulating a
good strategy on how to formulate a plan on how to penetrate the market will also give the
company enough knowledge of the competition and trends.

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References
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Opportunities.(2003)
Aitken, I. Value-driven I.T management: Commercializing the IT function, (2003) Alev M.E.;
Vincent F. Y. and William L. M. E-commerce in Developing Countries: Issues and Influences.
University of San Francisco. Press (2002)
Angehm, A. Designing mature internet business strategies: the ICDT model. European
management Journal, vol. 15(4), pp.361-369. (1997).
Ann, L.F. The impact of Electronic Commerce on Business-Level Strategies, Journal of
Electronic Commerce Research, University of Nebraska Omaha. Vol. 1, No. 1, pp. 13. (2000)
Buhrmann, A.. E-bussiness in the year of the gap. Bussiness Vol.2.0:pp. 48-59, (2002)
Concord, M.A. Trends in Electronic Procurement and Electronic Commerce and Their Impact
on Small Business, by Innovation & Information Consultants, Inc. (2004).
Imala, O.I. Electronic Commerce and Telecommunications in Nigeria: Bank regulator
perspective.
Lavin, A. Factors Affecting Ecommerce Adoption in Nigerian Banks.

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Udo, G.J. Factors Affecting E-commerce Website Effectiveness, The Journal of Computer
Information Systems.

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