MOBILE COMMERCE (M-COMMERCE):

A FUTURE DRIVER OF BUSINESS

GROWTH IN NIGERIA

LAYADE, ADEDAMOLA A.

SEPTEMBER 2012

TABLE OF CONTENT

1. INTRODUCTION
1.1

Background

1.2

Problem of the research

1.3

Purpose of the study and research questions

1.4

Objective of the research

1.5

Justification of the research

1.6

Overview of the research

2. THEORETICAL FRAMEWORK
2.1

Business vs. Commerce & Electronic vs. Mobile Components of MCommerce

2.2

Mobile Devices

2.3

Mobile Intelligence

2.4

E-Commerce

2.5

M-Commerce

2.6

M-Commerce History and Current Statistics

2.7

Features of M-Commerce

2.8

M-Commerce services & applications

2.9

Mobile Telecommunication in Nigeria

3. CONCEPTUAL FRAMEWORK
3.1

Motivations for M-Commerce Transformation

3.2

Challenges for M-Commerce Transformation

3.3

Benefits of M-Commerce

4. METHODOLOGY
4.1

Introduction

4.2

Research Design
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4.3

Re-Statement of Research Questions

4.4

Data Collection Instruments

4.5

Method of Data Analysis

5. DATA PRESENTATION AND ANALYSIS

5.1

Key Statistical Highlights: ITU Data Release 2012

5.2

Case Study: Oracles Survey

5.3

Case Study: Business Opportunities of technology Convergence

5.4

Global Internet and Mobile Trend Analysis

5.5

Global Mobile Advertising Market

5.6

Social Networking Accelerating Growth Of Mobile

5.7

Growth of Nigeria Economy With Specific Focus on Telecommunications

Sector

5.8

Impact Analysis of How Mobile Services Are Transforming Economic and

Social Services in Nigeria

6. SUMMARY, RECOMMENDATIONS AND CONCLUSION

6.1

Summary

6.2

Recommendations

6.3

Conclusion

REFERENCES

3|Page

LIST OF TABLES

Table 1: Top 40 Countries with active mobile subscription

Table 2: M-Commerce Application
Table 3: Quarterly Summary of Telecoms Subscribers in Nigeria (March 11 Dec 11)
Table 4: Annual Subscriber Data (2011 -2007)
Table 5: 2.3Billion Global Internet Users 8% Growth Driven By Emerging Markets
Table 6: 1.1B Global Mobile 3G Subscribers, 37% Growth, Q4 at Only 18% of Mobile
Subscribers
Table 7: Gross Domestic Product at Current Basic Prices (N' Million)
Table 8: Annual Subscriber Data (2011-2001)

LIST OF FIGURES

Fig 1: The Mobile Internet is the 5th major technology cycle of the last half century
Figure 2: Top 40 Countries with active mobile subscription against estimated population
Figure 3: Mobile Intelligence expands information opportunities
Figure 4: Mobile Intelligence expands personal query relevance
Figure 5: percentage of subscribers by major operators
Figure 6: Annual Subscriber Data (2011 -2007)

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Figure 7: The user experience, mobile programs, and the e-commerce platform were the
top three priorities for 2012.
Figure 8: Facebook is the clear winner for areas of new investment, followed by mobile
Web and other social programs
Figure 9: Rapidly Growing Mobile Internet Usage Surpassed More Highly Monetized
Desktop Internet Usage
Figure 10: What Desktop Computers Have Evolved To
Figure 11: Computing growth drivers over time 1960 -2020E
Figure 12: Relative efficacy of Mobile vs. Other Advertising Media
Figure 13: Different Types of Platforms = Facebook + Apple + Google
Figure 14: Emerging Types of Social Networks
Figure 15: Average Time Spent on Various Mobile Functions
Figure 16: Top 7 Social media Sites in Nigeria
Figure 17: Nigeria Sectoral Contribution to GDP (2010-2011)
Figure18: Growth Rates of Key Sectors in the Nigerian economy, 2010-2011
Figure 19: Evolution of Mobile Subscription in Nigeria
Figure 20: Expansion of Mobile Service across Africa

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ABSTRACT
This research work shall focus on highlighting the potential impact as well as the
qualitative and quantitative benefits of M-Commerce to business growth in Nigeria. This
study is mainly a descriptive one, therefore the method of analysis of the data will be
explanatory and complemented with the use of research instruments, diagrams and where
applicable simple statistical tools like graph and charts. Case studies will also be sighted as
well as trend analysis. The method of analysis will enable us have a concise view of how
m-commerce will drive business growth in Nigeria.
Technology experts predict that by 2020 mobile wireless communications are very likely
to be available to anyone anywhere on the globe at extremely low cost (Pew Internet &
American Life Project, 2006b). Currently in Nigeria we have over 120million mobile
subscribers (GSM & CDMA) with 96million active users in a country with an estimated
population of over 158million it is safe to conclude that mobile technology has reached a
remarkable amount of the population in just 10years of its introduction to Nigeria.
Meanwhile, the non-oil sectors of the economy remained vibrant with the
telecommunication sector which recorded a growth rate of 34.76% in 2011. Other sectors
including wholesale and retail, building and construction, hotel and restaurants and real
estate posted double digit growth rates in 2011 with 11.33%, 12.26%, 12.09%, and 10.41%
respectively. Between 2006 and 2010, these sectors have grown at a real average rate of
13.44 %, 12.58 %, 12.53 % and 11.38% respectively. The crude oil and natural gas sectors
recorded a decline of 0.57%, significantly down from 5.25 % in 2010.
The increase of the flexibility and power of wireless technology has ultimately been a
motivating factor to the growth of M-Commerce. In the current Business organizations,
mobile commerce or M-Commerce has been introduced in finance, service, retail,
telecommunication and information technology services. In these sectors, M-Commerce is
not only being widely accepted but also it is being more used as a popular way of business/
commerce. In this paper we try to provide an overview of the fundamentals about mcommerce and e commerce.

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Mobile Commerce is on a growth track. It is gaining increasing acceptance amongst

various sections of the society. This growth can be traced back to technological and
demographical developments that have influenced important aspects of the socio-cultural
behaviour in todays world. The need for mobility seems to be a primary driving force
behind M-Commerce applications such as Mobile Banking, Mobile Entertainment and
Mobile Marketing.

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CHAPTER 1
INTRODUCTION

1.1 Background
Gone are the days of being chained to an office desk. Advances in high-speed wireless
network technologies and the proliferation of mobile computing and storage devices are
allowing todays workers to enjoy newfound freedoms. Wireless mobile technologies can
provide workers the ability to freely share and access information anywhere, anytime. This
translates into higher worker productivity and efficiency and the ability to more costeffectively provide products and services to customers.
In 2008, imports of data enabled phones exceeded that of non-data enabled phones in many
African markets. In 2009, the undersea cables hit East and Southern Africa in a big way. In
2010, mobile operators became serious about data availability and cost packaging for
everyday Africans. 2011 is expected to bring a new type of data-enabled mobile user in
Africa, and brings the mobile web to center stage.
On the technology front, Africans can accelerate development by skipping less efficient
technologies and moving directly to more advanced ones. The telecommunications sector
continues to attract a flurry of public and private investment. Stiff competition in Africas
broadband market sparked by undersea cables has started forcing down telecommunication
prices in the region, with mobile phone service providers announcing significant reductions
in Internet service prices.
Operators such as MTN are looking to expanding Africa operations by launching app
stores. MTN operates in 21 countries across the Middle East and Africa and has seen a
huge growth in data usage on its networks. Christian de Faria, MTN Groups Senior VicePresident for Commercial and Innovation, says increased online activity drives operators to
respond to customer trends.

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The time when operators could dictate what they offered to customers is over, says de
Faria. Operators need to go into partnerships with content providers to offer services such
as cloud computing, solutions for small and medium enterprises and to provide rich content
in terms of music, gaming, entertainment and news.
It is no longer about selling airtime, but bundling airtime with products and services. These
can range from app stores and music to value-added services like m-learning and m-health.
A good example of business information services extending their reach from print media to
mobile is directory services. Yellow Pages search brings the ability to find products or
services in consumers neighbourhoods by any of hundreds of categories, from attorneys to
garden services to huts. Targeted businesses can then be contacted telephonically or via
SMS, and also navigated to.

1.2 Problem of the Research

The purpose of the study is understand characteristics of potential m-commerce users and
examine the factors that influence the intention to use m-commerce as well as to show that
M-Commerce can potentially drive business growth through improved marketing,
advertising and sales using mobile devices.
Can Mobile Commerce aid economic growth? This is the major problem this study will
take a critical look at.

1.3 Purpose of the Study and Research Questions

The purpose of the study is understand characteristics of potential m-commerce users and
examine the factors that influence the intention to use m-commerce as well as to show that
M-Commerce can potentially drive business growth in Nigeria.

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The study would be guided by the following research questions:

What are the particular issues in m-commerce, opportunities and challenges?
What gaps are emerging between research and practice?
What are some examples of successful applications?
How will m-commerce aid economic growth?
What does the future hold for m-commerce?

1.4 Objective of the Research

This research work shall focus on analysing the potential qualitative and quantitative
benefits of M-Commerce to business growth in Nigeria.

1.5 Justification of the Research

Technology experts predict that by 2020 mobile wireless communications are very likely
to be available to anyone anywhere on the globe at extremely low cost (Pew Internet &
American Life Project, 2006b). Currently in Nigeria, we have over one hundred and twenty
million mobile subscribers (GSM & CDMA according to Nigeria Communications
Commission annual subscriber data) in a country with an estimated population of over one
sixty million it is safe to conclude that mobile technology has reached a remarkable
proportion of the population in just 10years of its introduction to Nigeria.
The remarkable growth rate and spread of mobile technology is a strong reason why
mobile commerce should be considered in Nigeria. Most mobile users are individuals.
Handheld devices are personalised and unlikely to be shared with others. Potential mobile

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commerce customers are also likely to be consumers this therefore means most mobile
phone subscribers are potential m-commerce customers.
This study is hereby significant because it will analyse the potentials of M-Commerce and
how it will drive economic growth in Nigeria.

1.6 Overview of the Research

It is acknowledged that the Internet is playing an important role in our daily lives. The
Internet has become a vehicle for services rather than just a static repository of
information. Airline booking and hotel booking are examples of these services. Besides the
new role of the Internet, we are witnessing rapid progress in wireless and handheld
technologies.
Telecom companies are offering new opportunities to users over mobile devices like
cellular phones and Personal Digital Assistants (PDA), reading emails and sending Short
Code Message (SMS) messages between cellular phones are becoming natural. Surfing the
Web (thanks to the Wireless Application Protocol WAP) is further evidence of the wireless
technology development.
We are convinced that the next stage (if we are not already in it) for telecom companies in
partnership with businesses is to allow users to buy and sell without being connected to
any wired network. Mobile commerce (m-commerce) is the new trend and is expected to
drive the future development of e-commerce.
Being able to buy and sell goods/services over mobile devices is an important step towards
achieving an anywhere, anytime paradigm. Location and time will no longer constrain
people from completing their transactions. Suppose that a person would like to buy a gift
for her sons birthday while she is on a bus. Instead of postponing the errand, she can use
her mobile phone to search for the perfect gift. Her search can be narrowed by such criteria
as the maximum price she is willing to pay, the desired delivery time, and the age of her
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son. It would be even more interesting if this person could outsource the entire transaction
to intelligent mobile application that could act on her behalf. Software agents are among
the components that will have an important role to play in the worldwide spread of mcommerce.
Today, the scope of M-Commerce encompasses almost every walk of life. Mobile services
are reported from the fields of content, entertainment, travel, banking and marketing. These
therefore shows that a research into M-Commerce will further show how important it is in
the economy and how it can boost economic growth.

