By Matthew Otigbu
The role of micro, small and medium scale enterprises (MSMEs) in areas of promoting inclusive growth, increasing the country’s gross domestic product (GDP), creation of employment opportunities and wealth creation, the world over, can never be overemphasised. Their immense contributions to the growth of their micro and macroeconomics are the reason countries, developed and developing, highly regard their MSMEs sector.
According to the International Council for Small Business (ICSB), MSMEs makeup over 90 per cent of all firms and account for an average of 60 to 70 per cent of total employment and 50 per cent of Gross Domestic Product (GDP) of any economy. In Nigeria, however, according to the Nigerian Bureau of Statistics (NBS), the sector has over 37 million MSMEs and employs over 54 million skilled and unskilled labour while contributing about 54 per cent to the GDP of the country.
To underscore the importance of the role the sector plays towards the economic development of every country, almost all countries make special provisions to aid the growth of the sector. For example, while the Indian government created a separate ministry to cater for their needs, Nigeria established the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to specifically promote the development of the MSME sector in Nigeria. The efforts of the Nigerian government in boosting the sector, notwithstanding, the sector needs more facilitators if it would catch up with its counterparts in other developed and developing countries. One company that stands out in complementing the efforts of the government in facilitating the growth of the MSMEs in the country is Jumia Nigeria, the leading pan-African e-commerce platform. The company, which started in 2012 in Lagos and currently has a presence across more than 11 African countries, has woven its operations and products to suit the peculiar needs, and also serve the interests of the MSMEs.
Being the leading online marketplace in Africa for a wide range of products, the company offers all manufacturers, distributors and sellers, most of whom are MSMEs, a platform to sell their goods and services to their consumers. The company also offers logistics service, which enables the shipment and delivery of packages from sellers to consumers, and payment service, which facilitates transactions among participants active on Jumia’s platform in selected markets.
Jumia Nigeria alone has over 15,000 active sellers, about 80 per cent of whom are MSMEs, offering a wide range of goods including smartphones, consumer electronics, fashion and apparel, home and living, consumer packaged goods, beauty and perfumes etc. It also provides consumers with easy access to a number of services, such as restaurant food delivery, airtime recharge etc. The Jumia platform saves each of these MSMEs the cost of marketing, renting and operating physical stores, thereby increasing their profitability and boosting their growth.
Only last year, the company launched the Jumia Mall, an online platform where any interested brands could reach their target audiences through advertisement and display of their products and services. This platform, with its wide reach, offers these brands, irrespective of their sizes, a much wider reach at a much-reduced price thereby reducing their cost of marketing and advertising. Many MSMEs and even some Fortune 500 companies are taking advantage of the platform to reach their current and prospective consumers.
On the logistics aspect of its business, Jumia, not only uses its own vehicles but also third-party logistics companies to deliver merchandise from the sellers to the consumers. Apart from satisfying its numerous customers, Jumia has facilitated the growth of the logistics business in Nigeria by offering ready businesses, through patronage, to these third-party logistics services providers, who are mostly MSMEs. The company has over 100 local logistics services providers on its integrated network. It recently incorporated Gokada, one of the motorcycle hailing companies whose operations were recently restricted in Lagos State, saving the company from imminent collapse as a result of the regulatory restriction.
The company also has a payment service, JumiaPay, designed to offer a safe, fast and easy solution to online payments on its platform. The service which is available in six countries – Nigeria, Egypt, Ivory Coast, Ghana, Morocco and Kenya – has been expanded beyond the physical goods marketplace to also include the purchase of the company’s on-demand services such as restaurant food delivery, and airtime recharge.
JumiaPay offers convenience to all the parties for every transaction – customers, sellers, financial institutions etc. Prior to the launch of the service in 2016, Jumia users had to use other payment platforms to make payments for purchased items. This state of affairs was fraught with issues, especially when transactions are not completed. It, then, took days to weeks to get a refund when, for example, an item you ordered for wasn’t delivered or is damaged, or doesn’t match website description etc. Jumia works with banks to provide a more secure option of payments where you get reimbursed instantly if anything goes wrong with your order. It also ensures prompt payment to the sellers once the transaction is completed.
On job creation, few private companies have impacted on the Nigerian economy as Jumia. They have promoted entrepreneurship by reducing the hassles that come with marketing and logistics. By offering these at reduced prices, Jumia has emboldened many prospective entrepreneurs to take up the challenge of entrepreneurship thus, not only employing themselves but also employing many other people.
Jumia has shown that the nation’s economic growth could be facilitated by private corporate concerns through the building of ecosystems that could empower MSMEs at every aspect of their businesses. Jumia deliberately built its ecosystem this way and it is working out, not only for the company but for the country at large.