The Report: Nigeria 2019
Combining oil and gas wealth with the entrepreneurial efforts of its predominantly young population, Nigeria has developed a business-friendly environment over the past two decades of civilian rule. The country has effectively leveraged its abundance of natural resources and harnessed the strength of its 193m-strong population to become a key nation both on the African continent and beyond.
Country Profile
The most populous country in Africa with abundant natural resources, Nigeria is the continent’s largest economy by GDP. Combining oil and gas wealth with the entrepreneurial efforts of its predominantly young population, Nigeria has developed a business-friendly environment over two decades of civilian rule and in the nearly 60 years since independence. These achievements are all the more impressive given the stresses and strains imposed on this vast country by regional, religious and political tensions. Yet the challenges of economic inclusivity and ensuring wider equality remain, as around half of Nigerians continue to live below the income poverty line. The incoming administration will face some major security and corruption challenges for a republic that is multi-faceted and complex, but also multi-ethnic, multi-religious and multicultural. This chapter contains a viewpoint with President Muhammadu Buhari; and interviews with Patricia Scotland, Secretary-General, Commonwealth; and Ray Washburne, President and CEO, Overseas Private Investment Corporation.
Explore chapterEconomy
Nigeria is Africa’s biggest oil exporter and, with a population of 193m, the region’s biggest economy and largest consumer base. While the government is reliant on oil and gas for its revenue, the economy itself is more diversified, with manufacturing, banking and insurance, retail and agriculture all major contributors. However, each of these sectors could grow faster and create more opportunities if structural problems were overcome, among them, the country’s electricity shortage, corruption and bureaucratic bottlenecks. The country’s main economic blueprint is the Economic Recovery and Growth Plan, launched in 2017, which includes up to 60 policy interventions that seek to remove major obstacles to growth. Following the general election in February 2019, the incoming administration will be expected once again to consider major policy questions, notably including the issues of subsidies, oil sector laws and how to boost tax receipts. This chapter contains interviews with Yewande Sadiku, Executive Secretary, Nigerian Investment Promotion Commission; Babatunde Fowler, Executive Chairman, Federal Inland Revenue Service; Babatunde Paul Ruwase, President, Lagos Chamber of Commerce and Industry; and Peter Ashade, CEO, United Capital.
Explore chapterBanking
Nigeria’s banking sector is a diversified one, in which the largest banks follow the universal banking model and a range of specialised actors tap specific niches. New trends include merchant banks, sector-specific lending vehicles, and from policymakers, increased focus on financial inclusion. These include microfinance, mobile tools, and the establishment of a network of mobile money agents to service this developing financial infrastructure. For now, however, the banking sector features a slate of risks that leaves banks reluctant to lend to the private sector, and economic actors of most types suffer from inadequate access to finance. Despite this, overall performance is not expected to slide due to the counteracting improvements in the economy. This chapter contains interviews with Godwin Emefiele, Governor, Central Bank of Nigeria; Abubakar Jimoh, Managing Director and CEO, Coronation Merchant Bank; and Emeka Emuwa, CEO, Union Bank.
Explore chapterCapital Markets
Despite multiple trading platforms, a variety of debt instruments and a range of institutional investors, both domestic and foreign, Nigeria’s capital markets are relatively underdeveloped, accounting for only 11% of GDP in 2017, compared to a global average of 98.5% in 2016. Additionally, the authorities have not yet solved investors’ liquidity challenge and most domestics firms’ difficulties accessing finance. Furthermore, Nigeria wants to use capital markets to raise funds for infrastructure, the need for which is greater than what the federal budget and funding mechanisms are able to provide. Reforms to the sector are expected to play a role in infrastructure development in the near future, as new rules for pension funds are set to allow individual account holders to select risk-based investment approaches. This chapter contains interviews with Oscar N Onyema, CEO, Nigerian Stock Exchange; Ibukun Adebayo, Head of Middle East, Africa and South Asia, International Markets Unit, London Stock Exchange Group; Kayode Akinkugbe, Managing Director and CEO, FBNQuest Merchant Bank; and Chinua Azubike, Managing Director and CEO, InfraCredit.
Explore chapterInsurance
With a saturation rate of just 0.5% and a population of almost 200m, Nigeria’s insurance sector is attractive chiefly for its potential. The number of uninsured prospective customers is among the world’s largest within a single market. However, realising that potential has been difficult, with the sector fragmented and in need of consolidation. Although the industry regulator has been working to update and implement a new development plan, insurance companies are increasingly looking to non-traditional products to further boost exposure and overall access to policy coverage in Nigeria. These methods include micro-insurance for the retail market, index insurance for agriculture and new schemes for public health care. This chapter contains interviews with Alhaji Muhammadu Bagudu Hussaini, Managing Director and CEO, Nicon Insurance; and Nick Zaranyika, CEO, Total Health Trust.