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CHAPTER 2
THEORETICAL FRAMEWORK
2.1 Business vs. Commerce & Electronic vs. Mobile
In order to understand the convergence of E-Commerce and M-Commerce, it is imperative
to understand the conceptual background of these and other related terms e.g. Electronic
Business (E-Business) and Mobile Business (M-Business). It is therefore useful to
establish working definitions of the terms commerce and business for they seem to
have transcended their dictionary meanings and acquired new significance since the advent
of the Internet economy. We further differentiate between the terms electronic and
mobile, so as to clarify the respective concepts by showing their similarities and
highlighting their differences.
Business vs. Commerce
The term commerce, in this paper, refers to selling and purchasing of goods and services
in both business- and consumer segments and to activities directly related to such
transactions. Examples of such activities are marketing measures and after-sales services.
The related activities are included so as to take into account that not each and every
transfer of ownership or rights to use a good or service may necessarily trigger a monetary
transaction. The term business, in this paper, refers to all activities undertaken by a firm
in order to produce and sell goods and services. These activities are, thus, not exclusively
of commercial nature and include other processes such as procurement, production,
customer relationship management (CRM) and human resources management (HRM).
The term commerce is hence seen as an integral subset of the broader term business. In
accordance with this approach M-Commerce is regarded as an integral subset of MBusiness [Buse, 2002; UNCTAD, 2004]. E-Commerce is correspondingly seen as an
integral subset of E-Business.

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Electronic vs. Mobile Aspects

The adjective electronic, used within the specific contexts of E-Business or E
Commerce, signifies an anytime access to business processes. The access to computer
networks is in this case stationary. The services are therefore not completely independent
of the current geographic location of the user [Hohenberg and Rufera, 2004].
The adjective mobile, used within the specific contexts of M-Commerce or M
Business, signifies an anytime and anywhere access to business processes. The access
takes place using mobile communication networks, making availability of these services
independent of the geographic location of the user [Hohenberg and Rufera, 2004].
At this point it would be also helpful to differentiate between the terms mobile and
wireless. As opposed to the term mobile that signifies an anytime and anywhere
access to computer-mediated networks, wireless is just a method of communication
between electronic devices, e.g. with the help of infrared interfaces. Whereas a mobile
device is per se wireless, not every wireless device may be suitable for feasible mobile
applications [Anckar and DIncau, 2002]. For example, Wireless Local Area Networks
(WLAN) with a limited range of maximum 300 meters cannot support feasible mobile
applications.

2.2 Mobile Devices

M-Commerce is not just about using mobile phones as end user devices. The following list
gives an overview of different kinds of mobile devices:

Mobile phone

Blackberry

Personal Digital Assistant (PDA)

Smart phones (E.g. IPhone)

Laptop
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Tablet PCs (Apple I Pad, Blackberry Playbook, Samsung Galaxy Tab etc.)

Each mobile device has certain characteristics that influence its usability, such as

Size and colour of display

Input device, availability of keyboard or mouse

Memory and Central Processing Unit (CPU) processing power

Network connectivity, bandwidth capacity

Supported operating systems (e.g. Microsoft Pocket PC, Blackberry Operating

System, Android, Palm Operating System, Symbian)

Availability of internal smart card reader (e.g. Subscriber Identity Module (SIM)
card, memory card)

Depending on these factors, the services that the end user can receive differs
considerably. Moreover, depending on the network technology used for transmission,
the bandwidth capacity varies and influences the kind of services that the end user is
able to receive. Lately all these devices have the ability to connect to the internet either
through a Subscriber Identity Module (SIM) card by connecting to a 3G network or
through WIFI. The internet connectivity and mobility is a very integral part of Mobile
Commerce. Therefore any device that is mobile, has internet connectivity can be used
as a hardware resource for Mobile Commerce.

Figure 1: The Mobile Internet Is the 5th Major Technology Cycle of the Last Half Century
Source: Micro Strategy The New Era of Mobile Intelligence, 2010

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Since the 1960s, there have been four major cycles of computing: mainframes, mini
computing, personal computing, and desktop computing. Mobile computing, the 5th
technology cycle, is predicted to have a far greater impact and adoption than any of the
previous cycles.
Todays mobile computing is best epitomized by use of the Internet on smartphone
devices, including the Apple iPhone, Google Nexus One, and Research in Motion (RIM)
BlackBerry. Smartphones are exploding in popularity and technical capabilities. The
adoption rate of smartphones is far outpacing previously observed adoption rates of
Internet or desktop-based technologies. The reasons are simple: these mobile devices
provide constant connectivity and are convenient to carry, extremely powerful, and easy
and fun to use. Unique capabilities aside, the number of people that can carry a smartphone
is significantly greater than the number of people that take a laptop with them when away
from the office. Mobile computing will further expand its footprint with the arrival and
adoption of mobile tablet devices. Static, at-your-desk computing using a mouse and a
keyboard is quickly becoming out-dated. Almost everything about todays computers, for
the majority of daily tasks, is obsolete. The future is mobile computing on light-weight,
connected devices that use a Natural User Interface (NUI) and deliver information and
applications in the palm of your hand.
The table below shows the ranking of the top 40 countries in terms of the number of active
mobile phones in those countries. Nigeria ranks 10th in this regard but mobile phone
penetration compared to population are still pretty low at 60% compared to other countries
in the top 40. Despite this fact 60% and a very rapid growth rate of mobile phone
penetration which will be further explained below is an indication that Nigeria does have
huge potential for mobile commerce.

Rank County

Number of Mobile Phones

Estimated Population

% of Population

1. China

1,010,000,000

1,342,783,832

75.22

2. India

919,170,000

1,204,510,031

76.31

3. United States

327,577,529

316,070,001

103.64

4. Brazil

250,800,000

205,667,329

121.94
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5. Indonesia

250,100,000

182,469,001

137.06

6. Russia

224,260,000

138,119,425

162.37

7. Japan

121,246,700

126,214,115

96.06

8. Pakistan

114,610,000

182,469,001

62.81

9. Germany

107,000,000

82,187,224

130.19

10. Nigeria

95,886,714

158,033,962

60.67

11. Mexico

88,797,186

114,912,233

77.27

12. Italy

88,580,000

58,000,537

152.72

13. Bangladesh

86,550,000

161,959,717

53.44

14. Philippines

86,000,000

103,640,111

82.98

15. United kingdom

75,750,000

61,617,658

122.94

16. Vietnam

73,300,000

91,482,308

80.12

17. Egypt

71,460,000

83,593,737

85.48

18. Thailand

69,000,000

67,177,529

102.71

19. Iran

68,000,000

68,259,841

99.62

20. Turkey

66,000,000

79,720,789

82.79

21. France

58,730,000

64,716,341

90.75

22. Ukraine

54,377,000

44,869,414

121.19

23. South Korea

52,510,000

48,881,354

107.42

24. Spain

50,890,000

40,588,080

125.38

25. Argentina

50,409,800

42,177,224

119.52

26. Poland

47,153,200

38,426,384

122.71

27. Colombia

46,147,937

45,217,098

102.06

28. Saudi Arabia

46,000,000

30,198,724

152.32

29. South Africa

42,300,000

49,061,478

86.22

30. Algeria

33,000,000

35,377,819

93.28

31. Malaysia

30,379,000

27,022,899

112.42

32. Kenya

28,080,000

42,058,462

66.76

33. Venezuela

27,400,000

28,025,873

97.77

34. Peru

27,100,000

30,597,339

88.57

35. Morocco

27,050,000

32,289,992

83.77
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36. Canada

25,543,862

22,112,446

115.52

37. Taiwan

24,412,000

23,118,746

105.59

38. Romania

22,800,000

22,112,446

103.11

39. Australia

21,260,000

22,004,050

96.62

40. Netherlands

20,000,000

16,910,055

118.27

Table 1: Top 40 Countries with active mobile subscription

Source: Wikipedia, 2012

2.3 Mobile Intelligence

Mobile Business Intelligence (Mobile BI or Mobile Intelligence) refers to the distribution
of business data to mobile devices such as smartphones and tablet computers. Business
intelligence (BI) refers to computer-based techniques used in spotting, digging-out, and
analysing business data, such as sales revenue by products and/or departments or
associated costs and incomes.
Although the concept of mobile computing has been prevalent for over a decade, Mobile
BI has shown a momentum/growth only very recently. This change has been partly
encouraged by a change from the wired world to a wireless world with the advantage of
smartphones which has led to a new era of mobile computing, especially in the field of BI
Mobile Intelligence is 400 times more powerful than Desktop Internet Intelligence/
Business Intelligence. The revolutionary impact of Mobile Intelligence is evidenced by
three major drivers.

Driver Number 1: Mobile Intelligence Expands the User Population

Mobile devices will significantly surpass the impact and number of desktop Internet
devices. The range and number of mobile devices is showing explosive growth and the
boundaries between these devices is blurring. Mobile computing devices now range from
smartphones and NUI-infused tablets to handheld game consoles and fully functional incar computers. For all their differences, these mobile device types harmonize across
themes of connectivity, mobility, and information delivery.
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Figure 2: Mobile Intelligence will expand the user population

Source: Micro Strategy The New Era of Mobile Intelligence, 2010

Driver Number 2: Mobile Intelligence Expands Information Opportunities

As mobile computing becomes pervasive in both personal and professional lives, people
are discovering more and more opportunities to make complete use of these powerful
devices. From the moment they wake, they can use applications that not only enhance their
personal lives but also make them more productive and effective at work.
The ability to access information at any time in any location, easily in the palm of your
hand, allows immediate decision-making. A typical retail store manager may spend only a
few hours working at a desk. With Mobile Intelligence, the manager can process decisions
and analyse the latest information at any hour or location.

