Successfully investing in Nigeria


last updated on May 28, 2019


How do you assess the current economic situation in Nigeria?

Nigeria is the largest economy in Africa. The country has a population of 198.2 million and generated a Gross Domestic Product of 397.472 billion US-Dollar in 2018. The economy of Nigeria advanced 2.4 percent year-on-year in the last quarter of 2018, following a 1.8 percent expansion in the previous period and beating market expectations of a 2.1 percent gain. It was the highest growth rate since the third quarter of 2015, as the non-oil sector increased further and the oil sector contracted less. On a quarterly basis, the economy expanded 5.3 percent, lower than a 9.5 percent in the prior quarter. GDP Annual Growth Rate in Nigeria averaged 3.84 percent from 1982 until 2018, reaching an all-time high of 19.17 percent in the fourth quarter of 2004 and a record low of -7.81 percent in the fourth quarter of 1983.
The global decline in the oil price in the last years has forced the country to accelerate the diversification of the economy. But now, recession is regarded as overcome and a slight increase in economic growth by about 2.2 percent is expected for 2019. Economic growth in Nigeria is expected to rise, assuming that oil production will recover and a slow improvement in private demand will constrain growth in the non-oil industrial sector. This is primarily attributable to the recovering oil price but also to the increasing diversification of the Nigerian economy. In order to further support the trend, the government has intensified investments in other economic sectors such as agriculture, energy and the real estate market.
Generally, the economic policy of the Buhari government has improved its profile and structure in recent years. So, for example, the government aims to take various measures to further stabilise the currency (Naira). The forecasts about the upcoming national elections to be held in February 2019 have not yet identified a clear winner of the elections. But it is assumed that the elections will again be peaceful and democratic. Also, the major opposition party’s manifesto has promised effective governance based on its outlined projects to be executed if voted into power. Projects such as strengthening Fiscal and Monetary policies, executing various projects on Power, Health, Transportation infrastructure amongst others, deepening public-private sector partnership, youth empowerment and reviving the Niger Delta region. This is to demonstrate that regardless of who wins the election in February, Nigeria is still a very good country to invest in.
Despite the current economic challenges, the advantage of Nigeria as a business location is still enormous – alone due to the mere size of the market – and the country remains the economic “nerve centre” of the continent.


How would you describe the investment climate in Nigeria? Which sectors offer the largest potential?

Many international businesses are already based in Nigeria. The market is very dynamic and every day local or foreign companies establish a new branch office in nearly every economic sector. Accordingly, competition is very tight but the profit opportunities are also exciting. Thanks to the government's current aspirations to diversify the economy, investments in the areas of agriculture, energy, real estate and consumer goods currently have particularly enormous potential.
In addition, modernisation of the infrastructure should strengthen the existing companies and also facilitate foreign investments. 
Thanks to the already initiated reforms, Nigeria significantly improved its standing in the World Bank's “Ease of Doing Business” index and jumped 23 places (from 169 in 2017 to 146 in 2018).


What challenges do German companies face during their business ventures into Nigeria?

When entering the market in Nigeria a German entrepreneur has to deal with challenges such as weak infrastructure, competition with established and/or cheaper brands, volatile currency, corruption and frequent regulatory amendments introduced by the government and other sector-specific institutions. The not quite easy-to-navigate regulatory framework for investment, however, does not curb the potential for a hefty return on investment which Nigeria definitely has.


What are specific aspects of the Nigerian market?


Nigeria is a country of many different cultures. With more than 250 ethnic groups, the country has unique market potential and is able to accommodate nearly any kind of a company. Nearly any well-managed company can sell itself in Nigeria provided it finds the appropriate market niche. 
Additionally, emphasised should be the quite considerable business acumen of the Nigerians. Cleverness in business matters, diligence and ambition of the Nigerians significantly contribute to the dynamic development of Nigeria as a business location. German entrepreneurs should be prepared to cooperate with assertive and equal business partners who focus on profit no less than they do.

In your opinion, how will Nigeria develop?

To continue its development, Nigeria needs high-quality infrastructure, more transparency and efficiency at all levels of the government and private institutions, and further-reaching comprehensive reforms of the regulatory framework for investors so as to further increase the ease of doing business. If, in the next year after the elections, the new government manages to build on the already initiated reforms and creates better conditions for local and foreign entrepreneurs, Nigeria will certainly be able to show its enormous growth potential among global competitors.


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