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Comment by rmc | Hacker News Reader

Small population? Nigeria has 180 million people. The rest of Africa has similar paypal issues, and a population of 600 million people

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How many of those people are using the internet? How about for the rest of Africa? And how much ecommerce will they generate compared to other markets? That's the driving question when Paypal and other companies decide whether they want to take the risks inherently associated with operating in Nigeria and/or the rest of Africa.

>"how much ecommerce will they generate compared to other markets?"

For a company the size of Paypal, not enough to justify the political risks entailed by entering those markets. But startups are not the size of Paypal. 1% of Nigerians is still 1.6 million people. Paypal can afford to cut out large portions of the world. The company that solves the problem will have an advantage.

Considering the degree to which internet entrepreneurship has been established in Nigeria (even if exploitive), the construction of WACS and its high bandwith connection to Europe, its oil reserves and its native English speaking population, Nigeria has some real strategic advantages.

http://commons.wikimedia.org/wiki/File:Cable_map18.svg

I think the bigger issue is GDP and GDP per capita for both Nigeria and Africa as a whole:

Nigeria GDP (PPP): $170bil

Nigeria GDP per capita: $1754

I can understand why e-commerce companies might just choose to blacklist an entire country. There isn't much of a financial incentive to expend the resources for that small of a market.

I am not trying to comment on whether this is justifiable or not, but that is the reality of the situation.

GDP isn't the issue with Africa and the number of Western companies that want nothing to do with the continent.

The issue is the governments like Nigeria are completely incapable of regulating what goes on inside of its borders. In cases like Nigeria, where the "419" scam is actually an measurably significant industry within the country, the scammers are probably in cahoots with the authorities.

Why does e-commerce work in the US? As a guy sitting in New York, how can I comfortably sell goods via the internet to someone in Hawaii or New Mexico? Fundamentally, it's because the US is a nation governed by law, and efforts to defraud are not acceptable.

Very good point.

I think the point on corruption and the rule of law is really significant. It goes beyond just e-commerce and into a whole economy. A government of men and not of law does not make for a thriving economy. If found these two maps on corruption and governance really interesting. They really speak to they trouble with doing e-commerce in Africa:

Transparency International: http://www.transparency.org/policy_research/surveys_indices/...

Governance: http://en.wikipedia.org/wiki/Worldwide_Governance_Indicators

I wonder how ratings for China / India / Brazil will change in the next few decades as their per-capita GDP increases.

I don't know about China or Brazil, but India has done pretty well in fighting corruption lately. Of course, there's still a long way to go, but the progress so far is encouraging.

This is the same reasoning used 10 years ago to write off South America as a rounding error. It was frustrating and wrongheaded then, too.

I understand what your saying, but I am not sure I agree (at least from the US perspective) that South America has been written off as a rounding error in the last few decades. I think we have been on a trajectory from the early 1990's (starting with NAFTA) and continuing into the early 2000's (with the start of CAFTA) to today where we are near ratifying CAFTA. The next step is a full South American free trade agreement.

I don't think US industry has ever dismissed South America as a rounding error. They get the huge economic importance it has. Rather, we've had some feet dragging from unions (and to a smaller extent a little xenophobia, but I think this is really really small when it comes to Free Trade Agreements). Give the US another decade or two and there will be a full on American Free Trade Agreement.

I respectfully disagree. We're not talking bananas and sugar, we're talking US companies being unwilling to make the effort to sell to people in other countries.

I worked on Terespondo, a search advertising company focussed on SA from 2002-ish to 2006. We were thirty dorks who happened to speak the language, and we captured 65% of a continent-wide market. Why?

- MS AdCenter didn't get multilingual support until 2008 or so.

- Google Adwords required a US credit card until 2004 or 5.

- Overture (Yahoo) were idiots.

It's gotten much better in the last ten years.

"There isn't much of a financial incentive to expend the resources for that small of a market."

While probably justified, it also leaves most of the country out of the growing trend towards global ecommerce, possibly encouraging more people to take up fraud as one of the few ways to make any money at all.

He said 'internet population', not population. Do you realise that 70% of the country is below the poverty line?

It seems like I'm missing something, so I have a question for those who upvoted this comment. Do you all seriously think that the OP should set up an "african paypal" just because the real paypal is broken for him?

An African paypal that is open to those countries that were locked out due to excessive fraud would have an even harder time to stay alive than paypal already has. After all their fraudulent:legit ratio would be a lot worse than paypals'.

I believe we can crack it, but regulations are a worry.

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