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Digital distribution in the small retail sector in Nigeria

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Nigeria has a large demand base for retail goods, even though approximately 83 million people (40% of the total population) lived below the poverty line. Trade (retail and wholesale) has consistently comprised a large proportion of Nigeria’s GDP. The Nigerian retail sector is dominated by small and informal retailers.

This study, titled, ‘The impact of digital distribution on the small retail sector in Nigeria: The case of the ShopTopUp platform’ focused on  a digital retail distribution platform that is helping small retailers, mainly women, to avoid running out of stock of a specific selection of products, which is likely to positively impact on business outcomes. The business in question – TradeDepot – received funding from Partech Africa Venture Capital Fund, which secured European Investment Bank financing in 2017. The researchers used a phone survey to collect business data from 356 stores that use TradeDepot’s ShopTopUp service and from a comparison group of 124 stores not using the service. The study used econometric techniques, such as multivariate regression analysis and propensity score matching, to attempt to identify a causal relationship between use of the service and business outcomes. ShopTopUp users experience shorter stock-out periods compared to non-users (1.7 days vs. 3.4 days), which minimizes the time that retailers lack products to sell, thus reducing associated revenue losses.

The study was part of a joint program run by the European Investment Bank and the Global Development Network, initiated in 2016, that deployed African researchers to assess the development impacts of the EIB’s work in African and Caribbean countries, allowing the bank to enhance its contribution to sustainable and inclusive development while simultaneously enhancing local research and evaluative capacity.

Name of the Asset | The impact of private sector projects in Africa Studies from the EIB-GDN Program (Study from Cycle III: The impact of digital distribution on the small retail sector in Nigeria: The caseof the ShopTopUp platform)

Type of Asset | Paper in the Volume: The impact of private sector projects in Africa: Studies from the EIB-GDN Program (Cycle II).

Dates | 2021

Authors | Jaison Chireshe and Matthew Townshend

Country and/or Region | Africa, The Caribbean and The Pacific (ACP) countries

Name of the Program | EIB-GDN Program in Applied Development Finance

Download the Full Reports | Cycle III