Interview: Hajja Wakil

How attractive is the current economic situation in Nigeria for foreign investors?

HAJJA WAKIL: Several competitive advantages underpin Nigeria’s attractiveness as a destination for foreign direct investment (FDI). First, according to the World Bank, Nigeria is the largest economy in Africa, with a GDP of $441bn in 2021 and a population projected to be the third largest in the world by 2050 – providing a large customer base and growing middle class.

Second, Nigeria’s abundance of natural resources and its focus on entrepreneurship and innovation have transformed it into a leading financial technology (fintech) centre. For example, according to financial services company Mastercard, Nigerian start-ups accounted for a third of all funding granted to fintechs in the Middle East and Africa in 2021. Third, Nigeria is home to several international brands benefitting from generous investment incentives, strong investor protection and a private sector-led economy. Lastly, by enabling the integration of Nigeria’s sizeable market into regional and global value chains, the African Continental Free Trade Area strengthens the case for foreign investment in Nigeria as a gateway to Africa.

To what extent can digitalisation be leveraged to stimulate investment in Nigeria?

WAKIL: Digitalisation plays a critical role in promoting investment. A digital economy has three components: e-business infrastructure, e-business and e-commerce. Nigeria has made significant strides in the latter two. In the e-business category, Nigerian start-ups attracted $1.37bn of the $4bn raised in Africa in 2021. According to a 2021 report by the Fintech Times, Nigeria’s fintech landscape comprises over 210 companies, encompassing key stakeholders such as banks, incubators and research universities. The growing investor confidence in Nigerian fintech reflects its considerable digital potential, which is accentuated by several factors, including increasing mobile and internet penetration, and a technologically savvy youth.

Regarding e-commerce, reports indicate that Nigeria was the 33rd-largest e-commerce market in 2021, with a revenue of $6.9bn, placing it ahead of Denmark. Nigeria’s e-commerce market grew by 30% that year, compared to a global growth rate of 15%. Today, roughly 58 online marketplaces provide services to users, with the three leading players generating a combined revenue of over $30m in 2021. Nigeria can maximise its digital potential by improving access to technology, increasing digital literacy rates, removing funding constraints and expanding telecommunications infrastructure, as mobile phones remain the primary carrier of retail and enterprise data traffic.

What factors determine global competitiveness?

WAKIL: Nigeria has a large and relatively low-cost labour force, with more than half of its population of working age. The structure of the labour market is diverse; workers span the unskilled to highly skilled spectrum. While most of the working population is engaged in the unskilled to low-skilled informal sector, skilled to highly skilled workers are involved in the manufacturing, petroleum, financial and ICT sectors.

Companies that need unskilled and semi-skilled labour can attract employees with relative ease. Organisations with robust capacity-building structures can engender skills acquisition to enhance global competitiveness at relatively low costs. Conversely, firms in need of skilled and highly skilled employees must recruit from a comparatively smaller but competitive talent pool.

Key to unlocking the potential of Nigeria’s labour market is ensuring that FDI fosters knowledge and technology transfer to local firms and workers across all sectors. For example, numerous laws and regulations contain local content provisions to facilitate the transfer of critical skills and knowledge to Nigerians.