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Figure 3: Mobile Intelligence expands information opportunities

Source: Micro Strategy The New Era of Mobile Intelligence, 2010

Driver Number 3: Mobile Intelligence Expands Personal Query Relevance

Todays mobile computing devices are revolutionizing how information is deposited into
applications. Using a keyboard and a mouse is now out-dated. A natural user interface
allows users to point at what they want, touch where they want to go, and move the device
to indicate how they want to explore the information. Mobile computing devices respond
to how users move their fingers and arms, and understand their location, the direction they
are moving, and how fast. Mobile devices use these natural actions as inputs. Touch
screens dynamically change into convenient input controls to meet the users needs, such
as a keyboard, a calculator, a map, and a data visualization control. As a result, the users
inputs are faster and cover a greater range of options, all while being more intuitive. Why
enter a house number, street name, city, and zip code when the device can locate the user
automatically?
Query speed and query relevance are further enhanced with other rich capabilities such as
visual inputs via a camera or audio inputs via a microphone. Technology is playing catch20 | P a g e

up and already converts images into data inputs from barcodes, fingertips, fonts, and facial
recognition.
The on-going impact of the evolution in device inputs and natural interfaces is to make
applications faster, easier, and more natural to use, leading to greater usage and a higher
user adoption rate.

Figure 4: Mobile Intelligence expands personal query relevance

Source: Micro Strategy The New Era of Mobile Intelligence, 2010

The Impact of Mobile Intelligence will be greater than what is currently imaginable as
shown in figure 4 above. In the new era of Mobile Intelligence, businesses that presently
do not exist may evolve into industry leaders. Applications that are moderately valuable
with the desktop Internet may be billion dollar applications when fully applied to the
mobile Internet. The next YouTube or Facebook hasnt been invented yet, but will be
designed as a mobile application. Organizations that stay with todays desktop-based
information distribution models may become obsolete, outpaced by those organizations
that choose to thrive on the mobile Internet. Organizations that embrace Mobile

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Intelligence will become leaner, faster, smarter decision-making machines resulting in

more business, more revenue, and greater competitive advantage.

2.4 E-Commerce
The Internet and Web technologies have tremendously changed the way of doing business
in general, and commerce in particular. Users have more opportunities to be informed
about the current trend of the market before making any decision. Users are continuously
browsing the Internet as well as being overwhelmed with information from different online
sources (for example, www.forbes.com, www.ft.com ) In addition, there is no longer any
need to go to a library to purchase ones favourite sports magazine. Several Web sites exist
that allow users to submit online orders. This way of doing business constitutes a part of
what is commonly known as e-commerce). Web shopping is only a small part of the whole
e-commerce picture that covers several types of businesses that range from customer-based
retail sites like www.amazon.com (business-to-consumer), to auction and music sites like
www.ebay.com , and to business exchanges trading goods/services between corporations
(business-to-business). E-commerce is seen as a general term for any type of business, or
commercial transaction that involves the transfer of information across the Internet.
E-commerce as part of the whole e-business evolution has been the object of major
changes. First, businesses started the digitalization of their data to make it available online.
This data included the businesss profile and catalogues. Initially, businesses did not
attempt to adapt their business processes (that is, the know-how).
Later, businesses decided to undertake the reengineering of their processes due to the
pressure to remain competitive. The traditional way of satisfying users needs could no
longer cope with the challenges presented by the new context with its complex features:
profitability, competition, alliances, and market volatility. Adjusting the businesss knowhow to the context, therefore, became critical.

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The third stage consisted of offering online forms to capture users needs efficiently and
accurately. There was no longer the need to send faxes or call vendors to get orders
completed. To conclude any purchase transaction, financial partners were invited to join
the shopper-vendor relationship. Ensuring the security of the payment process and the
exchange of private information was and still is a major concern.
The next stage in the e-business evolution was the offering of personalized services. The
purpose of personalized services is to include the profiles of users in terms of preferences
and interests when working to fulfil their needs. Now, the trend of e-business is towards
joint ventures where business processes are merged.
A simple definition of E-Commerce describes it as: [...] the buying and selling of products
and services over the Web [Kalakota and Robinson, 2002]. However, there are several
definitions of Ecommerce in circulation emphasising its different aspects. Prevailing
definitions may be divided into two primary categories. The first category works with a
narrow, restrictive definition, requiring the whole transaction to take place in electronic
form and having a monetary character. For example, the
German Federal Statistical Office is reported to use the following definition: Transactions
are regarded as E-Commerce, when the offer as well as purchase or the actual availment of
a product or service is carried out in electronic form using a computer-mediated network
against monetary payment [Fischer, 2003].
This definition, however, seems to be too restrictive as it does not recognize the fact that
just some parts of a transaction might also be carried out electronically without having to
process all the steps of a value-chain in that form. Further, the emphasis on the monetary
character ignores the commercial nature of marketing measures (e.g. transactions carried
out with the intention of selling a product or service) and after-sales services (e.g.
transactions carried out in continuation of a preceding monetary transaction).
The second category works with a broader definition of E-Commerce, as can be seen in the
definition used by the US Bureau of the Census, which defines E-Commerce as, [...] any
transaction completed over a computer-mediated network that involves the transfer of
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ownership or rights to use goods or services. [] Completed transactions may have a zero
price (e.g., a free software download) [Mesenbourg, 2001]. Also according to the
Organisation for Economic Co-operation and Development (OECD), it is the method used
to place or receive an order, not the mode of payment or the channel of the delivery that
determines whether a transaction is considered as an E-Commerce transaction [OECD,
2002]. The primary criteria for E-Commerce, thus, are:

The least partially electronic form of a transaction, and

The transfer of ownership or rights to use a good or service whether against

monetary payment or otherwise.

2.5 M-Commerce
It is acknowledged that the Internet is playing an important role in our daily life. The
Internet has become a vehicle for services rather than just a static repository of
information. Airline booking and hotel booking are examples of these services. Besides the
new role of the Internet, we are witnessing rapid progress in wireless and handheld
technologies. Telecom companies are offering new opportunities to users over mobile
devices like cellular phones and personal digital assistants. Reading emails and sending
SMS messages between cellular phones are becoming natural. Surfing the Web thanks to
the Wireless Application Protocol is further evidence of the wireless technology
development. We are convinced that the next stage (if we are not already in it) for telecom
companies in partnership with businesses is to allow users to buy and sell without being
connected to any wired network. Mobile commerce (m-commerce) is the new trend and is
expected to drive the future development of e-commerce. Being able to buy and sell
goods/services over mobile devices is an important step towards achieving an anywhere,
anytime paradigm. Location and time will no longer constrain people from completing
their transactions. Suppose that a person would like to buy a gift for her sons birthday
while she is on a bus. Instead of postponing the errand, she can use her mobile phone to
search for the perfect gift. Her search can be narrowed by such criteria as the maximum
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price she is willing to pay, the desired delivery time, and the age of her son. It would be
even more interesting if this person could outsource the entire transaction to intelligent
components that could act on her behalf. Software agents are among the components that
will have an important role to play in the worldwide spread of m-commerce.
An e-commerce value-chain represents a set of business processes that implement
interactions between online shoppers and e-commerce systems. Song and Whang
suggested a value chain of eight processes: attract, interact, customize, transact, pay,
deliver, service, and personalize.
M-Commerce is a by-product of the technology convergence of Information Technology
(IT) with the telecommunication technologies (TCT), which is jointly referred to as
Information and Communication Technologies (ICT). M-Commerce may be thus regarded
as an extension of Electronic Commerce (E-Commerce) to wireless mediums. This
convergence, however, enables some unique, location-based services, hitherto not possible
in E-Commerce. These innovative services are made possible by the convergence of these
two technologies.
Many different definitions of mobile commerce exist in the literature, but these usually
refer to e-commerce activities via mobile devices such as mobile phones and PDA.
Mobility and reachability are two main characteristics of m-commerce. Compared with
traditional e-commerce, transactions are generally conducted through personal computers
(PCs) and laptops. M-commerce applications provide the potential with more freedom for
organizations and users to perform various commerce-related tasks without the limitation
of time and location (available anytime from anywhere).
Mobile phone users are increasingly accepting phones as multipurpose devices, which can
be used to send text messages, take pictures, surf the web, download ring-tones, and play
games (Smith, 2005). Some marketers are starting to see the mobile phone as a potential
marketing medium and consequently are seeking ways to tap into this burgeoning
opportunity. For example, Samsung and Nokia will provide digital video broadcast

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handheld (DVB-H) by mobile phones which can deliver up to 50 TV channels (Colleen,

2007).
Mobile commerce is viewed as the next generation e-commerce. It refers to any
transactions, either direct or indirect, via mobile devices, such as phones or personal digital
assistants (PDAs). The most significant features of mobile technology are mobility and
portability. The ability to access services ubiquitously, on the move, and through wireless
networks and various devices.
Adopting mobile technology may create two kinds of impacts on business operations. The
first is to facilitate communication among employee, customer and supplier. Through the
enhancement of communicating efficiency and information timeliness, mobile technology
can increase organizational productivity and profitability. The second is to re-vitalize
business processes through changing data access patterns. For example, insurance agents
are able to use mobile technology to provide timely services.
M-Commerce is any transaction, involving the transfer of ownership or rights to use
goods and services, which is initiated and/or completed by using mobile access to
computer-mediated networks with the help of an electronic device. (Rajnish Tiwari,
Stephan Buse and Cornelius Herstatt, 2010)
As shown above, M-Commerce is closely related to E-Commerce, since the services
offered in both variations are handled electronically by computer-mediated networks and
accessible via telecommunication networks. The only difference in the procedure to ECommerce is that in M-Commerce the telecommunication networks are accessed through
mobile electronic devices. There exist two different paradigms about the relationship of MCommerce to E-Commerce. The first paradigm classifies M-Commerce simply as an
extension of E-Commerce; the second paradigm regards M-Commerce as an independent
business field and consequently as an alternative mechanism to E-Commerce. That both of
these approaches are principally right and hence, individually, too one-sided, can be
derived from the following facts:

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a. Many of the services offered by M-Commerce may as well be availed using the
immobile (stationary) Internet, e.g. purchasing entrance ticket to a football
match.
b. M-Commerce opens new business opportunities by enabling innovative, locationbased services (LBS) that the immobile Internet cannot offer. For instance the
location of the nearest Automatic Teller Machine (ATM) in real time can only be
provided by determining the current geographic position of the user.