Explore chapterEnergy
With an abundant supply of natural resources, Nigeria’s oil and gas sector plays a key role in global energy. Its oil deposits have been a major source of crude for decades, while its less developed natural gas fields offer resources that have yet to be fully tapped. In addition to being a traditional heavyweight in terms of output, the energy sector is also notable for its early success in building local content in upstream activity. Policy moves over the past two decades have enabled young firms to acquire and develop oil and gas blocks, build pipelines and distribution networks, and, based on the current project pipeline, refineries as well. However, there is still room for improvement, Nigeria’s midstream infrastructure is lacking, and while this has held back overall development, it affects natural gas resources in particular. This chapter contains interviews with Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources; and Tunde Afolabi, Chairman and CEO, Amni International Petroleum Development Company.
Explore chapterUtilities
Access to power remains one of Nigeria’s chief economic and social issues, with about 90m citizens lacking access to electricity, while the World Bank estimates per capita usage is lower in just eight other countries. Indeed, as the biggest domestic market in Africa, the country has great potential for manufacturing, but most investment in the sector tends to prioritise a steady and reliable supply of power. The 2017 Power Sector Recovery Programme is providing a series of reforms aimed at prioritising investment, restructuring the sector and re-evaluating problems related to payment and tariffs. Alongside this, the development of new sources of energy, progress of independent power producers, local control of regional grid development, and funding to upgrade and expand the existing network are generating opportunities going forward. This chapter contains an interview with Ladi Sanni, CEO, Viathan Engineering.
Explore chapterIndustry & Mining
Nigeria presents considerable potential to return high yields on investment in the manufacturing industry. The administration has introduced a range of incentives to launch and broaden activities in various manufacturing segments, including agro-processing, biofuels, cement and automobiles. Coupled with the country’s broad resource base, the large and growing working-age population and the government’s renewed commitment to diversifying the economy through industrial development, conditions are right to achieve the ambitious output, employment and export rates proposed in plans like the Economic Recovery and Growth Plan. As for the mining sector, home to abundant, untapped reserves, and increasingly the focus of pro-business policies, the sector is poised for robust near and midterm growth as investors move to capitalise on opportunities in iron ore, gold, zinc and lead, among others. This chapter contains an interview with Jean-Marc Ricca, Managing Director, BASF West Africa; and a roundtable with Chris McAllister, Managing Director, British American Tobacco Nigeria and West Africa; Ben Langat, Managing Director, FrieslandCampina WAMCO Nigeria; and Yaw Nsarkoh, Executive Vice-President Ghana and Nigeria, Unilever.
Explore chapterAgriculture
Long a critical sector for the Nigerian economy, agriculture recorded steady growth throughout the country’s recent recession and supported macroeconomic stability against a backdrop of volatility in the global oil market. Although the sector’s workforce, exports and GDP contribution have fallen in recent decades, as oil and gas production became Nigeria’s economic mainstay, the country is home to vast amounts of arable land and a large, diverse production base that includes many high-value cash crops, offering significant opportunity for development and investment. Recognising the sector’s high growth and export potential, the federal government of Nigeria has increasingly focused on agricultural development as a support mechanism for macroeconomic and non-oil growth. This chapter contains an interview with Audu Ogbeh, Minister of Agriculture and Rural Development; and a roundtable with Chaim Zach, Managing Director and CEO, Agric International Technology and Trade; Kabiru Rabiu, Group Executive Director, BUA Group; and Aliyu Abbati Abdulhameed, Managing Director, Nigeria Incentive-Based Risk Sharing System for Agricultural Lending.
Explore chapterAbuja
Home to the national capital Abuja – one of the fastest-growing cities in Africa – the Federal Capital Territory has risen to become a significant investment destination in recent years. Supported by rapid population growth, rising GDP and expanding household consumption, a wide offering of opportunities have arisen across construction, mining, agriculture, ICT and real estate. However, rapid urbanisation presents serious challenges. The ongoing prioritisation of transport and infrastructure spending, coupled with efforts to increase private sector investment in real estate go some way towards addressing these issues. However, more remains to be done to further increase private sector involvement in large-scale infrastructure projects and to leverage the territory’s manufacturing potential. This chapter contains an interview with Muhammad Musa Bello, Minister of the Federal Capital Territory.
Explore chapterTransport
Nigeria has seen much of its transport network fall into disrepair in the wake of unprecedented recent economic and population growth, as well as decades of underinvestment in critical transport infrastructure. Although rising passenger and cargo demand continues to strain nearly every segment of Nigeria’s transport sector, over the course of 2017 and 2018 the country has made commendable progress in alleviating urban congestion, investing in critical infrastructure projects and increasing private sector participation in the development of transport arteries. The opening of the Abuja Light Rail system, steady progress on the new terminal at Abuja’s Nnamdi Azikiwe International Airport, and rising public and private investment in the critical rail and road segments should see the transport sector become a key enabler of diversified non-oil growth, supporting Economic Recovery and Growth Plan targets as well as an ongoing macroeconomic recovery. This chapter contains an interview with Hassan Bello, Executive Secretary and CEO, Nigerian Shippers’ Council.
