E-COMMERCE AND ITS APPLICATION TO NIGERIAN ECONOMY AND DEVELOPMENT (A CASE STUDY OF MINISTRY OF SCIENCE AND TECHNOLOGY, LAGOS STATE)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

With the rapid development in the internet and mobile computing, it’s now evident that the internet and mobile devices are important a part of the digital economy. The Adoption of e-commerce in developing countries has contributed immensely to economic process.

Online transactions have transformed the way we do business, moving from tradition fixed location to mobile computing, where the transaction takes place anytime, anywhere. New types of mobile technologies are rapidly changing the marketplace.

There’s a wide held belief that the new world economy will witness the transition of mobile devices from a straightforward communication device to a payment mechanism. E-Commerce contributes the potential to deliver most of what the web offers, plus the advantage of mobility while there has been a boom in internet access in

Nigeria in recent times, with internet access exceeding 100 million users in Nigeria, adoption of e-commerce has been relatively very low, Although this has included great concern for security, the advantages of e-commerce outweighs its disadvantages.

Electronic Commerce (e-commerce) is defined because of the conduct of commerce in goods and services, with the help of telecommunication and telecommunication-based tools like the web.

E-commerce is commonly employed in a way broader sense, to mean essentially the identical as “electronic business” (e-business) but the truth is e-commerce could be a sub-component in e-business. Where e-business refers to company operations conducted with the assistance of the Internet and online technologies, this includes as an example, buying and selling products with digital cash via Electronic Data Interchange (EDI).

The term e-commerce was originally conceived to explain the method of conducting business transactions electronically using technology from the Electronic Data Interchange (EDI) and Electronic funds transfer (EFT). These technologies, which first appeared within the late 1970s, allowed the exchange of knowledge and execution of electronic transactions between businesses, typically within the kind of electronic purchase orders and invoices.

EDI and EFT were enabling technologies that laid the groundwork for what we all know as e-commerce (Ma’aruf & Abdulkadir, 2012). Before e-commerce came into Nigeria, the strategy of transaction used is thought as traditional commerce which has its origin before recorded history when our ancestor first decided to specialize their everyday activities,

rather than all family units to try to all jobs to form their living, they developed skills in precisely one amongst these area and traded for other needs e.g., a farmer can exchange farm product with a tool-making family than on.

Eventually, this bartering method gave ways to the utilization of currency, making transaction easier to settle. E-commerce, therefore, is an extension of traditional commerce which is that the facilitation of economic transactions was electronically done using EDI to send a document like order or invoice.

Later it came to incorporate activities more precisely termed web commerce i.e., the acquisition of products and services over the planet Wide Web through secure server, a special server protocol, which encrypt confidential ordering data for customer protection.

Presently in Nigeria, traditional commerce continues to be the most method of transaction, only a few people are using e-commerce. A vital function of e-commerce is that the handling of payment over the web.

Most e-commerce involves the exchange of some kind of money for goods and services. Implementation of payment system for e-commerce continues to be evolving in Nigeria thus the amount of proposal and implementation of payment system currently compete for dominant. Irrespective of the format, e-commerce is way cheaper than the mailing of paper checks.

Today, four basic ways to purchase that dominate both traditional and electronic business to consumers commerce are cash, checks, credit cards, debits cards, but in Nigeria today, cash and checks are the most ways wont to purchase but MasterCard is out and away the foremost popular kind of consumer electronic payment online within the developed nation.

A recent survey found that quite 80% of worldwide internet consumer purchases are procured with credit cards and this has very limited use in Nigeria. Payment card transaction follows these general steps once the merchant receives consumer payment card information.

• The merchant authenticate the payment card to confirm it’s valid and not stolen

• The merchant checks the payment card issuer to confirm that credit or fund is available and put a hold on the credit line or the fund needed to hide the charge

• Settlement occurs usually a few days after the acquisition which implies that funds travel between banks through the automated financial organization system into the merchant account. Other means of payment system are electronic cash, electronic wallet, and stored value card, etc

Nigeria like many developing countries have not fully adopted e-commerce, the study observed specific infrastructural barriers and problems facing the adoption of e-commerce in Nigeria and security issues about e-commerce. There are plenty of reasons why e-commerce adoption in developing countries is hindered.

Reasons vary among countries from infrastructure (technology, internet availability, ICT skills, qualified personnel); to cost factors (costs of ICT equipment and implementation); and security and trust factors (uncertainty of payment methods, and legal frameworks), poor distribution logistics. These problems have hindered Nigeria from adopting e-commerce. Electronic Business (e-business) is the broadest concept of all “e-terms” employed in this research work.