2.6 M-Commerce History and Current Statistics

It might be wise to start off with a little background on M-Commerce and follow the trail
of technology and significant moments of M-Commerce growth. Mobile commerce was
introduced back in 1997 when Coca Cola installed the first two mobile phone enabled
vending machines in Finland. They were able to send mobile payments to the vending
machines via SMS text messages. It was in the same year and country that an MCommerce based banking service was introduced as well.
The first M-Commerce internet platform was launched in 1999 by a Japanese company
called I-mode. I-Mode would be similar to T-Mobiles web2go browsing interface which
allows users the ability to browse the net, view email, download games and access other
services.
In the U.S. unlimited cell phone plans were none existent among major carriers few
years ago while in the European markets it has been the norm and in some cases are the
law. While Japan and Europe rolled out 3G in 2001, the U.S. didnt introduce 3G until
2003 and in Nigeria 2007.
Below is a list of M-Commerce and mobile related statistics:

China has the worlds largest mobile market with more than 750 million
subscribers
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50 million iPhones have been sold as of April 8, 2010

In 2013, the number of mobile phone users in the US is predicted to reach 255
million, representing 80% of the population

Brazil was the BRIC country with the lowest number of mobile phone subscribers
with only 174 million in 2009

Purchasing Train or Plane Tickets (30%) was the most popular M-Commerce
application in France in 2009

6 out of the top 10 selling iPhone apps are related to shopping

Japans M-Commerce exceeded $10 billion in 2009, compared to $1.2 billion in the
US

2.7 Features of M-Commerce

M-Commerce is characterised by some unique features that equip it with certain
advantages against conventional forms of commercial transactions, including E-Commerce
[Mller-Veerse, 2000; Buse, 2002]:

1. Ubiquity: Ubiquity means that the user can avail services and carry out
transactions largely independent of his current geographic location (anywhere
features). This feature can be useful in many situations, e.g. to cross-check prices
while standing in a supermarket or while one the move.
2. Immediacy: Closely related to the feature of ubiquity is the possibility of real-time
availability of services (anytime feature). This feature is particularly attractive for
services that are time-critical and demand a fast reaction, e.g. stock market
information for a broker. Additionally, the consumer can buy goods and services,
as and when he feels the need. The immediacy of transaction helps to capture
consumers at the moment of intention so that sales are not lost in the discrepancy
between the point of intention and that of the actual purchase.
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3. Localisation: Positioning technologies, such as the Global Positioning System

(GPS), allow companies to offer goods and services to the user specific to his
current location. Location based services can be, thus, offered to meet consumers
needs and wishes for localised content and services.
4. Instant connectivity: Ever since the introduction of the General Packet Radio
Service (GPRS) mobile devices are constantly online, i.e. in touch with the
network (always-on feature). This feature brings convenience to the user, as
time-consuming dial-up or boot processes are not necessary.
5. Pro-active functionality: M-Commerce opens, by the virtue of its ability to be
immediate, local and personal, new avenues for push-marketing, such as contentand product offers. Services like Opt-in advertising" can be offered, so that a user
may choose the products, services and companies, which he wants to be kept
informed about. The Short Message Service (SMS) can be used to send brief text
messages to consumers informing them of relevant local offerings that best suit
their needs. This feature ensures that the right (relevant) information can be
provided to the user at the right place, at the right time. The user too does not
have to fear missing some potentially crucial information or getting it too late.
6. Simple authentication procedure: Mobile telecommunication devices function
with an electronic chip called Subscriber Identity Module (SIM). The SIM is
registered with the network operator and the owner is thus unambiguously
identifiable. The clear identification of the user in combination with an individual
Personal Identification Number (PIN) makes any further time-consuming,
complicated and potentially inefficient authentication process redundant.

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2.8 M-Commerce Services & Applications

M-Commerce Applications
Application

Examples Of Offered Services

Mobile Accounting

Mobile Brokerage

Mobile Financial Information

Mobile Gaming

SMS Competition and Voting

Download of Caller Tune

Download of Music and Ring Tones

Download of Videos and Digital Images

Location-based Entertainment Services

Current Affairs (Financial, Sport and other News)

Travel Information

Tracking Services (Persons and Objects)

Mobile Search Engines and Directories

Mobile Office

Mobile Couponing

Direct (context-sensitive) Marketing

Organisation of Mobile Events

Mobile Newsletters

Mobile Shopping

Mobile Purchasing of Goods and Services

Mobile Ticketing

Public Transport

Sport- and Cultural Events

Air & Rail-Traffic

Mobile Parking

Remote Diagnosis and Maintenance of Vehicles

Navigation Services

Vehicle Tracking and Theft Protection

Emergency Services

Mobile Banking

Mobile Entertainment

Mobile Information Services

Mobile Marketing

Telematics Services

Table 2: M-Commerce Application

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Mobile Banking: This application makes it possible to complete bank-related transactions,

e.g. checking account status, transferring money and selling stocks, via mobile devices,
independent of the current user location.
Mobile Entertainment: This application contains services that provide the user digital
data with entertainment value on mobile devices, e.g. ring-tones, music and videos, on the
one hand. On the other hand it opens an array of interactive services, e.g. betting, gaming,
dating and chatting.
Mobile Information Services: This term refers to mobile services that provide subscribers
with content of informational character. Examples of such services are news updates of any
nature (finance, politics, sport etc.), travel information, access to search engines and
Mobile Office (e-mails, appointments etc.).
Mobile Marketing: This term refers to services based on mobile communication
technologies that provide firms with new, innovative instruments, e.g. to increase sale, win
and retain customers, improve after-sales services, build and sustain a positive and modern
image/brand and carry market research. Mobile devices serve thereby as simple and
relatively inexpensive channels of interaction.
Mobile Shopping: This application bundles services that allow for mobile processing of
transactions involving purchase of goods of daily use. The user can purchase (mostly
standardised) products by choosing them from a catalogue accessible from a mobile
device.
Mobile Ticketing: All services that must be paid for, before a lawful utilisation can take
place, are suitable for Mobile Ticketing, e.g. travelling in public transport, entry to a
cultural event or cinema. This application ensures that the user can purchase a right to
utilisation/entry (ticket) via a mobile device, replacing the conventional paper ticket. The
ticket is sent in digital form to the mobile device.
Telematics Services: Telematics is an artificial term that refers to innovative technologies
that link telecommunication technologies with informatics. The transport segment has been
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the primary area of this application, which is also known as Intelligent Transport System
(ITS). The main services are navigation systems, remote diagnosis as well as access to
other mobile applications such as Mobile Entertainment, Mobile Content/Office, Mobile
Banking and Mobile Shopping.

2.9 Mobile Telecommunication in Nigeria

The Nigerian mobile market has boomed in the past eight years, supported by a successful
liberalization program as well as positive political and economic environment. The first set
of GSM licenses was issued in 2001. At present, there are five (5) active Global System for
Mobile Communication (GSM) operators (MTN, Zain, Glo, Mtel and new entrant Etisalat)
as well as a multitude of smaller Code Division Multiple Access (CDMA) operators.
The liberalization of Nigerias telecommunications industry started in the early 1990s and
accelerated in 2000, after the election of a democratic government. Since then there has
been an influx of foreign direct investment, especially in the mobile services segment.
Growth in the fixed segment has been sluggish due to inadequate infrastructure and
investment, prompting a significant fixedmobile substitution effect and turning mobile
technology into the dominant means of communication in Nigeria. In order to stimulate
growth in the fixed sector, the government initially stepped in; inviting bids to privatize the
fixed incumbent, Nitel, but the sale of the incumbent has not been completed so far.
Given its size and rate of growth, Nigeria is one of the most attractive markets in the
Africa. In 2008, the country became the biggest mobile market in Africa in terms of
subscriptions, which in 2008 exceeded 63m, surpassing South Africa, and reached 73m in
2009. However, given the countrys lower purchasing power, Nigeria still lags South
Africa as the second largest African market in terms of mobile service revenue, generating
$6.6bn in 2009

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Table 3: Quarterly Summary of Telecoms Subscribers in Nigeria (March 11 Dec 11)

Source: Nigeria Communications Commission, Annual Subscriber Data, 2012

Chart Title
ETISALAT
12%
M-TEL
0%

MTN
46%

AIRTEL
20%
GLO
22%

Figure 8: percentage of subscribers by major operators

Source: Nigeria Communications Commission, Annual Subscriber Data, 2012

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Table 4: Annual Subscriber Data (2011 -2007)

Source: Nigeria Communications Commission, 2012

ACTIVE SUBSCRIBERS

120,000,000
100,000,000
80,000,000
60,000,000
40,000,000

FIXED WIRELESS

20,000,000

CDMA

GSM
2007

2008

2009

2010

2011

FIXED WIRELESS 1,579,6 1,307,6 1,418,9 1,418,9 719,406

CDMA

384,315 6,052,5 7,565,4 7,565,4 4,601,0

GSM

40,011, 56,935, 65,533, 81,195, 90,566,

YEARS

Figure 8: Annual Subscriber Data (2011 -2007)

Source: Nigeria Communications Commission, Annual Subscriber Data, 2012

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CHAPTER 3
CONCEPTUAL FRAMEWORK
3.1 Motivations for E-Commerce Transformation
Even in its nascent stage, mobile commerce can enhance business efficiency by
distributing information to the workforce remotely, and offering new channels on which to
interact with customers. The distinction of M-Commerce from E-Commerce is based on
the value proposition attributes of ubiquity, convenience, localization and personalization.
When these attributes are combined, the potential to improve the business value becomes
enormous. For the Internet value-adding activities such as search, evaluation, problemsolving, and transaction, mobile technology also enhances the value by making them more
convenient and efficient. In addition, a mobile service framework enables whole new
levels of customer care, as well as new business opportunities.
Consequently, mobile business will be the main driving force for the next phase of
electronic commerce growth because the rapid adoption of the mobile telecommunication
systems has created a market opportunity of several hundred million consumers
worldwide.
I. Clarkein 2001 presented the following reasons why mobile technology is beneficial for
businesses:

e-commerce applications that succeed on the desktop Personal Computer (PC) will
not necessarily meet with a similar accomplishment in a wireless commerce;

industries that are time sensitive, such as financial services and travel, are likely to
benefit from mobile commerce;

the convenience of it offers tremendous opportunities to expand a client-base by

eliminating some of the customers labour of life's activities;

vendors can deliver promotions based on the user's location, and real time
discounting may become the killer application,
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Personalized information and transaction feeds (such as past behavior, situation,

profile), via mobile devices, offer the greatest potential for the customization

3.2 Challenges for M-Business Transformation

Currently, however, mobile technology encounters limitations. For example, high costs,
slow speed, difficulties in typing text using a phone keypad, cumbersome navigation, and
unreliable service are the top five dissatisfactions for mobile users. Handheld devices still
have restricted capabilities that hinder the design of straightforward communication
protocols and prevent the management of data or services in an easy way. Limitations of
mobile devices involve restricted processing capabilities and storage space, increased
power consumption, limited display capabilities, variable bandwidth availability, sudden
disconnections. Clarke also discusses the problems in terms of uniform standards, ease of
operation, security for transactions, minimum screen size, display type and bandwidth,
billing services, and relatively impoverished web sites. The lack of practical applications is
another problem. On the business side, the challenges for developing m-commerce include
different terminals, multi-transaction services, flexible location, flexible service and
configurations, users experience and enterprise integration. Additionally, it may be
difficult for decision makers to choose the most suitable business model.
Managers also face the risk of wasting company resources chasing a changing
technological environment, consumer alienation, and erosion of e-commerce market share.
Although many of these limitations are being eliminated or improved, nonetheless they
need to be taken into account in m-business planning.
The improvement in technology constantly seeks to eliminate or atleast reduce these
challenges. You can get cheaper smartphones that will serve similar function as the
expensive one but without the slickness and durability of the more expensive ones, the
point is it can still be used to an M-Commerce device. Also the security is rapidly
improving with companies like VISA partnering with mobile phone companies like
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Blackberry to improve on payment security and ease on mobile devices. Introduction of 3G

and even 4G have drastically improved the bandwidth and speed of the internet on mobile
devices.

