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IMPACT OF E-COMMERCE ON NIGERIA ECONOMY. A CASE STUDY OF KONGA AND JUMIA
IMPACT OF E-COMMERCE ON NIGERIA ECONOMY. A CASE STUDY OF KONGA AND JUMIA
CHAPTER ONE
INTRUDUCTION
1.1 Background to the Study
E-commerce is the use of the internet for marketing, identification, payment and delivery of goods and services. Through the e-commerce technology, the internet has revolutionised the mode of business transactions by providing customers with the ability to bank, invest, purchase, distribute, communicate, explore and research from virtually anywhere, anytime where there is internet access (Anup, 1997; Ayo, Adewoye & Oni, 2011). Economy offers a level playing ground for large businesses, as well as small and medium-scale enterprises (SMEs) to operate in the global marketplace, and for regional businesses and communities to participate in social, economic and cultural networks seamlessly across international boundaries (Mary-Anne, 1988). However, with the paradigm shift in the mode of operation occasioned by the advent of the internet, global corporations like Konga and Jumia now operate with much consistency and at reduced cost of transactions as if the entire world were a single entity. In Nigeria, the internet business is taking on a serious dimension in the country especially within the more commercial states of the nation.
Key players, Konga and Jumia are fostering cashless and financial inclusion by encouraging Nigerians to move from brick-and-mortar malls to selling and shopping online and making payment for goods online thereby promoting the digital economy.
With Konga and Jumia online marketplace, usage of electronic transactions in Nigeria continues to increase, banks are becoming more innovative with electronic banking products and services while more fintech companies are investing in the economy.
Konga and Jumia are promoting the growth of MSMEs and large businesses by offering sellers its online marketplace, logistics, and last-mile platforms to increase their customer base, reach the target market faster and become more competitive, profitable, and sustainable.
Some other businesses like Konga and Jumia are springing up within the cyber space and each one is targeting the over 100 million internet users in the country. At present, Jumia and Konga are the ‘Beasts’ of e-commerce in Nigeria (Babatunde, 2013). In the business-to-business world, buyers previously faced a number of obstacles to getting the best deal: suppliers were distant, research time was scarce, and intermediaries controlled most of the information. Presently, Web-based companies are becoming the new intermediaries, the conduit between producers and buyers. The benefits of e-commerce include customer loyalty, the speed of access, reduced costs of operation, transformation of traditional market chain, acquisition of a niche market, business efficiency, increased automation of process, retained and expanded customer base, enhancing well-being and education of customers. However, the growth of e-commerce in Nigeria is affected by accessibility, privacy and confidentiality, establishing cost, data security, network reliability, credit card threat, citizens’ income and education, authenticity, cyber crime, poor technological infrastructures and fear of inadequate security in online environments (Ayo, 2011). This study therefore aims at two major objectives, first to examine to benefits of e-commerce on the economy of Nigeria and second, its challenges. Also, the study recommends among others the need for adequate publicity on e-commerce with emphasis on e-shopping, e-banking and e-business.
1.2 Statement of Problem
The contribution of e-commerce to the economy of the country has experienced a consistently improving progression, but in the reverse, the economy of the country has not been quite encouraging to growing Micro, Small and Medium scale businesses. Several policies and restrictions have been developed by the government that has not really encouraged businesses to grow beyond the limit of local business transactions. As much as e-commerce help businesses conquer some physical challenges of growing businesses, other physical factors such as high mobility cost, exorbitant bank transaction charges for use of Point of Sale devices and other charges seem to discourage the flow of easy business.
E-commerce operators are faced with challenges that are inimical to their growth and the larger economy given the interplay between e-commerce and MSMEs.
Dearth of critical infrastructure like roads, inefficient transportation and insecurity inhibit movement of groceries from rural areas where food crops are planted to the cities and movement of goods across distant locations. Erratic electric power supply and multiplicity of tax also increase the cost of doing business in Nigeria.
However, This study will tend to find better approach to be suggested.
1.2 Research Questions
The study was guided by the following research questions:
1.3 Objectives of the Study
The main objective of the study is to ascertain the extent at which e-commerce inflow influences Nigeria’s economic growth. However, the following specific objectives would also be achieved to;
1.5 Research Hypotheses
The following null hypotheses were tested in the course of the research work:
1.6 Significance of the Study
Findings of the study will make meaningful contribution to the general knowledge and understanding of the nature of E-COMMERCE and its impact on Nigeria’s economy. It would help economists, leaders and other members of the government to understand the importance or otherwise of e-commerce which in turn would help in policy formulation.
Lastly, it would stimulate further research in the area of e-commerce and would provide policy recommendations to policy makers on ways to attract more e-commerce into the country.
1.7 Scope and Limitations of the Study
The study aims to address the issue on the impact of e-commerce on the Nigeria economy. The areas to be covered include the concept of e-commerce; its impact and determinants with special regards to the Nigeria economy. The empirical investigation shall be restricted to the period 1981 to 2014