Explore chapterConstruction & Real Estate
Although currency volatility and a recession in 2016 impacted private sector investment, public spending on new infrastructure has surged in recent years, and is expected to rise again for the remainder of 2018 and into 2019. However, public funds do not suffice to close the country’s widening infrastructure deficit, something that has led the government to increasingly target private sector investment to launch new projects. In addition to successful bond issuances that should relieve budgetary constraints and boost transport spending, the authorities have moved to increase the deployment of public-private partnerships to deliver big-ticket projects, a strategy that has had considerable success, and should keep the industry on the path towards positive growth going into 2019. Meanwhile, the real estate sector is set to stabilise in 2018 as markets absorb new supply, and macroeconomic indicators improve. The 2018 budget boosted public spending by 16% from 2017 levels, with a significant portion of funding channelled into new projects under the Federal Ministry of Power, Works and Housing, as well as the Federal Ministry of Transportation. This chapter contains interviews with Babatunde Fashola, Minister of Power, Works and Housing; and Paul Onwuanibe, CEO, Landmark Africa.
Explore chapterICT
Nigeria’s ICT sector has faced several challenging years, with rapid currency depreciation and a macroeconomic slowdown weighing on profitability. However the sector remains a critical non-oil growth driver and major contributor to the economy, supported by a sizeable young population and the rapid adoption of mobile internet services. Dominated by four large mobile operators, the telecoms industry remains on a steady growth trajectory, as rising smartphone penetration and investment in mobile internet networks supports a shift towards data-driven growth models. In the IT sector government efforts to boost broadband penetration have begun to gather steam, although the country will face a number of challenges in achieving its ambitious mid-term expansion targets owing to issues in deploying new fibre-optic infrastructure. This chapter contains an interview with Umar Danbatta, Executive Vice-chairman and CEO, Nigerian Communications Commission.
Explore chapterRetail
Following a decade-long period of growth, in which formal retail supplies more than tripled, Nigeria’s retail sector faced several challenging years. Macroeconomic volatility, a recession in 2016 and the naira’s rapid depreciation impacted retailers and consumers alike. Likewise, both purchasing power and household incomes declined, while input costs and vacancy rates simultaneously increased. Despite these recent economic challenges, the country remains one of Africa’s most attractive retail investment destinations for local and foreign investors. As retailers move to capitalise on opportunities in the sector, stakeholders anticipate that developers will increasingly shift their strategy towards smaller, localised retail developments offering essential grocery, pharmaceutical and clothing items. In the longer term resurgent middle-class growth, supported by improving oil prices and strengthening macroeconomic fundamentals, should see a return to large-scale, high-end regional and mixed-use retail centres. This chapter contains an interview with Olaide Agboola, Managing Partner, Purple Capital.
Explore chapterHealth & Education
Efforts to develop the Nigerian health care system have been hindered by several notable challenges, including limited public funding, a high communicable diseases burden, rising incidence of non-communicable diseases, and elevated rates of infant and maternal mortality. However, Nigeria’s large, young population, widening deficits in primary and specialty care, and the state’s encouragement of investment have created opportunities for growth across all levels of service provision. The government’s willingness to plan and partner with private providers should help to considerably improve the quality, access and outcomes of patient care in the years to come. Meanwhile, the education system presents itself as well with some challenges. Budget shortfalls have stretched the public system thin, while disparities in enrolment and outcomes across the K-12 spectrum continue to emerge along the lines of gender and geography. Moreover, primary and secondary enrolment has slipped in the midst of insecurity in the country’s north, even as the insurgency has ebbed. However, recent policy reforms should propel public investment in new facilities, classroom resources and teacher training, which should improve student outcomes and reduce the country’s large out-of-school population. This chapter contains an interview with Abubakar A Rasheed, Executive Secretary, National Universities Commission.
Explore chapterTax
In conjunction with Grant Thornton, this chapter explores the taxation system and Nigeria’s efforts to build an investor-friendly environment. It also contains a viewpoint with Peter N Orizu, Executive Chairman; and Nkwachi Abuka, Partner and Head of Tax, Grant Thornton.
Explore chapterLegal Framework
This chapter introduces the reader to the different aspects of the legal system in Nigeria, in partnership with Stillwaters Law Firm. This chapter also contains an interview with Afam Nwokedi, Principal Counsel and Group Head, Stillwaters Law Firm.
Explore chapterThe Guide
This section includes information on hotels, government offices and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress code, business hours and electricity. This chapter also contains an interview with Seun Anibaba, General Manager and CEO, Lagos State Lotteries Board.
Explore chapterTable of Contents
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President Muhammadu Buhari
Helen Grant, Member of Parliament and UK Trade Envoy to Nigeria
Yewande Sadiku, Former CEO, Nigerian Investment Promotion Commission (NIPC)
Jumoke Oduwole, Special Adviser to the President on Ease of Doing Business, and Secretary to the Presidential Enabling Business Environment Council
Samaila Zubairu, CEO, Africa Finance Corporation
Nasir Ahmad El-Rufai, Governor, Kaduna State
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Daily Times Nigeria: Boss Mustapha’s unforced error