3.3 Benefits of M-Commerce

Mobile technology is no doubt one of the most explosive developments ever to have taken
place in the world. It offers enormous advantagesadded convenience, greater personal
security and the ability to take advantage of dead time to do business on the move.
In an increasingly time-pressured business and personal environment, the ability to work in
what was previously dead time is more important both for productivity and work-life
balance. For some, work is no longer just somewhere to go to, but something they do,
wherever they are. In the worlds poorest and richest countries alike, mobile technology is
touching heights these days and the small device is offering a lot to the users other than
making and receiving calls. With a new platform of smartphones in the market, this
technology is giving a tough time to the other fields of advertising and marketing. The
wider connection a business can make to their target markets, the higher possible sales they
can have. With this, maximizing benefits from the current technology like mobile devices
is a big step that industries need to establish.
In connection, the development of Mobile Commerce or M-Commerce gives an
opportunity to many businesses to offer flexibility for their customers to have access to
their business from devices such as mobile phones.

M-Commerce is the term for making business transactions using mobile devices. There are
already several existing M-Commerce applications and services nowadays that have been
very helpful to us. Some are mobile banking, location maps, and variety of news, mobile
shopping, ticketing and mobile file sharing.
Mobiles are being used more and more on daily basis and its more than just making and
receiving a call. Mobile companies are coming up with new features for their smart
phones, which offer consumers ease, flexibility and security at the same time.
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Below are some of these advantages:

Convenience

Flexibility

Easy of Connectivity

Personalisation

Time Efficient

Convenience: It is a true convenience to do much from a handy device via M-Commerce.

With wherever you are, in just a few clicks on your mobile device, you can already do
shopping, banking and download media files.

Flexible Accessibility: User can be accessible via mobile phones and at the same time be
accessible online too through logging on to various mobile messengers like Yahoo and
Gtalk and other networking platforms. On the other hand, user may also choose not to be
accessible by shutting down his mobile device, which at times can be a good thing.

Easy Connectivity: As long as the network signal is available, mobile devices can connect
and do commerce transactions, mobile to mobile and even mobile to other devices. No
need for modem or WI-FI connectivity set up.

Personalization: Each mobile device is usually dedicated to a specific user, it is personal.

You can do whatever you want to your mobile device, modify the wallpaper, change view
settings or modify contact information as you send emails or e-payments.

Time Efficient: Doing M-Commerce transactions do not require the user to plug anything
like personal computer or wait for the laptop to load. Just hit the on button of your mobile
device and you are ready to go.

Despite the small screen, having something in your pocket that can do so much via M38 | P a g e

Commerce is really an amazing technology and a great help. E-Commerce businesses are
also making applications for mobile phones which allow users to browse their online
products and make payments with couple of buttons.
Mobile technology offering benefits to all kinds of business
No matter what kind of job you do, mobile technology can help to make you more
productive and responsive:

The lawyer can access and update documents quickly, regardless of where work
takes them;

The travelling salesman can update his sales figures for the weekly report while on
the road;

The home-based worker can access the company network to find data for a
credentials document;

The building site manager can download blueprints;

The market researcher can update statistics on the corporate network from
wherever they are;

The recruitment consultant can swot up on a company before meeting a candidate;

The council worker can report an urgent piece of information back to colleagues in
the office, without needing to travel back there.

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CHAPTER 4
METHODOLOGY

4.1

Introduction

In the theoretical part of the research, key concepts were explained and the framework for
analysis was set. This research project is primarily a descriptive study that will involve the
collection of data mainly from secondary sources (e.g. Nigeria Communications
Commission, Pyramid etc.). The aim of the study is to give significant insight into the
subject of study M-Commerce in order to arrive at a reasonable conclusion and
understanding that it is a major driver for business growth in Nigeria.

4.2

Research Design

This has to do with how the research paper has been designed. This research paper has
hence been divided into six (6) chapters.
Chapter one is general introduction of the research study and it involves looking at the
historical background of the study, problem of the research, the purpose why the research
is being carried out, objective of carrying out the research, the justification and the general
overview of the research.
Chapter two is the theoretical framework and it looked at various components of the
research from the following perspective:

business vs. commerce & electronic vs. mobile components of m-commerce

mobile devices

mobile intelligence
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e-commerce

m-commerce

m-commerce history and current statistics

features of m-commerce

m-commerce services & applications

mobile telecommunication in Nigeria

Chapter three outlines the conceptual framework of the research with emphasis on
motivations for m-commerce transformation, challenges of m-commerce transformation
and the benefits of m-commerce
Chapter four shows the methodology adopted in carrying out the research, it starts with an
introduction, research design, re-statement of research questions, data collection
instruments and finally method of data analysis.
Chapter five shows data presentation and analysis
Chapter six contains summary of the whole research work, conclusion and
recommendations.

4.3

Re-Statement Of Research Questions

What are the particular issues in m-commerce, opportunities and challenges?

What gaps are emerging between research and practice?

What are some examples of successful applications?

How will m-commerce aid economic growth?

What does the future hold for m-commerce?

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4.4

Data Collection Instruments

The main sources of data for this project are documents and publications that constitute
secondary instruments. Most of the data will be sourced from Nigeria Communications
Commission NCC and also reference will be made to findings from Pyramid Research
publication Impact of Mobile Services in Nigeria.

4.5

Method Of Data Analysis

This study is mainly a descriptive one, therefore the method of analysis of the data will be
explanatory and complemented with the use of research instruments, diagrams and where
applicable simple statistical tools like graph and charts. Case studies will also be sighted
as well as trend analysis. The method of analysis will enable us have a concise view of
how m-commerce will drive business growth in Nigeria.

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CHAPTER 5
DATA PRESENTATION AND ANALYSIS

We hope to rewire the way people spread and consume informationWe think a more
open and connected world will help create a stronger economy with more authentic
businesses that build better products and services
Mark Zuckerberg, Founder /
CEO, Facebook Letter to Potential
Shareholders, May 2012

5.1 Key Statistical Highlights: ITU Data Release 2012

Internet:

The percentage of individuals using the Internet continues to grow worldwide and
by end 2011 2.3 billion people were online.

In developing countries, the number of Internet users doubled between 2007 and
2011, but only a quarter of inhabitants in the developing world were online by end
2011.

The percentage of individuals using the Internet in the developed world reached the
70% landmark by end 2011. In Iceland, the Netherlands, Norway and Sweden more
than 90% of the population are online.

By end 2011, 70% of the total households in developed countries had Internet,
whereas only 20% of households in developing countries had Internet access. Some
outstanding exceptions include Lebanon and Malaysia with 62% and 61% of
households with Internet respectively.

Total international Internet bandwidth increased sevenfold over the last five years
reaching 76000 Giga Bit/s by end 2011. This equates to 34000 bit/s per Internet
user worldwide.

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Major differences in Internet bandwidth per Internet user persist between regions:
on average, a user in Europe enjoys 25 times as much international Internet
capacity as a user in Africa.

Mobile cellular:

Total mobilecellular subscriptions reached almost 6 billion by end 2011,

corresponding to a global penetration of 86%.

Growth was driven by developing countries, which accounted for more than 80%
of the 660 million new mobilecellular subscriptions added in 2011.

In 2011, 142 million mobilecellular subscriptions were added in India, twice as

many as in the whole Africa, and more than in the Arab States, CIS and Europe
together.

By end 2011, there were 105 countries with more mobilecellular subscriptions
than inhabitants, including African countries such as Botswana, Gabon, Namibia,
Seychelles and South Africa.

Countries where mobilecellular penetration increased the most in 2011 include

Brazil, Costa Rica, Kazakhstan, Lao P.D.R. and Mali.

Mobile broadband:

By end 2011, there were more than 1 billion mobilebroadband subscriptions

worldwide.

Mobile broadband has become the single most dynamic ICT service reaching a
40% annual subscription growth in 2011.

Although developing countries are catching up in terms of 3G coverage, huge

disparities remain between mobilebroadband penetration in the developing (8%)
and the developed world (51%).

In Africa there are less than 5 mobilebroadband subscriptions per 100 inhabitants,
whereas all other regions have penetration levels above 10%.
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By end 2011, there were more mobilebroadband subscriptions than inhabitants in

the Republic of Korea and Singapore. In Japan and Sweden, active mobile
broadband penetration surpassed 90% by end 2011.

In 2011, 144 million mobilebroadband subscriptions were added in the BRICS

(Brazil, the Russian Federation, India, China and South Africa), accounting for
45% of the worlds total subscriptions added in 2011.

5.2

Case Study: Oracles Survey

A 2011 survey of e-commerce professionals in consumer-facing industries shows that

online retailers are overcoming these challenges by focusing on their customers, building
Websites around them, investing heavily in the customer experience, and promising new
areas for engaging shoppers and growing the companys base. Initiatives such as mobile
that were a blip on the radar in previous years have taken center stage (and are
commanding budget dollars). This compounds a key frustration online retailers face: the
integration of multiple technologies, few of which were built for todays evolved use cases.
Online organizations are stretched thin to balance back-end challenges while sprinting to
deliver engaging, consistent user experiences that capture more mind share and wallet
sharethe key investment area for 2012.
In November 2011, Endeca (acquired by Oracle in February 2012) conducted the Trends
for 2012 in Business to Consumer (B2C) Commerce survey to help businesses gain
actionable insight into the evolving nature of e-commerce. The survey captures business
results from the last calendar year and provides visibility into areas of investment in 2011.
Responses were gathered from 221 e-commerce professionals from leading retail, travel,
and consumer manufacturing organizations. Among the respondents, 53% identified
themselves as business-oriented professionals, 37% indicated a technical role, and the
remainder had an executive or C-level role. Of those surveyedrepresenting primarily

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companies among the top 500 internet retailersmost were from apparel, travel and
hospitality, consumer electronics, general merchandisers, and specialty brands.
Mobile Was the Game Changer It Was Predicted to Be
Delivering on analyst predictions, 2011 was indeed The Year of Mobile. Not only did
mobile sales increase dramatically, with US$6.7 billion in 2011 m-commerce sales, but
mobile also proved itself as an incredibly valuable tool for accelerating online and in-store
purchases on the customers terms. Mobile has also served as a catalyst for cross-channel
integration. With consumers using mobile Websites and apps in tandem with other touch
points, 41% of the respondents from online organizations plan to invest more resources on
the front end of mobile user experiences and integrate mobile with their back-end
technology. The success of mobile has not only encouraged organizations to continue
investing in it in 2012 but has also led them to ratchet it up by hiring more employees with
mobile skills and building on existing programs to find new ways to engage connected
consumers.
To Hedge Against the Weak Economy, Organizations Balanced New Acquisition and
Retention Strategies with Investment in Experience
To combat the lingering economic weakness, online retailers focused equally on three
areas: growing market share, cultivating their customer bases with loyalty programs, and
investing in the user experience. Customer acquisition centered on search strategies and
social programs, whereas loyalty programs relied heavily on e-mail marketing and mobile
loyalty programs to drive more-frequent, higher-value transactions. Protecting margin and
experimenting with new social programs rounded out the top five areas online
organizations focused on to protect against economic woes.
Organizations

