While e-commerce is starting from a relatively low base, the market looks promising for rapid expansion. Demographics, income and internet uptake all suggest that online retailers are well placed to generate strong revenue in this key African market. However, e-commerce faces several impediments to growth, including poor distribution infrastructure, existing consumer payment preferences and logistical issues.


Across the continent, e-commerce is seen as a promising area for investment. Management consulting firm McKinsey estimates that African online sales will reach $75bn annually by 2025, with the Nigerian industry expected to be worth $10bn by that year. Some estimates are higher. Hussein Hachem, CEO of logistics and transport firm Aramex, told local media that domestic e-commerce was worth about $12bn in 2016. This would represent as much as 11% of total retail sales in the Nigerian market, according to figures from AT Kearney consultancy. Ayo Adegboye, managing director of ICT solutions company Business Connexions, told OBG, “There is no better time to invest in Nigeria than now, given that the business environment is improving so noticeably. This is especially so for the ICT sector.”

Important Indicators

While the exact value of the market may be unclear, there is little doubt about the potential of the e-commerce industry. Nigeria has a population of nearly 189m people, more than two-thirds of whom are under the age of 25, and incomes are growing. According to PwC, Nigeria’s middle class – those who earn between $8500 and $42,000 per year – increased by 600% between 2000 and 2014. Although this represents only 11% of the country’s total households, it is expected to almost triple by 2030, when 11m households will be in the mid-income range. Given this environment, it is perhaps unsurprising that Nigeria regularly appears on AT Kearney’s Global Retail Development Index, which tracks the top-30 developing retail markets worldwide. In 2017 the West African country ranked 27th. There is another trend worth watching: retail spending is likely to shift online in the coming years. According to online retailer Jumia, internet penetration in Nigeria exceeds 50%, and is only expected to grow as devices and data become more affordable. A 2015 survey by PayPal found that 65% of Nigerian internet users already shop online, while a further 24% are expected to in the future.


There has been considerable investment interest in e-commerce companies in Nigeria. Jumia and Konga, two of the most successful online retailers and marketplaces in Africa, have received more than $400m in venture capital funding. The former is owned by Africa Internet Group (AIG), which has 10 online businesses covering classifieds, travel bookings, food delivery and fashion retail. AIG became Africa’s first company with a market value of more than $1bn in early 2016 when it received a fresh round of funding from Goldman Sachs, Germany’s Rocket Internet and South Africa’s MTN. Jumia and Konga are establishing a strong presence for e-commerce in Nigeria and Africa. Jumia is currently the sixth-most-visited site in Nigeria, while Konga, the biggest online mall in the country, is ranked 14th, according to internet analytics firm Alexa.

Distribution Challenges

Despite these bright spots, e-commerce companies still deal with a raft of challenges in the Nigerian market. Konga, for example, is trying to resolve issues around logistical bottlenecks by developing its own warehouse infrastructure, building delivery centres in Lagos, Abuja and Port Harcourt. The initiative should see a 90% reduction in merchant order processing times for third-party sellers from 40 hours to three. The company is also looking to work with a microfinance partner, One Credit, to improve the consumer credit environment. The two are planning to launch the “Buy Now, Pay Later” initiative, which will allow customers to pay for online purchases in monthly instalments. This should help alleviate some current constraints around delivery and payment for the firm.