Nigeria is the third-biggest country in West Africa by area and 32nd largest in the world. With 853 km of coastline adjoining the Gulf of Guinea, it is well connected to international trade routes and acts as an important conduit of goods for its landlocked neighbours to the north. Nigeria is also blessed with an abundance of resources. In the last 18 months, significant political progress has been made in Nigeria. The ballot box has taken centre stage as the country carried out a peaceful handover of power at both the executive and legislative level. The incoming government has a number of pressing issues to tackle ranging from an Islamist insurgency in the north to a bruised oil industry in the south, alongside a slowing economy and depreciating currency.
This chapter contains viewpoints from President Muhammadu Buhari; and Christine Lagarde, Managing Director, IMF; as well as an interview with Lim Hng Kiang, Singapore Minister for Trade and Industry.Explore chapter
As Africa’s most populous nation, and with the biggest oil and gas reserves in the region, Nigeria has long been one of the continent’s sought-after markets, but also one of its most complex and challenging. A GDP rebasing in 2014 modernised the country’s statistical measurements, expanding GDP to N94.14trn ($155.1bn at the time of printing) in 2015. As the current government approaches the end of its second year in power, the outlook for Nigeria’s economy remains unclear. Through an expansionary budget and a war on corruption, President Muhammadu Buhari hopes to usher in an era of long-term, inclusive growth. However, lower oil prices and a still fragile global economy will likely pose significant challenges through 2017.
This chapter contains interviews with Kemi Adeosun, Minister of Finance; Tunde Fowler, Executive Chairman, Federal Inland Revenue Service; Laoye Jaiyeola, CEO, Nigerian Economic Summit Group; Hajiya Ladi Katagum, Acting Executive Secretary, Nigerian Investment Promotion Commission; and Razia Khan, Chief Economist, Africa, Standard Chartered.Explore chapter
Against the backdrop of a slowing economy and low oil prices, the Nigerian banking sector – filled with heavyweight regional players and the largest sector on the Nigerian Stock Exchange – has sought to play an increasingly important intermediary role, facilitating efforts to diversify the economy by expanding private sector credit and lending to small and medium-sized enterprises. However, macroeconomic conditions, including a depreciating currency and changes to the government’s fiscal policy, are impacting the ability of banks to deploy capital in the real economy. Furthermore, the Central Bank of Nigeria has unveiled a number of plans to tighten the risk management of the sector and further reduce the exposure of banks to government debt, all of which could herald significant changes to the competitive landscape.
This chapter contains an interview with Godwin Emefiele, Governor, Central Bank of Nigeria; and a roundtable with Peter Amangbo, Group Managing Director, Zenith Bank; Uzoma Dozie, Managing Director, Diamond Bank; and Herbert Wigwe, Group Managing Director, Access Bank; and Adesola Adeduntan, Managing Director and CEO, First Bank.Explore chapter
Already home to the second-largest stock exchange in Africa by market capitalisation, the introduction of foreign-exchange futures trading in mid-2016 is a major step towards the market’s goal of offering increasingly sophisticated investment and risk-management products and services. Although there are a handful of potential initial public offerings in the pipeline, 2016 may not be an active year for new listings, but capital markets, through rights offerings, corporate debt issues and other products will remain a key source of new capital for corporations. The next 12-18 months will see a host of new financial products designed to help corporations raise capital, hedge risk and speculate in various markets.
This chapter contains an interview with Oscar Onyema, CEO, Nigerian Stock Exchange; and a viewpoint from Kayode Akinkugbe, Chairman, FBN Capital.Explore chapter
In 2015 Nigerian underwriters reported total gross written premiums of nearly N350bn ($1.1bn at the time of printing), according to data released by the Nigerian Insurers Association, an industry group. This figure was up around 19% on the previous year. In light of the pace of expansion, and in addition to Nigeria’s enormous population and low rate of insurance penetration, it is perhaps not surprising that the market has attracted a raft of major foreign insurance players in recent years. However, Nigeria’s insurers have faced a series of challenges. Far-reaching economic volatility, political instability and ongoing structural issues continue to hinder many local players. However, given the market opportunities many underwriters and market watchers are broadly optimistic about the future.