Have

Invested More

in

Customer-Centric

and Customer-Facing

Technologies, with Mobile and Analytics Leading the Pack

When asked to select all areas of investment over the last 18 months, mobile (68%),
Website analytics (68%), e-mail marketing (53%), and social programs (47%) topped the
list, followed by user reviews (broken out separately from social programs, at 45%).
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Capturing lower percentages were internal-facing technologies, including content

management systems (41%) and e-commerce platforms (36%).
Investment in User Experience Remains a Top Priority; Mobile and Commerce Platforms
Get Equal Priority
When asked to identify the top three areas for investment in 2012, the respondents
indicated that continued investment in the customer experience was the top priority,
followed by mobile and commerce platforms.
User experience seen as the largest opportunity to drive additional revenue.
Answering the demand for tailored user experiences, 44% of the respondents representing
online retailers reported that optimizing the user experience across touch points is their top
priority for 2012.
Planned investment in mobile equals e-commerce platforms. Mobile and commerce
platforms came in second and third, respectively, for planned areas of investment in 2012,
with 42% of the respondents choosing spending on mobile programs and 41% indicating
budget for a commerce platform. Mobile has become a key element of doing online
business, gaining as much attention as must-haves such as the commerce platform.
Social climbs the list as a top investment area. The survey respondents listed social
fourth on the list, with 35% citing a planned social investment in 2012. As online
organizations aim to build experiences around consumers, they know that social elements
are a necessity to further engage the millions of socially active consumers and meet their
expectations. Survey respondents regard social programs as both a customer acquisition
and retention tool.

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Figure 7: The user experience, mobile programs, and the e-commerce platform were the top three priorities for
2012.
Source: Oracle, 2011

For New Areas of Investment, Facebook Ranks #1, Followed by Mobile and Other Social
Programs
Broken out from other social programs, Facebook takes the top spot for emerging areas
to invest in, with 57% of the respondents indicating a planned investment in the social
networking giant. Behind Facebook, the mobile Web (47%), other social programs (such
as Twitter or forums, with 43%), and mobile apps (43%) rank among the top emerging
initiatives.

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Figure 8: Facebook is the clear winner for areas of new investment, followed by mobile Web and other social
programs
Source: Oracle. 2011

Emerging Initiatives for 2012

Retailers flip mobile prioritiesmobile Web over apps in 2012. Flip-flopping from
last years survey results, investing in a mobile-optimized Website ranked as a higher
priority than mobile apps. Last year 38% of retailers reported mobile apps as a top
investment, with 31% choosing mobile Web. In the current survey, 46 % said they will
invest in mobile Web and 42% will invest funds in apps. Although apps will continue to be
created for engaging interfaces and features, retailers are now focusing on the greater
volume of browser-based traffic by providing consistent experiences integrated with the
other digital touch points that mobile directly supports.
Social programs remain a top priority. Beyond Facebook, 43% of retailers are
continuing to answer the demand for social programs such as enhanced user reviews and
communities. Although social programs are a must-have in todays user experiences, onethird of the respondents still reported difficulty in determining social program ROI.

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 Personalization, A/B testing, and tablet devices round out the emerging initiatives
list. Personalization has been broadly defined, but with relevance at the core of a great
user experience, personalization remains a consistent focus, with 34% of the respondents
investing in new personalization initiatives in 2012. Among the respondents, 31% of
respondents reported A/B testing as a new area of investment with the promise of
promoting proven content and products to consumers. Tablet devices made a first
appearance on this years survey, with 31% saying they plan to invest in the emerging
touch point, ranging from in-store deployments for kiosks and associates to consumerfacing apps and experiences that engage big-spender tablet users.
Determining emerging programs ROI is a challenge. Consumers are demanding
social programs and multichannel features that retailers must deliver to remain
competitive, but 30% said determining the measurable value of new programs is difficult.
Retailers are defining new metrics to measure success going forward, including newcustomer acquisition, volume of user-generated content, and time spent on a Website.
Conclusion
Online retailers are on the cusp of a totally new way of doing business. They have a unique
opportunity to capture consumer mind share and wallet share if they can deliver consistent
experiences and enable unique multichannel commerce behaviors before their competitors
do. Success will rely on honing efforts to address user-centric customer experiences,
narrowing the focus to the most-valuable programs, and electing the right technology
strategy that will enable internal teams to deliver optimized experiences scalably. Areas to
watch are the emergence of real-time retail analytics, social-enabled commerce, the
continued success of mobile, and tools that will enable retailers to scale always-targeted
experiences that target merchandising more effectively. As needs surpass what existing
technology can support, solutions will collapse into a unified control panel where
consistent, optimized cross-channel experiences can be created, managed, and monitored
centrally.

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5.3 Case Study: Business Opportunities of Technology

Convergence
This section describes how the technology convergence may be utilized to find new
business opportunities. Following is a case study of Sevenval AG, a firm providing
innovative (browser-based) solutions for E-Business and M-Business. Its product
Sevenval FIT Mobile which converts web based applications into mobile solutions is
reportedly in use at Deutsche Postbank AG and several others. The following data are
based on information provided by Sevenval AG as well as own research.
Cologne-based software firm Sevenval AG, with its 40-members team, provides an
innovative middleware solution for Mobile Business. Its product Sevenval FIT Mobile
(FIT = Filtering Integration Technology) converts an existing internet presence into an
application for mobile devices. The main advantage of such a solution is that the customer
does not need to undertake any technical modifications on existing software. According to
information provided by Sevenval, existing web sites can be thus converted into suitable
formats for mobile devices within a few man days.
The idea behind FIT Mobile is as simple as it is ingenious. On receiving a request from a
mobile device the FIT middleware interprets the request, retrieves the data including
complex processes and security mechanisms from the existing internet applications and
transforms it into a suitable mobile format. Processes, graphics and images are thereby
automatically adapted to the respective capabilities of the display and browser in use. FIT
Mobile can work with all popular mark-up languages, mobile formats and web
technologies, e.g. HTML or WML. It recognises the mobile device and automatically
renders the content in an optimised format. For this purpose, Sevenval maintains and
regularly updates, as per its own statement, a database containing technical specifications
of over 7000 mobile phone models from across the world. This feature of the Sevenval
solution circumvents the otherwise seriously impairing issue of finding suitable mobile
phones. This ensures that the mobile banking software does not have to be updated each
time a new mobile phone model comes out; an entry of technical specifications in the
database would suffice.
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This solution seems to be gaining fast popularity. Sevenval can meanwhile boast of several
top references in various sectors. Prominent references in the field of Mobile Banking
include Postbank, comdirect bank, Norisbank and VR-Networld.

5.4

Global Internet and Mobile Trend Analysis

Mobile is clearly becoming a new way people shop [eBay has] nearly tripled mobile
GMV (gross merchandise value) year-over-year to nearly $2 billion, with strong holiday
shopping momentum in Q4. In 2011, we expect Mobile GMV to double to $4 billion.
John Donahoe,
President & CEO,
eBay
CQ4:10
Earnings Call

Table 5: 2.3Billion Global Internet Users 8% Growth Driven By Emerging Markets

Source: United Nations/ International Telecommunications Union, Internet World Stats, 2011

For mobile phones to effectively drive M-Commerce, it relies heavily on internet

connectivity. Transactions on are completely and are executed over the internet so internet
penetration and growth is very critical. Table 5 above shows that Nigeria ranks 5th
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worldwide in terms of the number of internet users added between 2008 -2011, this is
above the USA which is 8th within the same time frame. Although Nigerias population
penetration is just 28%, this is still impressive within a short time and indicates a huge
potential for growth.

Table 6: 1.1B Global Mobile 3G Subscribers, 37% Growth, Q4 at Only 18% of Mobile Subscribers
Source: Kleiner Perkins Caufield Byers (KPCB), Internet Trends D10 Conference, 2012

Table 6 above shows global 3G subscription. This is equally important as 3G offers high
speed internet. The growth of 3G subscriptions in Nigeria is 51%, although this is small
compared to countries like China, India, Brazil Egypt and Vietnam we still rank no1 in
terms of 3G growth in Africa.
In 2011 according to KPCBs research shown in Table 6 above, Nigeria had 6million 3G
subscription in 2011. Let me also add that the current Blackberry Internet Subscription in
Nigeria is currently 2.4million in addition to the 3G this is impressive considering when it
was introduced to Nigeria.

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Figure 9: Rapidly Growing Mobile Internet Usage Surpassed More Highly Monetized Desktop Internet Usage
Source: Stat Counter, 2012

The year 2011 witnessed a great shift from desktop computing to mobile computing.
Although a lot of people have desktop computers in their homes and offices, the still
prepare to go to the internet using their mobile devices. Figure 11 shows that more and
more people use their tablets, mobile phones and other mobile devices to connect to the
internet in Nigeria. This is because mobile internet is relatively affordable and most
importantly its easier and cheaper to acquire a mobile phone than to buy a computer
dedicated for internet connectivity. A N2500 brand new nokia phone will allow you
connect to the internet and service providers have various data bundles that are affordable
for different categories of people.

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Figure 10: What Desktop Computers Have Evolved To

Source: Corbis, 2012

Although we have the more expensive mobile device like the tablets (Ipad, galaxy tab etc.),
it is still a preferred choice for internet connectivity by many because of its mobility

Figure 11: Computing growth drivers over time 1960 -2020E

Source: ITU, Mark Lipacis Morgan Stanley Report, 2011

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5.5

Global Mobile Advertising Market

Mobile is clearly becoming a new way people shop [eBay has] nearly tripled mobile
GMV (gross merchandise value) year-over-year to nearly $2 billion, with strong holiday
shopping momentum in Q4. In 2011, we expect Mobile GMV to double to $4 billion.
John Donahoe,
President & CEO,
eBay
CQ4:10
Earnings Call

Figure 12: Relative efficacy of Mobile vs. Other Advertising Media

Source: Chetan Sharma, 2011

Figure 12 shows that mobile advetising is graudally becoming the number choose for
brands. This is because it is more effective than other media and the fact that it cuts across
a huge demographic and is not limited by location makes it very effective. All that is
require is basic mobile internet connectivity. A lot of mobile phone manufacturers now
make it standard for phones to be a ble to browse the internet just as much as the phone can
do its primary function which is to make a phone call.

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5.6

Social Networking Accelerating Growth of Mobile

John Doerr of KPCB coined SOLOMO (Social Local Mobile). This describes the way
social media has helped shape and accelerate growth of mobile global and we shall see
later in this chapter Nigeria.

