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Despite tax holidays, e-commerce firms make losses

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Although the Federal Government granted pioneer status to operators in the country’s electronic commerce (e-commerce), investigations have shown that a majority of the players have been running at a loss for the past three years.

The e-commerce is a sub-sector of the country’s Information and Communication Technology (ICT) sector.

The woes of some of these players, especially the big ones like Jumia and Konga, might have been compounded by the declaration by the Nigeria Investment Promotion Council (NIPC) that some players that have existed for several years in a particular sector may not enjoy the pioneer status except they venture into a new line of business covered by the list of 27 new industries and products. The list now consists of 71 new industries and products.

A source at the NIPC told The Guardian that the special status actually applies to companies that are in the first year of operation, meaning that those older than one year will not benefit.

The Chief Executive Officer (CEO) of Jumia, Juliet Anammah, told The Guardian that the inclusion of e-commerce as a pioneer industry would certainly encourage new entrants. She, however, lamented that e-commerce companies in Nigeria are currently running at a loss in spite of the fact that quite a few of them have been in business for at least three years. According to Anammah, these companies therefore can’t take advantage of any tax holidays while they are still making losses.
The Guardian, September 27, 2017

 

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