STATEMENT OF THE PROBLEM

Implementing successful e-commerce is not as easy as most people think. Many obstacles exist and revolve around three major pieces of the electronic commerce puzzle- money, technology and people.

Hence, there is a limited research in developing countries particularly in Africa. Sometimes the cost of avoiding e-commerce is greater than the cost of initiating it. Web technology is still developing. Despite the global reach of e-commerce, not all country has taken advantage of it. There is a big gap in the internet and e-commerce adoption between developed and developing country, thus creating a digital divide.

Nigeria with a population of 150 million is a potentially lucrative market for e-commerce activities. Nigeria being one of the few nations in the world blessed with abundant mineral wealth, and entrepreneurial population and productive agricultural base.

By virtue of size, population location is well positioned to the economic activities in Africa. E-commerce is an opportunity to use private sector to drive economic development. The research quest to see Nigeria benefit from the enormous gain of e-commerce motivated the researcher to embark on the work.

The main problem has been the very low adoption of e- commerce in Nigeria, compared to the devolved countries in the world. e- commerce compliances in Nigeria has been below 10%, finding ways and making Nigeria to understand the benefits of e-commerce inspired the research to embark on the  project.

AIMS OF THE STUDY

The major purpose of this study is to examine e-commerce and its application to Nigerian economy and development. Other general objectives of the study are:

1. To examine the level of e-commerce in Nigeria.

2. To examine the role of e-commerce in promoting emerging market.

3. To examine the impact of e-commerce application on Nigerian economic development.

4. To examine the factors combating against e-commerce in Nigeria.

5. To examine the relationship between e-commerce application and emerging market growth in Nigeria.

6. To examine ways on how e-commerce can be applied to contribute positively to Nigeria economic growth.

RESEARCH QUESTIONS

1. What is the level of e-commerce in Nigeria?

2. What are the roles of e-commerce in promoting emerging market?

3. What is the impact of e-commerce application on Nigerian economic development?

4. What are the factors combating against e-commerce in Nigeria?

5. What is the relationship between e-commerce application and emerging market growth in Nigeria?

6. What are the ways on how e-commerce can be applied to contribute positively to Nigeria economic growth?

RESEARCH HYPOTHESES

Hypothesis 1

1. 1. There is no significant impact of e-commerce application on Nigerian economic development.

1. 1. There is a significant impact of e-commerce application on Nigerian economic development

Hypothesis 2

1. 1. There is no significant relationship between e-commerce application and emerging market growth in Nigeria.

1. 1. There is a significant relationship between e-commerce application and emerging market growth in Nigeria.

SIGNIFICANCE OF THE STUDY

The need for the study of this nature cannot be over stated, now that the application of electronic commerce has brought so many benefits like marketing changes, control business cost, customer expansion, wealth creation, job creation opportunities and easy to reach worldwide.

The study will draw the attentions of the management and owners of businesses to the urgent need for the adoptions of electronic commerce applications into their enterprises to enhance efficiency and effectiveness.

The study is of benefits to the existing and potential entrepreneurs so that they can understand the significant of electronic commerce applications in business processes.  It highlights a critical construct in terms of a contribution to foster adoption of e-commerce by customers.

It provides an integrated model to predict customers’ intentions to adopt ecommerce as a medium for transactions. This research will be used as useful citation source for many other researches or practitioners who are interested in studying the application of e-commerce in Nigerian economic development.

SCOPE OF THE STUDY 

The study is based on e-commerce and its application to Nigerian economy and development, a case study of ministry of science and technology, Lagos state.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

DEFINITION OF TERMS

E-commerce: Is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer or consumer-to-business.

Internet: The internet is referred to as the largest computer Network in the world! It is a vast, globe-spanning network. No single person, group, organization runs it. Instead, it is the purest form of electronic democracy.

The network communicates with each other based on certain protocols, such as the Transmission Control Protocol (TCP) and the Internet Protocol (IP). More and more networks and computers are being hooked up to the internet every day,

ranging from university networks to corporate Local area networks to Large Online-services such as American Online and CompuServe. Every time you tap into the internet, your own computer becomes an extension of the Network.

Technology: The branch of knowledge deals with the creation and use of technical means and their interrelation with life, society and the environment, drawing upon such subjects as industrial arts, engineering, applied science and pure science.

E-COMMERCE AND ITS APPLICATION TO NIGERIAN ECONOMY AND DEVELOPMENT (A CASE STUDY OF MINISTRY OF SCIENCE AND TECHNOLOGY, LAGOS STATE)