A land of opportunity - By Katrin Roscher

 Which country has over 500 languages, produces more movies than Hollywood, has the highest consumption of Guinness stout in the world,the landmass of France and the UK combined, a country, whose population the UN estimates will outgrow that of the USA by 2045, with a GDP growth that has consistently outpaced global GDP performance over the last decade and is also,the largest oil producer in Africa?

Nigeria is mostly known for the last fact which has obscured the abundance of opportunities its market has to offer. Many businesses are scared off by the country’s reputation for unsafe streets, the rise of extremism, high corruption rates and the fact that according to the World Bank there are only four countries where access to electricity is more difficult than in Nigeria.

However, there are a lot of success stories; for example, the country’s poor infrastructure rapidly accelerated the uptake of mobile phones. Telecoms giant MTN entered Nigeria in 2001 and in 2013 the country accounted for 29% of MTN’s revenue.The South African company operates in over 20 countries but Nigeria is the growth engine with a nearly 22% revenue increase in the first half of 2014.

The use of mobile devices as the prime means of surfing the web is rising rapidly and can be expected to grow as the cost of acquiring devices such as smartphones drops. Naturally, the increased availability of second hand devices that are capable of accessing the internet will also contribute to this rise. In a country where just a tiny fraction of purchases are being made in modern trade outlets, poor roads coupled with more smartphones could facilitate a leap from open market to online shopping. There are already a few successful online retailers like Jumia or Konga operating in Nigeria.

Mobile money is making banking accessible to the majority of the population who has traditionally been excluded from conventional financial services.The mobile phone has become a multi-task gadget providing farmers with weather updates, crop prices etc., UNICEF has launched a maternal health service that sends text messages to mothers in their local language detailing the nearest medical facilities to visit, on which day and the services available etc. 

Social media is mainly accessed through mobile phones and a very popular medium, particularly to Nigeria’s youth. Facebook is a commonly used platform but is receiving increased competition from mobile apps such as Eskimi which is a mobile-first social network and entertainment platform. Services like WhatsApp are also popular as these services allow the exchange of messages without having to pay for SMS.

Nigeria has a young and increasingly educated population that has its own cultural identity but is also interested in global trends and brands. KFC entered Nigeria in 2009 and now has about 25 outlets. Fried chicken is not necessarily the main attraction of these fast food stores; reliable electricity and free Wi-Fi are also unique selling points as many use KFC outlets as a short term work location after their meal. It’s only a matter of time before McDonald’s will sell burgers to Nigerians. The fact that mall shopping is gaining popularity amongst Nigerians and transforming the local retail landscape could provide Western fast food outlets a suitable environment for their stores. New shopping malls are springing up across the country catering for the increased desire of consumers to spend their leisure time in these modern shopping complexes.

The 2008 economic downturn in Western markets has driven many companies to shift their focus towards the most populous country in Africa. In order to overcome the challenges relating to importing consumer goods into Nigeria, many players have opted for manufacturing locally.

Some global giants such as Nestle and Unilever have had factories in Nigeria for decades, but others are just starting to invest heavily:

In early 2014, SAB Miller announced that it will invest $110 million to expand production in Nigeria, in spring 2014 P&G opened a large scale Pampers factory in the country and at around the same time, United Biscuits acquired a stake in A&P Foods which gives the company a manufacturing presence in Nigeria. The recent privatization of electricity generation and distribution should bring more reliable power which in turn will make local manufacturing more lucrative.

But reaching Nigerian consumers many of whom are earning less than $2/day on a large scale is a difficult task. The most popular strategy to reach low income earners is the introduction of small pack sizes. As such, most of the basic consumer products are available in single serve sachets ranging from laundry detergent to powdered milk. Another way is to innovate, for example, SAB Miller plans to roll out cassava beer in Nigeria. The company plans to use locally grown cassava for a cassava based beer which will be targeted at low income consumers.Diageo’s Ruut Extra which is a similar cassava based beer, has had ample success in Ghana.

For companies wishing to enter Nigeria’s market, the trick is to balance the foreign and the local carefully and always remember that in chaos lies opportunity.