Why Airbnb Struggles In Nigeria

ICT is facilitating the process of socio-economic development in Nigeria. It has offered new ways of exchanging information and transacting businesses, efficiently and cheaply. It has also changed the dynamic natures of financial, entertainment, and communication industries and provided better means of using the human and institutional capabilities of the nation in both the public and private sectors. Nigerians have seen a total redesign of many industrial sectors, from banking to insurance, as technology reduces the friction in business processes. Technology improves efficiency, delivering a better experience for customers.

Increasingly, ICT is rapidly moving Nigeria towards knowledge-based economic structures and information societies, comprising networks of individuals, firms, and states that are linked electronically and in interdependent global relationships. This linkage has enabled new classes of companies to emerge, not just in Nigeria, but globally.

Not Really Airbnb Problem

The root of this issue is Nigeria, and it is a big problem that is evident to most entrepreneurs, depending on the business sector. Because of the low level of trust, especially in digital business, Nigerians like “cash and carry” transactions, where that cash now includes digital payments. In essence, we want to spend money on something and get the gratification immediately. Or better, we want to inspect before we pay. The commodification of trust which has made Airbnb a multi-billion dollar firm does not work in Nigeria. When you do not have that trust, nothing can work. It is also a problem that technology, by itself, cannot just fix.

Fixing This Is Beyond Technology

The history of the lack of trust in Nigerian Internet can be linked to the boom in the “corruption sector” in Nigeria, which was aggressively invented by the military. As the Internet penetrated in our society, the corruption went digital. The emergence of the Yahoo Boys should not be seen as an Internet phenomenon, rather an extension of a physical moral collapse. As military men ripped off the commonwealth, excluding many ordinary citizens, the Internet provided a window for some of the excluded in a country with minimal opportunities, to try acts they had mastered in the meatspace (the physical world). Most of those men were later branded as Yahoo Boys. They poisoned digital Nigeria. The implication is that the Internet in Nigeria became corrosive to the extent that some courts and banks, at a time, did not accept emails or documents from the web (that has since changed).

Changing this unfortunate path of Nigeria will not happen overnight. It will require orientation on civility and decency, which will take time to evolve. That is when we can see companies like Airbnb that require a higher level of trust to flourish, not just for the Americans but also for their Nigerian equivalents.

Three Key Problems for Airbnb in Nigeria

The heart of Airbnb problems in Nigeria can be summarized thus:

  • The difficulty of getting people to use their debit and credit cards to reserve “home” online. Even when people like to try, most will be afraid to put their cards online, for access to someone’s home (which is not a hotel). This sentiment may not be for college students, but for most, it is an issue. That said, Wakanow, Hotel.ng, etc have shown that customers do spend to get hotel rooms. Sure, Airbnb homes are different.
  • Trusting that people will see the rooms as advertised when they visit the “homes”. The perception of cheating makes few believe what they see online. The house looks good, but you are not sure. This is a huge challenge.
  • Overcome the security challenges since Nigerian Police is largely not on top of its game to prosecute crime if it happens. What happens if someone is harmed, the guest or the renter? Airbnb is risky; doing that in Nigeria, as a guest, could be seen as madness. This is the biggest reason why Airbnb struggles. unfortunately, the firm cannot do much here. A LinkedIn user after this piece ran summarized thus “I read your piece and loved it! I just need to include the 4th problem for Airbnb: The Security of the homeowner. Some people will harbor the fear of being raided by the so-called guest who has come to sleep in their home whether immediately or after his/her stay. Trust is the highest denomination in Digital Currency!

Rounding Up

Nigeria is largely a pre-monetization era of the Internet, at scale. Sure we have Konga, Hotel.ng, Jumia and iROKO, but the fact remains that it will take another 5-7 years to see the dramatic evolution of spending on Internet. That has to happen before transactions which do not deliver value on the spot can be done by many people. Uber has to risk because you pay the driver when you get to your destination. But when it comes to knocking on a door of a stranger, to sleep there, it is a tough one. The commodification of trust is an industry challenge which everyone has a duty to make sure it is institutionalized. That virtuoso moment in Digital Nigeria will not happen without it.


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