Financial Data
Updated 21 Nov 2017


Nigeria

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Business opportunities and risks

Opportunities for you to do business in Nigeria

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Consumption in Nigeria could more than triple due to the expansion of the middle class and is expected to rise to almost US$1.4 trillion a year in 2030, an annual increase of about 8%.

Here’s how your business could benefit from a rapidly growing population:

  • The growth in the number of consuming households will be the main driver of expansion in the trade sector;
  • The trade sector will provide opportunities for manufacturers of packaged foods and fast-moving consumer goods (FMCG), such as paper goods, which could grow by more than 10% a year;
  • Agriculture, which is already 22% of the Nigeria’s economy, could double in value from US$112 billion a year in 2013 to US$263 billion a year by 2030;
  • Nigeria is the largest mobile-phone market in Africa. Mobile phones are the main form of Internet access in the country. This could create opportunities for new, mobile-compatible IT solutions.
Operational risks to consider

Operating costs, underdeveloped infrastructure and corruption are some of the challenges complicating the development environment and business owners considering expanding into Nigeria must mitigate the risks to ensure business success.

The following operational challenges have been identified as risks to the development environment:

  • A poor state of infrastructure, especially power-generation capacity, telecommunications and the logistics network;
  • The current domestic security situation characterised by criminal and terrorist attacks (from groups such as by Boko Haram), and fuel shortages as a result of theft and sabotage;
  • Corruption in both the public and private sector complicates government bureaucracy and deters foreign direct investment. This increases the risk of higher costs for incoming businesses;
  • Corruption perception index: 27 versus 32.6 average (0 is highly corrupt while 100 is very clean);
  • There are high labour costs and skills are scarce;
  • An expatriate quota limits the number of international workers a company can employ;
  • Trade policies are restrictive, which affects both imports and export;
  • Payment policies are poor and debt collection may be challenging.

Additionally, within sub Saharan Africa, Nigeria underperforms slightly in respect of openness to foreign direct investment. Nigeria scores 40/100 for the Investment Freedom Index, while sub-Saharan Africa averages 48.6/100

Businesses can also expect to encounter red tape and high levels of bureaucracy in the trade and investment environment:

  • The country has one of the highest costs for acquiring construction permits;
  • Dispute resolution mechanisms are reportedly slow and unreliable;
  • Time taken to pay taxes: 907.6 hours; regional average: 310.4;
  • Time to open a business: 30.8 days versus average of 27.3;
  • Contract enforceability: ranked 140; regional average: 120.7.

 Businesses could also face risks relating to the weak enforcement of intellectual property (IP) protection laws and the slow development of e-governance policies and projects. The low levels of enforcement of IP laws in Nigeria can increase the risk of businesses being undercut by counterfeit products in different product categories.

Business challenges
  • Limited Internet and broadband access
  • The country has one of the highest costs for acquiring construction permits
  • Corruption in both the public and private sector complicates government bureaucracy and deters foreign direct investment.
  • Limitation on the number of international workers that can be employed by businesses due to an expatriate quota
  • Nigerian businesses can have poor payment policies and money/debt collection can be challenging.
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