The growth of bitcoin in Nigeria

Tuesday 08 April 2014

There is an emerging market of online shoppers in Nigeria. Many entrepreneurs and investors see promise in this market, in spite of negative stereotypes held globally. The online shopping market has been valued at several billion dollars and there are currently over 300 registered e-commerce sites. The total investment, locally and abroad, in the e-commerce space was estimated at over fifteen million US dollars at the end of 2013. That figure has already been well surpassed, as investors seek new opportunities in this emerging market.

bitcoin e-commerce by BitScan

The Nigerian e-commerce industry is valued at several billion dollars

The opportunities

Nigeria’s population is expected to swell to well over four hundred million people by the year 2050; this represents a four times increase. Critical infrastructure is lacking: notably, there is no functioning postal service in the country and a lack of reliable roads makes deliveries difficult. Nigeria also lacks access to standardised banking and payment networks, such as PayPal. As a result it has been a tough market to crack for conventional online retailers like Amazon.

This is where local companies, Konga and Jumia, have seen a unique opportunity on which they are capitalising. These companies promise delivery within twenty-four hours. Both companies have been able to live up to that promise and they both boast a safe and secure online shopping experience available to all Nigerians.

Their success has not gone unnoticed. Jumia has secured over sixty million US dollars in seed and series-A funding, to-date. Its growth has been rapid, expanding from three to five hundred employees. Konga has raised similar investment capital, fostering similar growth.

Lagos Island, Nigeria

Lagos Island, Nigeria: Benji Robertson, wikimedia commons

Media giant Facebook is also interested in the opportunities that exist in the Nigerian market. Facebook has over twelve million registered users in the country and they recently sent a delegation to Lagos to strengthen relations with these companies.

Overcoming the limitations

Jumia and Konga are the larger operators in the local market. However, they are not the only businesses developing online shopping. More specialised entrants are also making their presence felt. Gloo.ng focuses on supermarket items. The last twelve months have seen this company grow four times in size and expand to a massive twenty thousand square foot facility.

Similar to Amazon, these companies are known to be exploring the use of drone technology in product delivery, as a means of servicing the growing population base.

Drone technology may prove an efficient means of delivery

in the absence of adequate transportation infrastructure. 

The African continent, for the most part, skipped fixed line Internet and moved immediately to mobile technology for connectivity. Perhaps it will move directly to drone delivery out of necessity, bypassing conventional means of transportation.

This is real economic growth and it is exciting. While none of the above listed companies use bitcoin yet, it could certainly provide benefit going forward. However, there is one online retail start-up embracing the utility of bitcoin for its fashion design business: Minku.

Minku leather bagMinku is based in Nigeria and Spain. The company specialises in the design, manufacture and sale of original handmade leather bags. These bags are sold both online and at high-end fashion stores in Nigeria. The founder, is a young and dynamic entrepreneur. She has worked in the fashion industries in both the United States and Europe. Minku's bags are all designed and handmade by Kunmi personally. Excited by the opportunities bitcoin represents in the Nigerian e- commerce space, Kunmi points to leading online merchants, like Overstock.com, as indicative of growing acceptance globally. She sees greater merchant acceptance in Nigeria as inevitable. In the meantime, she is content to be pioneering.

For her company, "accepting bitcoin is not just about nudging Nigerians to adopt the currency", it is also about "including Nigeria...in an interesting global conversation".

Bitcoin represents an opportunity for Minku as a company and Kinmi sees that. Her company is more focused on the international market than online retailers like Konga and Jumia. With bitcoin, Minku is able to sell product to clients in over sixteen countries. For the most part, product is delivered to Nigeria and the USA. Notably, there is a market for her products in places as far-flung as Finland and India. It is bitcoin that facilitates this extraordinary global reach.

Bitcoin’s acceptance by boutique manufacturers and designers in Nigeria is a trend that one would expect to gain momentum; it just makes sense. Conventional payment processors block Nigeria and banking infrastructure is poor. The greater promise of bitcoin to entrepreneurs in markets lacking access to conventional payment networks is often cited. It is good to see the early signs of this development in Nigeria.

Tristan Winters


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