Table of Contents.
- Benefits of investing in Nigeria.
- Consumer products.
- Information and communication technology (ICT).
- Export opportunities.
- Cryptocurrency in Nigeria
- Challenges in exporting to Nigeria.
- Entry Strategy.
Nigeria has Africa’s largest population, oil production and export. With over 190 million citizens and nearly two thirds of its population under the age of 25, Nigeria is a very young country. A Gross Domestic Product (GDP) of over USD 568 billion, and oil production over 2 million barrels per day. Sustained GDP growth over the past decade has developed a growing consumer class and attracted considerable investor interest (see source 8).
2. Benefits of exporting to Nigeria.
Nigeria offers abundant natural resources, low-cost labor pool and enjoys mostly duty-free trade with other member countries of the Economic Community of West African States (ECOWAS). Its current economic growth depends on the oil sector but the non-oil sector is also gaining ground particularly in sectors like construction, telecommunications, wholesale/retail trade, hotel and restaurant services, manufacturing, and agriculture. At this time, rising incomes through urbanization and consumer spending, which accounts for 70 percent of GDP, is pushing the economy forward (see source 6).
Nigeria can be a lucrative market for companies that can learn to navigate a complex and evolving business environment. Established multinationals that have mastered operating in this chaotic regulatory environment make substantial profits despite the country’s low-income levels and logistical difficulties. The Nigerian Government continues to promote Nigeria as a rewarding target for Foreign Direct Investment (FDI). Foreign capital flows into all major sectors of the economy with the United States, Canada, France and China being the main sources. China contributes actively to infrastructure and capital projects in the country. Industries displaying substantial growth prospects include:
• Consumer goods and the retail industry (including online shopping);
• Real estate due to high population, urban migration and a rising middle class;
• Information and communications technology;
• Food and agriculture;
• Infrastructure (especially power and transportation).
The major ports in Nigeria are based in Lagos (Apapa and Tin Can Island), Port Harcourt and Calabar. While the Government of Nigeria has opened the ports sector for the private sector to manage and operate through concession agreements, the government still manages the railroad sector. Only five of Nigeria’s twenty-two airports currently receive international flights: Lagos, Kano, Port Harcourt, Enugu and Abuja. Lagos is working towards establishing itself as a regional hub (see source 2).
Nigeria’s services output ranks as the 63rd largest worldwide and fifth largest in Africa. The potential of the Nigerian financial services sector remains enormous and foreign banks are becoming increasingly attracted to the market. However, the majority of Nigeria’s population has only limited access to these financial services, this is a huge exporting opportunity that should be explored by manufacturers (see source 2).
5. Consumer products.
Nigeria is an increasingly important market and manufacturing center for the African consumer product sector. Nigeria is currently home to a growing middle class now estimated at about 50 million people, and it is a clear leader in the regional economic grouping ECOWAS and regionalization efforts (see source 2).
6. Information and communication technology (ICT).
Nigeria is Africa’s largest ICT market, accounting for 29% of Internet usage in Africa. In 2018, Nigeria had more than 196 million active telecoms lines of GSM and CDMA. Mobile GSM subscribers account for 98.37 percent of the total number of telecom subscribers. As Internet coverage increases, there will be significant opportunities for the development of data services (see source 2).
Nigeria’s agricultural sector employs nearly 70 percent of the population and contributes nearly 22 percent of GDP. Nigeria possesses an abundance of arable land and a favorable climate for the production of nuts, fruits and grains. The vast majority of farming in Nigeria is subsistence-based, utilizing manual labor and relatively little agricultural machinery. Many multi-national companies have engaged in agro-processing business, which is in large demand (see source 4).
8. Export opportunities.
Contrary to unfavourable belief, Nigeria has a majority of honest, well-educated, and well-prepared business people eager to enter into partnerships with manufacturers worldwide. Opportunities abound in Nigeria for exporters in the following sectors:
• Aerospace (aircraft, services and parts).
• Agricultural products and equipment.
• Automobiles, trucks, buses, automotive parts and accessories.
• Computer hardware and software.
• Construction and earth moving equipment.
• Education and training.
• Electricity and power generation.
• Environmental equipment and services.
• Healthcare services and medical equipment.
• Marine vessels.
• Oil and gas equipment.
• Security and safety equipment.
• Telecommunications equipment and services.
(see source 3).
9. Cryptocurrency in Nigeria.
Nigeria has become the cryptocurrency hub of Africa, as the adoption in the country is the highest in Africa. Cryptocurrency adoption has increased in the past few years with trading volume reaching an estimated $1.5 million in February 2017. Although, when compared with figures globally, this is relatively small, but a huge step in the country.
Presently, there’s no existing legal structure put in place to regulate cryptocurrency related activities and startups in the country. This should be considered an opportunity to take maximum advantage of the benefits crypto has got to offer.
Adoption is mostly among the technologically savvy youths who want to utilize the benefits Blockchain and cryptocurrency has got to offer like borderless transactions, fast transaction speeds, low transaction costs, anonymity of payments, less reliance on financial institutions which are usually third party, and transaction system based on trust/proof.
10. Challenges to exporting to Nigeria.
Much of Nigeria’s market potential remains unrealized because of major obstacles like:
• Inadequate power.
• Poor transportation infrastructure.
• High energy costs.
• An inconsistent regulatory and legal environment.
• A slow and ineffective judicial system.
• Inadequate intellectual property rights protections and enforcement.
• An inefficient property registration system.
• Declining Naira.
• Foreign exchange and fiscal challenges.
• Expensive internet infrastructures.
(see source 5).
11. Entry strategy.
In order to establish a presence in Nigeria, you need to assess the potential of the market. We take that burden off you by offering these services:
• We make a detailed in-depth analysis of the industry and how well your products will perform in the market.
• Design websites, brochures, draft agreements, run marketing campaigns, find retail stores, and whatever is required to make your project successful.
- Atlas.media.mit.edu. (2018). OEC – Nigeria (NGA) Exports, Imports, and Trade Partners. [online] Available at: https://atlas.media.mit.edu/en/profile/country/nga/ [Accessed 25 Oct. 2018].
- Export.gov. (2018). Exporting to Nigeria – Market Overview | export.gov. [online] Available at: https://www.export.gov/article?id=Nigeria-Market-Overview [Accessed 25 Oct. 2018].
- Customs.gov.ng. (2018). Nigeria Customs Administration. [online] Available at: https://www.customs.gov.ng/ProhibitionList/import.php [Accessed 30 Oct. 2018].
- Nigeria – Executive Summary | export.gov. [online] Available at: https://www.export.gov/article?id=Nigeria-Executive-Summary [Accessed 30 Oct. 2018].
- Nigeria – Market Challenges | export.gov. [online] Available at: https://www.export.gov/article?id=Nigeria-Market-Challenges [Accessed 30 Oct. 2018].
- Nigeria – Market Opportunities | export.gov. [online] Available at: https://www.export.gov/article?id=Nigeria-Market-Opportunities [Accessed 30 Oct. 2018].
- Nigeria – Prohibited and Restricted Imports | export.gov. [online] Available at: https://www.export.gov/article?id=Nigeria-Prohibited-and-Restricted-Imports [Accessed 30 Oct. 2018].
- Worldometers.info. (2018). Nigeria Population (2018) – Worldometers. [online] Available at: http://www.worldometers.info/world-population/nigeria-population/ [Accessed 25 Oct. 2018].