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Mr. Godwin C. Nwaogwugwu is a former World Bank Analyst/Consultant. He is a senior key resource person on Information systems, E-business Development, Youth Programs, and Africa Initiatives for many international agencies, and governments. He is the author of several best-selling publications. His writings in very simple language inspire many young readers around the world


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Developing E-Business For Small Business In Nigeria

By: Godwin C. Nwaogwugwu

Published March 6, 2007 

In simple terms, E-business (doing business on the Internet) can enable small scale businesses in emerging markets gain greater bargaining power in the global economic exchange despite their limited capital, and mobility. The world economy is moving online. Today people are meeting online and eventually getting married, people who do not have the capital to establish physical stores are getting rich maintaining only online shops, small musicians who find it difficult getting producers are uploading their tracks on ‘Napster’ (http://www.napster.com/choose/index.html)  to be downloaded by millions of people around the world, even politicians are using video-sharing tools like ‘Youtube’ (http://www.youtube.com/) to reach potential voters, etc.  Therefore, the action or inaction of businesses to take advantage of e-business will determine how much they grow in the coming years.

E-readiness Ranking

In 2005, the Economist Intelligence Unit's sixth annual e-readiness rankings placed Nigeria on 58th position out of 65 countries ranked. This is not very promising considering that most investors today will be interested not only on the investment climate and infrastructure in a country but also on e-readiness indices such as national connectivity, e-leadership, information security, human capital, and e-business climate.

Interpreting E-readiness Indices

There are many indices used to measure e-readiness. The most common ones are:  

  • Connectivity: Addresses the ability to exchange information, goods and services with the rest of the world.
  • E-leadership: Addresses the commitment of a national government to partner with industry leaders to create conditions favorable to electronic transactions.
  • Information security: Addresses issues concerning the protection of personal data, intellectual property, and effective privacy laws.
  • Human Capital: Emphasis on developing competent manpower including IT managers who can manage complex technology tasks, policy analysts who can make informed inputs on government policies and regulations that are capable of stifling technology growth; local content creators who can either customize or adapt global technologies to the specific business needs in the country, software and hardware engineers.

Beyond the indices, e-business requires a larger population of end-users or consumers who don’t have to understand how the technology works, but can use the technology.

How Small Businesses in Nigeria Can Benefit From E-business: 

Individual Action:

Even in challenging environments such as Nigeria, small businesses can still benefit from e-business. Simple information websites with product and contact information, as a first step can open new doors for small businesses locally and internationally. Hospitality industries stand to gain more exposure and market through e-business. Tourists and people in the Diaspora are excellent target customers for hotel and tourism information and online reservations.

Group Action:

Business associations like the National Association of Small Scale Industrialists (NASSI), National Association of Chambers Of Commerce, Industries, Mines and Agriculture (NACCIMA) can bridge the economy of scale on the technology required for e-business by setting up an online mall showcasing a pool of their members’ sites, products and services. Through the online mall people in the Diaspora may order local goods for friends or family. These associations can also help to guarantee the quality of products advertised on the site, as well as the credibility of its members to ensure fraudulent people do not seize the opportunity. Only certified members and certified products will make it on the site. ‘Ghana Mall’, for instance, sells goods made by Ghanaian artisans internationally. It also rakes in some $500 million a year in goods and cash that are sent to the country from abroad.  Funds to develop such malls can be sort as grants from multilateral agencies as the World Bank Group’s Small and Medium Enterprise Department (http://www.ifc.org/sme)

Payment:

No doubt, credit card acceptance is the heart of e-commerce, but technological hindrances and doing business in local currency can drive up transaction costs. There are rules and protocols to gain access to international card association systems, which currently do not favor African countries. The amounts of online transactions originating from most African countries hardly meet the rules required by the international card associations. So there must be a way around it. Few banks in Nigeria have already started issuing credit cards. However banks need to establish special ‘Merchant Accounts’ for small businesses to enable them accept secured payments in foreign currencies processed in the same way as credit cards. Online payments will still have to go through SWIFT, encryptions, or other secured sites, as PayPal to ensure adequate security.

Shipping:

Nigerian Postal Services and international courier services are currently equipped to handle shipping to any location in the world. Business organizations can also enter into partnership agreements with these postal and shipping agencies to either enjoy special shipping rates or develop more efficient shipping methods that can guarantee delivery. In addition, the Nigerian Custom and exercise will make available list of prohibited items, duties and fees to the business organizations. One workable model is to post their personnel at the post offices for inspection of goods.

Government’s Role

As a private-sector crusader, I dislike prescribing any solution that will depend on governments. But E-commerce requires vendor credibility. Apart from technology, the greatest impediment Nigerian businesses have in embracing e-business is Nigeria’s current image as a corrupt and fraudulent nation. I wonder how many people will enter their credit card information on a site hosted in Nigeria. This is where the government should play an important role. Rather than defend or deny Nigeria’s bad image through the fable adverts of the ministry of information on international media, law-makers should strengthen existing laws to stem out corruption. People who thrive on advance fee fraud should be put out of business. It is possible! Anything that works through technology can be stopped through technology. It’s simply a digital war amongst programmers (it’s like the virus and anti-virus battle among programmers). Moreover, the world wants to see trials, prosecutions and convictions to believe the country is serious in its war against corruption.

How This Will Work

For this to work it must exist as one bundle. A customer does not want to be bothered by the backend technology and how it works. They want an easy-to-use, time-saving, front-end screen. As for now, cross-continental partnerships will play a major role in helping businesses in Nigeria cross the e-commerce threshold, as businesses will still need an international partnership to help complete orders. PeopLink (http://www.peoplink.org/EN/)  offers such a partnership. They have developed free, downloadable tools to help small businesses build virtual product catalogs, which they then upload to a searchable catalog on their database, thereby offering small businesses the opportunity to benefit from collective marketing power.

One Stop Tech Support Centers:

Rather than the proliferation of cybercafés in Nigeria, people should consider going into one-stop tech support centers. For instance, in Ghana BusyInternet (http://www.busyinternet.com/)  is such a one-stop  IT center with a cyber café, call booths, video conferencing services, document services, web hosting, space rental and other tech support for e-businesses. 

Exploring E-business will help small businesses in Nigeria increase their market share in the global marketplace? There should be a concerted effort to make this happen. The World Bank developed a collection of free tools called ‘SMEToolkit’ to help small business develop such potentials. This can be found at: http://www.smetoolkit.org/

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Publications By This Mentor

'Preparing For Life After School' by Mr. Godwin C. Nwaogwugwu is a very popular career counseling booklet for Nigerian  youths

 

'Guide To Micro, Small, & Medium Business Development' by Mr. Godwin C. Nwaogwugwu is an award-winning publication that teaches how to prepare business plans for  Micro, Small, & Medium Enterprises

 

'Microsoft Office, A Student Hands-on Manual' by Mr. Godwin C. Nwaogwugwu is a hand-on computer training manual for African schools

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   

 

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