Is 'Buy Now, Pay Later' good for the Nigerian economy?
One of my favourite discoveries from my time in university was the “Bring Your Own Bottle” (otherwise known as BYOB) event.
It wasn’t novel or anything. In fact, the idea dates all the way back to the American prohibitionist era when people could legally own or consume alcohol but couldn’t sell or purchase it. So when guests received an invitation with “BYOB” inscribed on it, they understood that the host would not be providing alcohol, and they (the guests) would have to bring their own.
In a slightly different but also similar tone, founders building out of African countries like Nigeria find themselves having to do the same. Not with alcohol, though, but with the market.
Some takeaways:
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With less than 2% of the Nigerian population spending more than $10 a day, startups need to be creative to attract customers and grow their business.
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Buy Now Pay Later is a possible solution to the ability of Nigerian consumers to pay for products. The effect of offering a BNPL option to sales can be massive, with an international fintech company saying they can boost order value by 41% and another 85%.
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BNPL is a booming global industry with $353 billion spent in 2019 and a projection of $680 billion by 2025.
You see, Nigeria’s young and growing estimated population of 200 million people is always cited as a signal of a healthy market for new products. However, when you dig deeper, you find that the average Nigerian consumer is poor. Data shows that less than 2% of the Nigerian population can afford to spend more than $10 a day. Meanwhile, in Brazil, with a population similar to ours (209 million), the same number is about 59%.
So Nigeria’s market is smaller than people think.
Why is that such a big
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