This chapter contains an interview with Mohammed Kari, Commissioner for Insurance, National Insurance Commission.Explore chapter
As Africa’s largest oil producer, Nigeria’s energy sector accounts for 90% of exports and at least 50% of government revenues. The country is second only to Libya on the continent in the size of its reserves, and onshore fields have been productive for decades. Offshore deposits are a frontier that has been massively underexplored, and in recent years international oil companies have started to refocus their efforts there. That has left an opening on land, which local start-ups have filled. New and smaller indigenous companies are buying up onshore blocks from the global giants, investing in fresh capacity, and increasingly shaping the sector and its future. Under the current government, a number of substantial moves have been planned – all of which, if executed, could significantly modernise the hydrocarbons industry for one of the world’s largest producers.
This chapter contains interviews with Emmanuel Ibe Kachikwu, Minister of State, Petroleum Resources and former Chairman of the Board, Nigerian National Petroleum Corporation; and Mohammed Sanusi Barkindo, Secretary-General, Organisation of the Petroleum Exporting Countries.Explore chapter
A shortage of electricity is among Nigeria’s greatest obstacles to growth. Chronic shortages affect all consumers, due to a legacy of underinvestment in maintenance and new facilities. The system typically functions at less than half of its installed capacity of around 12,000 MW. Successive administrations have made sector reform a priority, with partial privatisation of the national grid being a key pillar. After years of delays, there have recently been some key investments made, and Nigeria has emerged as a test case for how development finance institutions can help catalyse investment in power across the continent. Although meeting Nigeria’s massive and expanding electricity needs will require the development of its major offshore gas fields, in the short term the combination of reforms and local involvement continues to provide opportunities for investors willing to risk capital on the new, and as yet untested, systems now in place.
This chapter contains interviews with Babatunde Fashola, Minister of Power, Works and Housing; and Jay Ireland, CEO, GE Africa.Explore chapter
From rails and roads to ports and airports, Nigeria’s transport sector is facing an extensive overhaul. The country has long suffered as a result of inadequate investment in infrastructure, constraining the movement of people and goods, and prompting the government to push for the rehabilitation and expansion of the entire transport network. Despite the government’s substantial project pipeline and increased budget allocations, potential issues connected to investment, funding and coordination could limit their implementation. The anticipated overhaul of the industry will only happen if the private sector can be fully engaged. The success of future transport projects also depends on the coordination and integration of the networks to provide intermodal connections and seamless travel for people and goods on these ambitious new routes.
This chapter contains an interview with Iyiola Adegboye, former Acting Managing Director, Lagos Metropolitan Area Transport Authority.Explore chapter
Construction & Real Estate
As the continent’s most populous nation and arguably its biggest economy, Nigeria offers a lot of potential for construction firms – particularly given the significant need for infrastructure work, from housing to roads. However, meeting this demand will require overcoming a number of obstacles, ranging from cash flow issues and payment delays to import of equipment and building material costs. A difficult macroeconomic environment is also constraining efforts to remedy this situation in the short term. The property market is defined by significant long-term potential, but realising it is not necessarily simple. A drop in the price of oil, a lack of foreign exchange and a depreciating currency are all combining to slow the economy, in turn dampening demand for both residential and commercial real estate. However, with a young and urbanised population of more than 184m people, the outlook in the longer term is more positive. If household incomes rise and access to finance improves, the scope for growth is immense.
This chapter contains a roundtable with Ronald Chagoury Jr, Vice-Chairman, South Energyx; Odenigwe Ike Michaels, CEO, Centenary City; Vinay Mahtani, CEO, Churchgate; and Elias Saad, Chairman, Eko Pearl Towers.Explore chapter
Telecoms & IT
Even amid the macroeconomic uncertainty of 2015 and the first half of 2016, the performance of Nigeria’s telecoms sector was marked by steady subscriber growth, a renewed regulatory mandate and continued infrastructure development. By July 2016 the country was home to 150.3m active telecoms subscribers, according to the federal telecoms regulator. This user base represents 81.7% of the total population of 184m in 2016, with the mobile segment accounting for more than 99% of subscriptions. Over the course of 2015 and 2016 the ICT industry has developed rapidly on the back of state-led growth initiatives and also, increasingly, as a result of rising levels of private sector activity. According to estimates compiled by the Federal Ministry of Communications, in 2015 ICT-related activities accounted for nearly 11% of GDP, up from 6% in 2012 and less than 1% as recently as 2001. The rapid uptake of mobile data subscriptions over the past few years, plus the steadily rising number of smartphone handsets in circulation indicate significant unmet demand for digital products and services.
This chapter contains interviews with Adebayo Shittu, Minister of Communications; and Issam Darwish, Executive Vice-Chairman and Group CEO, IHS Towers.Explore chapter
Industry & