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Posts Tagged ‘Lagos’

I set foot in Lagos for the first time on a hazy January morning in 2011. The mist hung low and it was my first exposure to the ‘Harmattan’ blowing south from the Sahara causing the blur. Well wishers having cautioned me and many questions about my intentions of  traveling to Nigeria fueled with the  419 scams doing their  daily rounds, there was much trepidation to deal with as I emerged from Murtala Muhammad International Airport. But honestly it all ended there! It has been ten months off and on and a lot of traveling throughout this amazing country which brought me close to some wonderful people with fierce optimism, pride and the desire to forge ahead in their lives – no matter what the stakes are!

Welcome to Nigeria –  proud people, good country and land of opportunity.

I have had close encounters with an agriculturist turned driver, grass root entrepreneurs, God-fearing hustlers, business minded Pastors, greedy expats, lonely Bankers, cheerful hawkers, reformed crooks, an ex-President, an esteemed academician, a well known technocrat, a confused chieftain, early morning joggers, bread vendors, innocent children – you name it – and there is one common trait they all share – Positivity!

Yet it is so difficult even for an ‘honourably’ unscrupulous businessman from the ‘ever-so-transparent’ Bangladesh to accept the beauty of Nigeria as a destination – and then ofcourse there is the inverted snobbery of Indian and Western businesses who consider the BRIC as their only destination.

Before I start sounding like on the payroll of the Nigerian Investment Promotion Board, my foray into the country had been purely to assess and advise a local company on their sales and distribution strategy – the rest we will wait and see.

CLICK HERE FOR AN INSIGHT THROUGH PICTURES OF NIGERIA

Many investors and business people are aware about the opportunities that Nigeria’s market of 150 million people offers but are still unsure of whether to take the plunge. The sheer scope of my project has helped me to be exposed to various levels of the Nigerian society and today I had the courage to pen down a few thoughts that could answer some common questions I have been asked about considering investing in Nigeria. Nothing is sacrosanct, but you will definitely get an idea of what things are. Try these:

I want to get involved in the Nigerian market but am not sure about the first step to take. What is the best route to follow?

It obviously differs from industry to industry but it is highly advisable to find a Nigerian partner who knows the business environment. Nigerians are generally also more sympathetic to investors with local partners or staff. The next stop would be to visit the Nigerian Investment Promotion Commission (NIPC) where you will be able to get advice on investing in Nigeria. The NIPC has streamlined the investment process by setting up a ‘One Stop Investment Centre’. Many countries also have bilateral chambers of commerce that will be able to assist you. It is always a good idea to meet with other established foreign investors to receive some insight from their experiences in doing business in Nigeria.

The political situation in Nigeria has stabilised dramatically since 1999 but how can one be assured that things will stay this way?

As with all young democracies there is always a fear that the situation can destabilise at any moment. Although such a scenario is theoretically possible in Nigeria, it does seem that the majority of the population, including politicians, is sick and tired of struggling and really wants to see Nigeria work. The people are happy with the democratic gains made so far. Corruption is still an issue but this evil is gradually being rooted out; and in most cases should not be a deterrent for investment. Incidents of violence around election time are often no worse than in other developing countries. Nigeria also has a vibrant and firmly established free press that is not afraid to hold politicians and authority figures accountable.

The re-election of President Goodluck Jonathan is another positive in this direction.

What are some of the major challenges in doing business in Nigeria and how can they be overcome?

Many Nigerians would tell you the country’s electricity supply problems are the main hurdle in the way of meaningful economic growth. The lack of infrastructure is also a major problem as anyone who has ever been stuck in Lagos traffic would know. Bad roads and a lack of railway services also create challenges in moving goods around the country. Despite this there are still many highly successful businesses in Nigeria. Most investors are able to look beyond these difficulties when Nigeria’s massive market of 150 million people is considered. The infrastructure situation is however being addressed by the authorities and the situation is improving.

What are the implications of Nigeria’s electricity supply problems for businesses looking to invest in the country?

Nigeria generates less than 30% of its total requirement of electricity.When spending time in a Nigerian office or hotel, there are normally short periods every few hours when the lights and air conditioning go off as the building switches from the national grid to its own generators; or vice versa. Most businesses have generators running the show. The direct impact that using generators will have on your business is that it raises the cost of electricity and subsequently the prices of most products in Nigeria. On an average businesses spend 10-15% on energy. Foreigners are usually surprised at how ‘expensive’ Nigeria is. This situation has made it difficult for many local manufacturers to compete with cheap foreign imports. The federal government has however banned the importation of many products in order to stimulate local production. As with other infrastructure projects many plans are on the table to improve power generation in Nigeria.

Will I have access to a skilled workforce in Nigeria?

Nigeria has a number of good universities and other educational institutions which turn out many highly educated and skilled individuals. A large number of Nigerians also go to America and Europe to study and then return to Nigeria to apply their skills in their homeland. Although investors might have to search a bit longer to find highly specialized individuals in certain fields, educated and eager to learn Nigerians are not hard to come by. Because of its British colonial past English is well established in Nigeria and the vast majority of people are fluent in the language.