Figure 13: Different Types of Platforms = Facebook + Apple + Google

Source: ComScore Company Data, 2010

Figure 14: Emerging Types of Social Networks

Source: Groupon, Twitter Zynga Company Information, 2011

Figure 13 and 14 takes a look at establish platform and emerging platforms from the social
networking angle that serves various purposes from information sharing to pure social,
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gaming etc. The amazing thing about these social media platform is that to the owners its
a huge investment that rakes in billions of dollars, to the various vendors that use it for
advertising, product launch and sale, its very effective and finally to the end user its
engaging, easy, fun and now seen as a way of life.

Figure 15: Average Time Spent on Various Mobile Functions

Source: AppsFire, 2011

Nigeria currently ranks 31st in the world in terms of Facebook subscription with 5,184,720
members as of July 2012. The user penetration is 3.41% currently but Nigeria ranks
highest globally with 81.2% for Facebook mobile penetration.
In terms of advertising on Facebook, Nigeria ranks 5th globally with Cost Per Click (CPC)
of $0.91 and Cost Per Mille (CPM) of $0.17. Russia, Japan, United State and Australia are
ahead of Nigeria in that order. Meanwhile South Africa also made the top 10 list coming
10th globally and 2nd in Africa.
From the African perspective, Nigeria has the highest number of users in Africa followed
by South Africa which ranks 32nd globally. Algeria, Israel, Tunisia, Kenya, Ghana,
Senegal, Ethiopia, Libya, Tanzania and Cameroun all make the top 100 globally in that
order.

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What this means is that the potentials that social media has to accelerate growth can also be
used to accelerate the use of commerce using the same media and leveraging on the mobile
web exposure it exposes users to.

Figure 16: Top 7 Social media Sites in Nigeria

Source: Stats Counter, 2012

5.7

Growth of the Nigeria Economy with Specific Focus on

Telecommunications Sector
In 2011, the Nigerian economy grew at an estimated real rate of 7.36% (see figure 19).
This was slightly lower than the 7.98% recorded in 2010. In 2011 on a quarterly basis, the
economy grew by 6.68% in the first quarter, down by 0.64 percentage points year-onyear. In the second quarter, the economy grew by 7.61% down marginally from the 7.71%
posted in the corresponding quarter a year earlier. The economy recorded growth rates of
7.30% and 7.68% in the third and fourth quarters of the year respectively, down by 0.66
percentage points and 0.92 percentage points year-on-year.

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Key economic developments that contributed to the marginal decline in GDP in 2011
include lower agricultural output, the lingering effect of the financial sector reforms
(involving mainly the banking sector and the capital market), as well as some significant
disruptions witnessed in the oil and gas sector particularly towards the fourth quarter.
Despite the marginal decline posted in 2011 however, the growth rate for the year was
higher than the five year average recorded over 2005 to 2010 at 6.68%.

Figure 17: Nigeria Sectoral Contribution to GDP (2010-2011)

Source: National Bureau of Statistics, Review of the Nigerian Economy in 2011 & Economic Outlook for 2012
2015, May 2012

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Activity Sector
1. Agriculture
(a) Crop Production
(b) Livestock
(c) Forestry
(d) Fishing
2. Industry
(a) Crude Petroleum & Natural Gas
(b) Solid Minerals
Coal Mining
Metal Ores
Quarrying & Other Mining
(c) Manufacturing
Oil Refining
Cement
Other Manufacturing
3. Building & Construction
4. Wholesale & Retail Trade
5. Services
(a) Transport
Road Transport
Rail Transport & Pipelines
Water Transport
Air Transport
Other Transport Services
(b) Communication
Telecommunications
Post
(c) Utilities
Electricity
Water
(d) Hotel & Restaurant
(e) Finance & Insurance
Financial Institutions
Insurance
(f) Real Estate & Business Services
Real Estate
Business Services
(g) Producers of Govt. Services
Public Administration
Education
Health
(h) Comm., Social & Pers. Services
Private non-Profit Organizations
Other Services
Broadcasting
TOTAL (GDP)
Source: National Bureau of Statistics (NBS)

2005
4,773,198.38
4,228,282.24
313,252.32
61,785.79
169,878.03
6,094,891.34
5,664,883.21
17,301.53
0.28
14.90
17,286.35
412,706.60
29,037.47
8,501.84
375,167.29
215,786.12
1,868,251.30
1,620,111.98
385,481.61
362,605.26
6.94
982.88
3,282.82
18,603.71
39,513.20
38,194.00
1,319.20
29,387.42
27,905.92
1,481.50
46,080.04
130,749.45
126,528.38
4,221.07
712,835.26
680,790.75
32,044.51
148,055.51
115,190.77
26,042.52
6,822.22
128,009.49
154.48
126,112.79
1,742.22
14,572,239.12

2006
2007
5,940,236.97 6,757,867.73
5,291,619.08
6,024,381.00
378,702.61
434,151.66
73,461.07
83,812.04
196,454.21
215,523.03
7,488,743.54 8,085,380.04
6,982,935.44
7,533,042.60
27,283.96
31,454.41
0.30
0.40
22.21
26.94
27,261.45
31,427.07
478,524.14
520,883.03
37,457.96
41,355.76
11,791.64
14,916.86
429,274.54
464,610.41
250,332.27
266,463.99
2,741,794.53 3,044,773.87
2,143,487.42 2,502,832.04
441,822.30
473,445.36
416,240.26
444,989.96
7.53
9.55
1,061.25
1,170.70
4,023.88
4,567.79
20,489.38
22,707.36
165,524.06
243,551.04
164,019.87
241,814.89
1,504.19
1,736.15
42,614.82
45,778.44
40,974.19
43,820.51
1,640.63
1,957.93
57,611.87
72,839.43
296,704.89
340,908.11
288,381.31
330,822.23
8,323.58
10,085.88
808,555.17
925,594.42
765,184.66
871,568.00
43,370.51
54,026.42
168,796.67
193,425.36
131,329.00
151,330.40
29,689.87
33,356.60
7,777.80
8,738.36
161,857.64
207,289.88
158.80
163.59
159,545.29
204,451.11
2,153.55
2,675.18
18,564,594.73 20,657,317.67

2008
7,981,397.32
7,114,793.96
512,943.55
99,022.65
254,637.17
9,719,513.85
9,097,750.70
36,190.11
0.52
31.00
36,158.59
585,573.04
47,582.10
17,162.68
520,828.27
306,581.64
3,503,181.70
2,785,654.78
479,126.69
450,329.84
9.66
1,184.75
4,622.60
22,979.84
249,883.37
248,102.08
1,781.29
52,670.64
50,417.93
2,252.71
86,058.68
392,044.34
380,445.57
11,598.77
1,064,433.59
1,002,303.20
62,130.39
223,385.84
174,029.96
39,394.14
9,961.73
238,051.64
188.13
235,118.78
2,744.74
24,296,329.29

2009
2010
9,186,306.05 10,273,651.99
8,200,921.69
9,159,983.65
583,623.47
661,662.21
111,071.52
124,283.20
290,689.37
327,722.93
8,071,070.58 10,440,834.98
7,418,148.91
9,747,355.20
40,612.78
45,656.99
0.60
0.68
34.68
39.10
40,577.51
45,617.21
612,308.89
647,822.79
53,958.89
61,268.35
19,556.59
22,121.45
538,793.41
564,432.99
347,690.73
393,525.92
4,082,351.76
4,667,658.38
3,106,819.54
3,430,111.69
506,720.97
528,268.57
475,907.25
495,111.55
10.22
10.78
1,248.38
1,357.77
5,243.09
5,805.66
24,312.03
25,982.81
256,003.69
262,617.83
254,195.37
260,770.98
1,808.32
1,846.85
62,148.50
70,543.07
59,613.44
67,684.79
2,535.06
2,858.29
98,961.71
113,684.94
444,235.90
507,490.24
430,991.55
492,259.57
13,244.35
15,230.67
1,213,009.66
1,342,926.91
1,142,366.55
1,262,791.74
70,643.11
80,135.17
255,443.83
292,679.99
197,262.29
224,204.56
47,095.70
56,010.85
11,085.85
12,464.58
270,295.27
311,900.14
211.99
241.29
267,194.85
308,642.66
2,888.43
3,016.18
24,794,238.66 29,205,782.96

Table 7: Gross Domestic Product at Current Basic Prices (N' Million)

Source: National Bureau of Statistics, Review of the Nigerian Economy in 2011 & Economic Outlook for 2012
2015, May 2012

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Figure18: Growth Rates of Key Sectors in the Nigerian economy, 2010-2011

Source: National Bureau of Statistics, Review of the Nigerian Economy in 2011 & Economic Outlook for 2012
2015, May 2012

The non-oil sectors of the economy remained vibrant with the telecommunication sector
which recorded a growth rate of 34.76% in 2011. Other sectors including wholesale and
retail, building and construction, hotel and restaurants and real estate posted double digit
growth rates in 2011 with 11.33%, 12.26%, 12.09%, and 10.41% respectively. Between
2006 and 2010, these sectors have grown at a real average rate of 13.44 %, 12.58 %, 12.53
% and 11.38% respectively. The crude oil and natural gas sectors recorded a decline of
0.57%, significantly down from 5.25 % in 2010.

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5.8

Impact Analysis of How Mobile Services Are

Transforming Economic and Social Services in Nigeria

Table 8: Annual Subscriber Data (2011-2001)

ACTIVE SUBSCRIBERS

Source: Nigeria Communications Commission, Annual Subscriber Data, 2012

120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0

FIXED WIRELESS

20
07

20
08

20
09

20
10

20
11

CDMA
GSM

FIXED WIRELESS 1,579, 1,307, 1,418, 1,418, 719,40

CDMA

384,31 6,052, 7,565, 7,565, 4,601,

GSM

40,011 56,935 65,533 81,195 90,566

YEARS

Figure 19: Evolution of Mobile Subscription in Nigeria

Source: Nigeria Communications Commission, Annual Subscriber Data, 2012

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In US-dollar based revenue terms, the Nigerian mobile services market expanded at one of
the fastest rates in Africa for the past decade and is the second largest in the region.

