E-commerce booms, states lose revenues

The News Agency of Nigeria (NAN) reports that online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet.

Alternative names of the system include e-web-store, e-shop, e-store, online store, online storefront and virtual store.

Some of the managers of the stores, who spoke with NAN, complained that e-commerce had slowed down their businesses as well as reduced volume of sales.

The system has also caused decline in revenues accruing to state governments which have not perfected mechanisms to monitor activities of operators and collect revenues in their states.

A survey on the operation of online shops in some major cities of the country, including Abuja, Port Harcourt and Kaduna, shows that small business operators are complaining of low patronage.

Mr Kazeem Olagoke, Manager, Samsung Telecommunications, in Abeokuta, noted that the ease in buying products online made such system more attractive to clients than buying from open markets.

"Many people prefer to sit within the confines of their rooms and order for goods online which are being delivered to them without sweats.

" You know it saves them transport cost, stress and time they could have spent to purchase the goods at physical markets.

"So it is increasingly becoming difficult to attract and maintain clients," he said.

Mr Adeyemi Johnson, Manager, Shallom Mega Stores at Oke-Ilewo, Abeokuta, noted that online shopping "has created serious competition in the physical market".

"Owners of the online businesses have their agents all around, who even visit our stores and lure away our clients.’’

Dr Michael Simpson, a Lecturer at the Department of Economics at the Olabisi Onabanjo University, Ago-Iwoye, however, described online shopping as a positive trend in Nigeria.

He noted that the development had contributed significantly to the entrepreneurial skill of Nigeria, particularly the youth.

According to Mrs Adenike Ajala, a civil servant, the advantages of online shopping is that online stores are opened 24 hours daily and internet offered many resources for products and price comparisons.

"It provides customers with a wider range of products and services, many which cannot be found at the physical markets," she said.

Following the trend in business lull in open markets and the booming e-business, the Kaduna State Government said it planned to set up a structure to monitor the platforms with physical presence in the state.

The state’s Commissioner for Commerce, Industry and Tourism, Malam Shehu Balarabe, said the ministry had begun to identify and locate all online-shopping outlets in the state.

“We need to know where they are and how they operate with a view to checkmate their activities,’’ he said.

The commissioner said that the measure had become necessary to protect consumers from fraudsters who would take advantage of internet’s free highway to swindle consumers.

He noted the need to enlighten the public on the advantages and the dangers of online-markets that were fast gaining popularity with improved internet access.

Mr Jenom Nyam, a Kaduna businessman who utilised online platforms for over 10 years, said highlighted the high risk associated with it and the need for monitoring.

“Sometimes when you make purchase online, after supplying your credit card details, money would be deducted from your account, but the goods will never get to you.’’

However, an economist with the Kaduna State Ministry of Budget and Planning, Mr Yusuf Auta, said in spite of the huge risk associated with e-shopping, government could still tap from it’s huge revenue potentials.

Auta explained that the platforms provided huge employment opportunities and wide range of taxes that could be derived from the markets, if allowed to flourish.

“Manpower is needed to run the market, thereby creating employment opportunities.

"The staff are paid salaries and obliged to pay Personal Income Tax (PIT) which is a huge source of revenue to the government.’’

“Also, the organisations that run online-market platforms usually have physical presence where their goods are stocked for delivery to customers; government could charge ground rent on the land,’’ he said.

Financial experts in Port Harcourt expressed divergent views on the potentials and benefits of the platform to the nation`s economy.

Mr Emmanuel Jumbo, a management expert, said the system was not in the interest of the nation`s economy.

"It makes the buyer to pay more for any service.

"For instance, I ordered for a handset (phone) worth N28,000. I paid extra N2,000 as cost of delivery. It means that for anything you buy online, you pay extra.

"Meanwhile, the owner of the shop pays nothing as tax to government because he does not have a rented shop and operates from home," he said.

However, Ephraims Okon, a stockbroker, said online shopping had brought a new dimension to commerce in the country.

He also said that the proprietors paid tax to government because they also bought such goods from somewhere and in the process, paid Value Added Tax.

Corroborating the position, the Director, Communications and Liaison Department, Federal Inland Revenue Service (FIRS) Mr Emmanuel Obeta, said the operators were collecting agents, working on behalf of the Federal Government.

Obeta said that every item sold by the online shop was inclusive of VAT element of five per cent, which would be remitted to the FIRS.

"The five per cent VAT is attached to every product you buy so long as this goods is not VAT exempted.

"At the end of every month, these online shops which operate as registered businesses, when piling up their returns, remit the VAT to us (FIRS).'' Obeta said.