Nigeria’s gift card market is expected to grow by 21.4 percent to reach $1.7 billion in 2022 on the back of deeper e-commerce penetration that saw a resurgence following shut-downs precipitated by the COVID-19 pandemic, a new study has shown.
BusinessDay analysis of the data published by a Dublin-based Research and Markets, a market research firm, shows that the gift card market in Nigeria grew by 16.7 percent to $1.4 billion in 2021 from $1.2 billion in 2020, and is predicted to grow further to $1.7 billion in 2022.
Further analysis shows the projected figure for Nigeria will improve its ranking by three places to 21 out of 43 countries from 24 in 2021. The country is also the only African country in the top 25 list.
While other African countries like South Africa ($1.1bn), Egypt ($544m), and Kenya ($338.8m) remain in their previous ranking of 30, 42, and 43, respectively.
According to the report, the gift card market in Nigeria has done well to withstand the impact of economic slowdown along with negative business and consumer sentiment due to disruption caused by the pandemic.
“The growth of e-commerce, increased adoption to incentivise employees working remotely, digital gifting, and initiatives undertaken by government, hospitality and travel industries to revive growth were the factors that supported growth in the market,” the report states.
It also adds that though the gift card market was impacted due to the COVID-19, the market is expected to bounce back in the coming quarters, especially in the first half of 2022.
A gift card, a form of payment, is usually stored for future uses. Most often offered by retailers, consumers use it to make purchases at retail stores, filling stations, restaurants, and other locations. Once you load money in the card, you or the gift card’s recipient can then spend at accepted locations.
Examples of some gift cards in Nigeria are iTunes gift card, Amazon gift card, Google Play Store gift card, Steam gift card, Razor Gold gift card, American Express gift card, etc. Also, some of the companies that sell them in Nigeria are SureGifts, Patricia, GetCards Africa, JumiaPay, and Konga.
“The gift card market in Nigeria is thriving, and it is primarily led by SureGifts. There are also newer entrants like Showlove, and several merchants like Spar and Shoprite also issue their own proprietary gift cards,” Olaoluwa Samuel-Biyi, co-founder of SureGifts says.
He also states that although there is an active market for gift cards in Nigeria, the purchase volume skews in favour of corporate institutions using them as employee and consumer rewards, noting, “There is still limited adoption from individuals in Nigeria and there is a lot of room for growth, especially with some more marketing and sensitisation efforts.
“There is also an active market for international gift cards, where people receive and sell gift cards from US merchants for naira locally. This is done on platforms like Paxful or Patricia.”
Similarly, SpaceWatch.Africa, a digital magazine platform, notes in an article that the gift market growth has been primarily backed by the rising adoption of gift cards by the millennials and Gen Z consumers, expansion of the retail sector, and growing inclination towards cryptocurrencies.
“The demand for gift cards is also increasing in line with the demand for cryptocurrencies. The trend of converting gift cards into bitcoins and then into cash is gaining popularity among Nigerians and Kenyans. Cryptocurrencies and gift cards are driving the remittance market in Africa, and more specifically in Nigeria,” according to the magazine.
For retailers and marketers, gift cards help build brand awareness; capture more holiday sales; enable customer engagement; generate useful customer behavioural data; offer easy distribution and improve cash flow, Research and Markets says.
Cheng Fuller, a retail expert, notes that retailers are now setting more mixes of gift cards not because it brings them a significant market but because it creates an opportunity to bring more customers for them.
“The gift card market in which retailers generate gift cards is supposed to commit consumers’ future money or spend to their brand,” Fuller further states.
Although the gift card market declined marginally by 4.5 percent to $1.2 billion in 2020 from $1.3 billion in 2019, it was already gaining popularity among Nigerians.
“Everyone in Nigeria has one or two friends or families; they would like to give something too. So, instead of sending them money directly, they either give them gift cards to buy as much as the value of those cards,” notes Gbenga Ogunbiyi, a marketing consultant for Apex Network, a gift card exchange company.
He also states that people abroad who bring their money through the use of gift cards help bring capital investments that are significant for the economy.