Why Informal Retail Market is Key to Nigeria’s Digital Economy
At the 5th edition of TechSummit Ogun State, an Information Technology Expert, Olaniyi Ayoola, said Nigeria is still scratching the surface as regards the immense economic opportunities technology offers. “As a nation, we are yet to take advantage of technology to improve and grow the GDP, considering the rate at which other nations have developed and integrated using various technologies. Digital Economy for instance, Nigeria is just implementing like 10% of what it entails, the opportunity is endless,” he said.
The major drivers of the economy are the SMEs. Presently, experts are of the view that this sector, especially the micro businesses’ potential for expansion, are under-exploited. It is widely held that when providers of financial services create innovative and inclusive products for this sector, as well as the retail market, Nigeria’s digital economy will flourish.
The retail market commands huge patronage in Nigeria. For instance, the Nigerian food & grocery retail market had total revenues of $45.7bn in 2020, representing a compound annual growth rate of 5.8% between 2016 and 2020. The Nigerian informal retail market is generally estimated at over $100 million.
In recent years, some innovators in the ICT space have initiated services targeted at this crucial sector, with the aim of digitizing the process of restocking and improving the supply chain of manufacturers. Providing a marketplace built on technology, platforms like Alerzo, TradeDepot and others are also leading financial inclusion in the retail sector.
A Nigerian, Adewale Opaleye, founded Alerzo as a last-mile distribution platform that helps retailers stock inventory directly from manufacturers. Alerzo’s core business distributes FMCG goods using a first-party relationship platform which allows suppliers to clear inventory faster and let Alerzo control the supply chain and delivery. “The company is at the beginning of a compelling multi-decade opportunity to streamline and digitize Nigeria’s retail supply chain,”said Ian Loizeaux, the managing partner at Nosara Capital.
Digitization of informal retail markets is an emerging global business model. According to the Nigerian government, the aim is to tap the opportunities in the digital space for more revenue for the country. “We want to get to the level of the advanced countries, where we can generate more revenue from tapping into ICT than crude oil,” said the Director General of National Information Technology Development Agency, Kashifu Inuwa.
A lot is there for the country to explore given the nation’s population of digital natives, and increasing internet connection. Digitizing some aspects of the informal retail market is one of the many ways the country can achieve the set goals
