The Central Bank of Nigeria’s most recent Annual Economic Report stated that the volume of transactions across e-payment channels in the retail payments segment rose significantly in 2021. The volume grew by 61.1 percent to N16, 324.84 million in 2021, from N10, 132.3 million in 2020.
The corresponding value of transactions also increased, by 43.4 per cent, to N1, 082,297.47 billion, from ₦754,830.82 billion in 2020.
The Nigerian retail industry has experienced substantial growth in recent years, contributing to economic development and job creation. By investing in modern methods and technologies, the sector has enabled more Nigerians to access quality goods and services, making it a key driver of economic prosperity.
The retail sector of the economy has made great strides since its emergence in the late 1970s, with retail companies now playing a pivotal role in the country’s economy. Over the last decade, the sector has grown significantly, leading to the development of modern shopping centres and malls across the country’s major business hubs and cities.
According to the most recent data from the Nigerian Communications Commission (NCC), the retail industry in Nigeria generated revenues of ₦1.59 trillion in 2018, accounting for 10 percent of the country’s Gross Domestic Product (GDP).
The sector also experienced a 7.2 percent growth in sales over the prior year, highlighting its continued expansion. Furthermore, the industry grew by over 13 percent between 2016 and 2018, indicating its positive trajectory.
Today, Nigerian retail companies’ account for a significant portion of the country’s GDP, with the sector contributing an estimated 10-15 percent. The industry has also been a key driver for job creation, employing more than one million people directly and stimulating the growth of other businesses in related fields.
The retail sector also employed over 1.1 million people in 2018, according to the NCC, and this figure is expected to increase as the industry continues to grow. Moreover, 70 percent of the industry’s workforce is made up of women, who are mainly employed as clerks and shop assistants.
In addition to creating jobs and wealth, the retail industry has also contributed to economic innovation and improved customer service. Retail companies operating in the country have invested heavily in technology, which has enabled shoppers to use the latest tools to purchase items and receive support from customer service agents.
This has led to improved convenience and customer satisfaction, while also reducing the costs of operating. Similarly, the industry’s presence in major cities across the country has stimulated local economic growth, encouraging investment in infrastructure, new businesses, and other services.
The industry has also been a major proponent of e-commerce, with companies within the sector accounting for a sizable portion of transactions taking place online and through mobile devices.
In 2018, the retail industry accounted for 37 percent of online and mobile transactions, according to the NCC. This has enabled individuals to access goods and services across the country more conveniently, encouraging more people to engage in online shopping and contributing to the growth of the e-commerce sector.
Furthermore, the sector has seen an increase in the number of retail stores in the country, with major shopping hubs located in Lagos, Abuja and Port Harcourt.
For example, Shoprite, one of Nigeria’s biggest retail outlets has expanded to 25 locations across 12 states and the Federal Capital Territory, Abuja since it first launched in Nigeria in 2005. The Shoprite retail chain in Nigeria also leverages a 4,732 square meters distribution centres in Lagos, to facilitate direct delivery from local farmers for Freshmark, the fruit and vegetable procurement and distribution arm of Shoprite to other retail companies and outlets across the country.
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This has had a major impact on the Nigerian economy as the leading supermarket chain formerly owned by South African-based retail company, Shoprite Limited, has over the years experienced remarkable growth, recently opening new stores in Port Harcourt, the capital city of Rivers State, reopening the vandalised store in Circle Mall, Lekki, Lagos and announced plans to open new stores in several cities in 2023.
With these outlets, Shoprite is providing the much-needed employment to over 2000 Nigerians, with a wide range of quality and affordable items on offer to the Nigerian public.
Furthermore, Shoprite’s presence has sparked the development of new businesses and services in the area, creating an environment primed for further economic growth and development. This has led to an improvement in the standard of living in Nigeria, as more people have access to quality goods and services.
The success story of the retail chain company could be attributed to the power of the retail industry to spur long-term economic development, towards the overall revival of the Nigerian economy in general as the service sector as a key driver of economic sustainability.
Another clear win for the retail industry is the social cohesion it fosters across the country, providing more individuals with access to venues to socialise and unwind while providing quality goods and services.
In recent years, the retail industry has also adopted more modern methods of payment, such as mobile money, gift cards and QR codes, enabling more Nigerians to purchase goods and services more easily.
This is also in response to the cashless policy of the Federal Government, which aims to ease the burden of cash transactions by providing more payment options to make shopping more secure and convenient for shoppers.
Overall, it is clear that the retail industry has played a key role in spurring economic growth in Nigeria. The sector’s contributions have been instrumental in encouraging investment, creating jobs, and improving the standard of living for many individuals.
However, as the industry continues to grow in the years ahead, analysts believe the retail sector can be expected to further contribute to the country’s long-term economic success if well harnessed by the government with the right incentives to attract more foreign direct investment (FDI) into the country.
