By Jonah Nwokpoku

LAST month, the Nigerian  senate proposed a bill seeking to introduce a legal framework for e-commerce in the country. The bill which is titled: “Act to provide for Effective and Transparent Administration, Management and Control of Payment, Clearing and Settlement Processes in Nigeria (and for related matters) and has passed a second reading, seeks to address the legal lacuna in e-commerce, according to the sponsor of the bill, Senator John Enoh from Cross River Central Senatorial District.

While defending the bill on the floor of the senate, Senator Enoh tried to prove that the bill was inspired by need for a legal structure to address challenges that may arise from increasing internet penetration in the country.

“500 million tweets go out daily, with one million YouTube users, over 45 million Nigerians are active daily on the Internet,” he said.

Another senator,  Ibrahim Gobir in support of the bill said, “E-Commerce has taken over the whole world and with that we can make billions of money daily.”

These statements are an indication of the lawmakers’ misperception of e-commerce. While internet penetration may be growing in Nigeria, Senator Enoh’s claim of 500 million tweets going out of Nigeria daily plus one million YouTube users is only an indication of high level of social media engagement but not an indication of high volume traffic of buyers and sellers online. In the same vein, Nigeria cannot in the foreseeable future make billions of money daily, as Senator  Ibrahim Gobir pointed out.

And the reason is not far-fetched; the sector has simply not developed to that extent.

“Starting an e-commerce business is very expensive and the gestation period till profitability is very long. Just like any other industry, you see yourself providing all that you need to survive despite paying your taxes. What has made things harder in recent times is the issue of the devalued Naira. A large percentage of our advertising and hosting costs are USD denominated. A $10,000 ad budget which used to be less than N2 million is now about N5 million with so much difficulty accessing FX to support business operations,” lamented Osamede Evbakhavbokun, who is the founder/CEO of Gidimall Nigeria.

But does e-commerce need a law and what must people drafting the law know ?

According to Osamede, “There is a need for a legislation that will protect the industry and not exploit its young and fragile state. Ideally, no bill should be passed without our senate consulting key industry stakeholders in policy formulation. That way, we are better able to grow the industry, create jobs and improve taxable revenue for the government.”

E-commerce in Nigeria: Things have not exactly been rosy for the sector in recent times. Since October, 2015, the sector has struggled, shedding more than 50 per cent of the jobs it had created over the past three years. Most big players in the sector including Konga, Jumia, Dealdey, Jumia Market, etc have implemented massive job cuts that have led to loss of thousands of jobs as they struggled to remain afloat. Some e-commerce firms have also been forced by the increasing challenging macroeconomic environment to close shops. The sector has also attracted fewer investments within the past one year.

And some of the financial reports emerging from some perceived established players have also shown sluggish growth and still far away from profitability.

E-commerce operators

Co-founder/CEO of Nigeria’s premiere online print shop, Printivo.com, Oluyomi Ojo, said e-commerce needs no law at this stage. He said the proposed law is simply an attempt for government to stifle innovation and ultimately kill the sector.

He said: “This bill is just an attempt to tax an industry that is still at its infancy. But why would anyone want to tax e-commerce? Is it the customer that will pay or the company? Again, e-commerce operators are already being taxed through the sectors their services are based. Already they are paying employee income tax, VAT and company taxes, so which other money does government want to make from e-commerce?

He added: “I don’t think that e-commerce needs a regulation because virtually every other sector that is connected with e-commerce is in a way regulated. Finance is regulated, that is people being able to pay with their credit card, in a way logistics is regulated. The only thing that e-commerce needs is customer protection but there is already an agency for that, so I do not know why e-commerce should be singled out for regulation. Let us be realistic, that is actually a way to kill e-commerce.”