Figure 20: Expansion of Mobile Service across Africa

Source: Pyramid Research, Impact of Mobile Services in Nigeria, 2010

Currently M-Commerce application is already in full swing in the financial sector. The
success of M-PESA in Kenya launched by Safaricom has spread through the rest of the
continent. Money Box Africa (www.mobileboxafrica.com ) is also a mobile-phone based
money transfer services that allow customers to deposit and withdraw money, transfer
money to others, pay bills and make purchases. The company was setup to deploy a
mobile commerce application to allow users to virtually store and move money, make
payments over distance and enable a host of transactions all with the use of mobile
phones. The company aims not only to use mobile technology to deliver its services but
also to adopt the same business model that helped mobile operators succeed in lowincome
and growth markets. Also MTN Nigeria just introduced mobile money which what the
whole concept of Mobile Commerce.
Also various companies especially the entertainment and media industry in Nigeria already
use the Short Code SMS service which is a value added service provided by the service

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providers and create revenue not just for the but to marketers and also the business owners.
Already companies also engage in mobile advertising and this has proved very effective so
far.
The purpose of this study is to show the huge potential that can help Nigeria Business grow
but leveraging on the opportunities that M-Commerce provides. Nigeria is very ripe to
adopt M-Commerce because as we can already see the growth in mobile penetration,
internet connectivity and social media creates the necessary platform needed for any
investor to engage in M-Commerce in Nigeria.
Every sector in Nigeria can benefit from adopting M-Commerce to boost their business, it
does not only add to their revenue but also allows them reach out to a huge number of
people at a lesser cost than what the other media will cost. The potential of M-Commerce
in Nigeria cannot be over emphasized enough as it is evident from the analysis above that
this is the future driver of business in Nigeria.

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CHAPTER 6
SUMMARY, RECOMMENDATIONS AND
CONCLUSION

6.1

Summary of Findings

This study has helped to show that mobile technology has remarkably grown in Africa and
especially Nigeria. Ideal time has never been more productive with the emergence of social
media which in itself has transformed into a platform for commerce. Mobility makes it
perfect for developing countries and the idea platform to reach out to a large number of
people.
The explosive growth of the mobile internet and its associated devices has finally helped to
realize the idea of consumer convergence, making it imperative for multichannel retailers
and other enterprises that sell online to present a unified and consistent view of themselves
to customers across a multitude of devices, locations, and activities. In this new world of
agile or elastic commerce, the concept of a traditional website or in-store purchasing funnel
becomes obsolete as mobile devices bridge the gap between online and offline. All
enterprises will have to transform themselves into next-generation multichannel retailers,
allowing consumers to interact with their brand, search their catalogue, make a purchase,
or track an order or even basic financial transactions and banking.
In an increasingly time-pressured business and personal environment, the ability to work in
what was previously dead time is more important both for productivity and work-life
balance. For some, work is no longer just somewhere to go to, but something they do,
wherever they are. In the worlds poorest and richest countries alike, mobile technology is
touching heights these days and the small device is offering a lot to the users other than
making and receiving calls. With a new platform of smartphones in the market, this
technology is giving a tough time to the other fields of advertising and marketing.

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Already we know the following facts:

Mobile subscription has surpassed the 6billion mark

Developing countries account for the rapid growth in mobile subscription

Growth in mobile Web penetration is strongest in Asia and Africa, where PC

penetration is lower.

Mobile broadband subscription is also growing very fast with over 1billion
subscription

Social media plays a very important role in mobile penetrations and mobile
commerce

Financial sector have leveraged on the potentials of M-Commerce the most

especially in Nigeria.

Mobile Commerce is gaining increasing acceptance amongst various sections of the

society. This growth can be partly traced back to technological and demographical
developments that have been influencing important aspects of the socio-cultural behaviour
in todays world. The need/wish for mobility seems to be the driving force behind Mobile
Commerce in general. Mobile Banking, availment of bank-related financial services via
mobile devices, builds a cornerstone of Mobile Commerce.

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6.2

RECOMMENDATIONS

To succeed with m-commerce, however, it is critical for marketers to understand the

characteristics of mobile users and their perceptions of m-commerce. Little is known about
what drives consumers to use m-commerce, and how retailers can optimize consumers
mobile experiences. We cannot afford to neglect the opportunities the mobile services
carry and the most critical of all is mobile commerce.
With the increasing growth of mobile subscription and mobile phone penetration in Nigeria
and identifying the potential for mobile commerce I hereby have the following
recommendations:
Government/ Regulators: the government and the regulators should ensure they come up
with consumer protection laws as this will boost the confidence of potential consumers in
engaging in m-commerce activities. The regulators also need to ensure that the service
providers improve on the quality of service as the success of m-commerce actually relies
heavily on the quality of voice and data services that the providers make available to the
consumers.
Service Providers: they have to comply with the rules and regulations in the industry and
also ensure that they put their customers first. Telecommunication in a very profitable
business but the service providers have over the years imposed huge tariff on their
customers in Nigeria. Although this has not really stopped people from using their services
as the day to day activities of an average Nigerian rely heavily on a mobile phone but I
believe if their tariff becomes cheaper and more affordable we will witness even
monumental growth that will surpass that of India, China and they US in so many ways.
The service providers should also drive technological innovations by introducing a lot of
value added service to allow Nigerians benefit more from the potentials of mobile
technology especially through m-commerce.

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Banking: Mobile Banking can also serve as a source of revenue. Mobile services can be
offered on a premium basis. The price, in this case, should be reasonable enough so that
customers are willing to pay them but at the same time they should be from a financial
point of view higher than the costs incurred by the bank. Additional revenues can be
generated in two ways:

Offering innovative, premium services to existing customers;

Attracting new customers by offering innovative services whereby new customers

contribute to revenue generation not only by utilising mobile services but also by
using other conventional distribution channels.

Mobile Banking can be also used as an image product to gain strategic advantages. A bank
may hope to win or retain a positive image amongst technology-savvy sections of the
society and strengthen the brand-reputation of being innovative and visionary. The image
of being a technology leader can help the bank win customers looking for modern products
and services and at the same time help it retain its own existing base of technology-savvy
customers, some of whom otherwise might have switched to other banks while looking for
such a product. Further, the bank can profit from an early-mover advantage by actively
shaping technological standards that are based on ones own strengths. This is, of course,
fraught with a substantial risk of incurring financial and image losses if the propagated
technology fails to establish. Although all banks in Nigeria now provide SMS alerts and a
few banks like UBA and Zenith have introduced mobile money, there is still room for
other competitors to play as this will boost the growth of the sector and the economy at
large.

Entertainment: this industry has benefitted immensely form mobile commerce by

introducing short code sms for voting in completion, subscription to entertainment
services, paid song download and ringtones. The thing to note is more investment in this
sector will drive a significant level of growth in not just the sector but also mobile
commerce.
Marketing and Advertising: mobile marketing and advertising in a relatively untapped
area in Nigeria by Nigerian business. Although companies like Google and Facebook place
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a lot of adverts on mobile but very few Nigerian companies use this medium and its a very
effective means of reaching a wide range of Nigerians.
Transportation: New transportation application streamlines ticketing, planning, traveling
and bookings. In different parts of Nigeria this might be a challenge to implement because
of poor urban transit system but in places like Lagos, Abuja and Edo state that have
organised their urban transit system, extending their services to be done using the mobile
phone will not only make it convenient for the customers but will also create a new
revenue stream.
Agriculture: because of the mobility, m-commerce provide, rural users will use
applications that use the mobile phone as a payment tool or convey more information that
is relevant to their daytoday activities. Applications can be designed specifically to suit
farmers needs and interface them with buyers and government.
Education: Similar to other wired technologies, mobile wireless technologies have first
been used in industry sectors such as business. The movement of mobile wireless
technologies in education is a recent trend, and it is now becoming the hottest technology
in higher education. Developing applications and portals that educate people on various
issues from healthcare to basic child sciences can be used to engage people intellectually
across the population. The quality and relevance of the application will justify the cost
attached to it. The fact that it makes idle time more productive is a huge plus.
Health Care: Healthcare is the largest service industry in the world and none of us
throughout the course of our life can avoid some interaction with this industry. Healthcare
systems in each nation have till date been shaped by their country's traditions, culture,
payment mechanisms and patient expectations. Now however, it is not these differences
but rather the commonalties of a global and apparent terminal malady of exponentially
increasing costs, an informed and empowered consumer, the need for e-health adaptability
and a shift from focusing on primarily curing to the prevention of diseases that are the
major challenges of healthcare management in the 21st century

Improve Patient Care

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Reduce Transaction Costs

Increase Health Care Quality

Enhance Teaching and Research

M-Commerce can provide all these with ease if well harnessed. In fact it will boost
primary health care delivery.

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6.3

CONCLUSION

Mobile phone is the ultimate platform for various companies to market and advertise their
products, says Rene Meza, Managing Director, Zain Kenya.
M-Commerce is definitely here to stay and its the future. As technology continues to
progress and new systems are being created, mobile commerce is on a rapid rise. Today
most people are constantly on the go and the ability to conduct businesses in the palm of
your hand wherever you go is definitely in high demand. It is important therefore to note
the following
Weakness: the major weakness of this research is that M-Commerce is heavily dependent
of Mobile Device, availability of cheap internet connectivity and enabling government
regulations. But the two most critical obstacles are:

Customer trust in M-Commerce

Security Challenges

Limitations: this research was limited by access to Value Added Service (VAS) data by
telecoms operators which would have been used to show the potentials of M-Commerce
through its current use and future projections.
Several authors suggest diverse current and future scenarios related to M-Commerce, this
research attempted to give an overview of those authors work and screen the situation in
Nigeria. It is important to highlight that this research was conducted with the resources
accessible within the time frame provided but for a more detailed assessment of the impact
of M-Commerce on the Nigeria economy, a more extensive study should be conducted
looking at the impact on each sector of the economy.
This research was able to come up with the conclusion that wireless internet and mobile
commerce and its applications are here to stay and if it is harnessed properly can definitely
contribute to economic growth in Nigeria by leveraging on the population and mobile
phone penetration.

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Generally, M-commerce has several major advantages to consumers and economy:

Context-specific services M-Commerce makes it possible to offer location based
services, which are specific to a given context (e.g. time of the day, location and the
interests of the user).
Time-critical situations - The ubiquity and immediacy of Mobile Commerce allows user
to perform urgent tasks in an efficient manner, irrespective of his current geographic
location.
Spontaneous decisions and need- Spontaneous needs are not externally triggered and
generally involve decisions that do not require a very careful consideration, e.g. purchase
decisions involving small amounts of money.
Efficiency increase - Mobile Commerce helps increase the productivity of the workforce
by increasing the efficiency of their daily routines. Time (employees) can use dead spots
in the day, e.g. during the daily travel to and from workplace, more effectively.
The ease of communication with goods and service presenters, in 24hours and without any
locational limitations has caused an everyday popularity increase in mobile trading. Both
the telecommunications industry and the business world are starting to see m-commerce as
a major focus for the future. As m-commerce applications and wireless devices are
evolving rapidly, one will take forward the other one towards empowering innovation,
versatility and power in them. There are a number of business opportunities and grand
challenges of bringing forth viable and robust wireless technologies ahead for fully
realizing the enormous strength of m-commerce in this Internet era and thereby meeting
both the basic requirements and advanced expectations of mobile users and providers. The
mobile Internet channel has opened up new possibilities. There is a big gap between
technologys capabilities and the consumers expectations. But, the good news is that
problem areas like slow transmission speeds and high costs are being addressed by
operators and equipment manufacturers. M- Commerce players need to improve the user
interface soon and implement innovative pricing structures. Despite the initial frustrations
of the users, consumers envision that once the glitches are worked out, mobile applications
will become an integral part of their daily lives.
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