With e-commerce in Nigeria recording over $2 million worth of transactions per week and close to $1.3 billion monthly, online marketplace Kaymu has attributed the burgeoning online transactions to the rising purchasing power of the country’s growing middle class.
According to a survey conducted by the business management and consulting firm Philip consulting, 38 percent of Nigerians prefer to buy products through the internet. Much of that section of the population is made up of the middle class, notes Kaymu which is owned by online investment company Africa Internet Holding (AIH).
Evangeline Wiles, the Managing Director of Kaymu Nigeria, pointed to the west African country’s economic growth as leading to a strong increase in its middle class. “This powerful group of consumers are demanding quality goods and services. They are becoming the foundation of a market-oriented economy and contributing to continued economic growth and social development”, she added.
Describing the middle class as key to sustaining economic and social development, Wiles stated that an economy without a mass group of consumers as its foundation cannot be sustained in the long run. In Africa’s largest economy the middle class is doing just that especially in the e-commerce sector with online transactions in the country are expected to reach N1 trillion ($6.2 billion) by the end of 2014.
“The rapid growth of e-commerce in Nigeria can be attributed to the middle class who are the primary consumers of mass marketed products”, Wiles explained.
Economists divide the middle class into relative and absolute terms. In relative terms, this refers to individuals or households that fall between the 20th and 80th percentile of the consumption distribution or between 0.75 and 1.25 times the median per capita income.
Nigeria’s middle class now account for 23 percent of the population, according to the latest statistics from the African Development Bank (AFDB). The newly-minted middle class are well educated, with 92 percent having completed a post-secondary school education.
The AFDB used an absolute definition of people whose daily consumption is between $2 and $20 (in 2005 PPP) daily to characterise the middle class in Africa. The definition is based on the average cost of living of about 1 billion people in the continent. The sector of the population spending between $2 to $4 a day is considered as the ‘floating class’, vulnerable enough to slip back to poverty. The remaining population earning between $4 and $20 a day is categorized as the ‘stable’ middle class.
Online marketing offers a level playing ground for large businesses as well as small and medium scale enterprises to operate in the global marketplace and for regional businesses and communities to participate in social economic and cultural networks across the globe.
With the growing successes recorded in the country’s e-commerce space contributed largely to the middle class of the economy, the low income group is also a potential target for business investors and mass products.