There is an abundance of enthusiasm in the workforce. Tapping it and channeling this enthusiasm to ones advantage is the real challenge.

How big is the Nigerian middle class and at what rate is it growing?

The size of Nigeria’s middle class is estimated to be 38 million strong and sales of consumer goods such as cars, fashionable clothing, air conditioners, computers and satellite television decoders suggest that it is growing at a steady pace. Nigeria’s economy is fast expanding, albeit from a very low base, lifting more people out of poverty every day and pushing many into higher income brackets.

Nigeria has a very young population with a median age of 18 and more than 60% of its 150 million people aged 25 years or younger. This segment of the population has become very trendy, with widespread exposure to Western lifestyles through the internet, satellite TV and magazines.

What kind of assistance can investors expect from the Nigerian Government?

The Nigerian Government has demonstrated its desire to grow the non-oil sector of the economy by introducing various incentives for investors and reducing bureaucratic bottlenecks. Although investors should still expect some red tape there is definitely a political will to increase foreign investment in the country. Generally the Nigerian Government, on federal and state level, will help investors out in the areas of land acquisition, incentives, infrastructure provision and financing. The situation however differs from state to state and investors should go and meet with the local authorities where they want to establish their business.

Will I have to fear for my safety in Nigeria?

Nigeria’s image as a dangerous and lawless society is vastly exaggerated. I feel much safer in Nigeria than in many other countries. As is the case with the rest of the world, Nigeria’s metropolitan areas have more problems with crime than the rural areas. Most crime is however purely a result of poverty. Foreigners have told me that although they sometimes experience crimes like petty theft they have never felt as if their lives are in danger in Nigeria. Incidences of kidnapping in the Niger-Delta area are confined to the oil industry where the local population wants to draw attention to the fact that they are being exploited by multinational oil companies – this area should however be avoided if possible. Visitors in Nigeria should just use common sense !

As a foreign investor, will I be accepted by local Nigerians, or will I be seen as trying to exploit the country?

Nigerians are generally very friendly and hospitable but also a proud people who don’t like to be trampled upon. Most are aware of the advantages of foreign investment in terms of job creation and economic growth. As an investor the key is to always treat people with respect and to behave like you are a guest in a foreign country.

NIGERIA – Some Facts

The Nigerian industrial sector primarily depends on oil extraction and refining. It employs approximately 10% of the labour force and accounts for 34% of the GDP.

•        The service sector is also gradually emerging in the country. Almost 20% of the population is engaged in service sector jobs. This sector contributes 32.5% of the total GDP

•        23,982,200 Internet users as of December/2009, 16.1% of the population

•        Nigeria’s population sits at about 150 million with about 38 million people making up the middle class. This market continues to remain upwardly mobile, which presents great opportunities for entrepreneurs and investors.

•        The upwardly mobile Nigerian middle class is still avidly shopping for consumer goods. The recession has not dampened the needs and desires of Nigerians

•        Nigeria will be the next “gold rush” on the continent as investors take advantage of a booming economy, according to former South Africa reserve bank governor Tito Mboweni.

•        Nigeria’s gross domestic product would overtake South Africa’s in the next three decades, says Mboweni, who is now an adviser for Goldman Sachs Group. Its economy of $169-billion compares with South Africa’s $286-billion, according to World Bank data.

•        Nigeria is targeting annual economic growth of 10% in the coming years and intends to boost spending on power plants and attract more investment. The government is preparing to sell its first Eurobond of $500-million this year.

•        The collective buying power of households in Nigeria earning $1,000 to $5,000 a year doubled from 2000 to 2007, reaching $20-billion. Nearly seven million additional households have enough discretionary income to take their place as consumers, according to a report by consultants McKinsey and Co.

•        Unilever Global chief executive officer Paul Polman recently announced the consumer foods giant plans to over 100-million Euros in Unilever Nigeria within the next three years.

•        Polman says there is great potential in Nigeria despite the challenges in the business environment. Unilever plans to double its business in the country.

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Happy Child! – Lagos

Originally uploaded by Mohul

Click here for a Nigerian journey through pictures of my travel into the interiors of the country – as a market survey project for FMCG goods the pictures portray various aspects of life and people’s buying habits. Places visited include – Lagos, Kano, Gusau, Funtua, Sokoto, Kebbe-Birnin, Katsina, Abuja, Suleja and Port Harcourt. All the pictures have been with my Blackberry and a very cheap and dated camera – so please pardon the quality. It is more about the pictures themselves and not technicalities!

Contrary to media reports and perceptions my experience was highly enriching and fascinating to say the least! Politeness, positivity, innovative ideas, smiling faces, diversity and a great zeal for life – not common in the Western world today, sums up what I encountered!

Great Country, Good People!

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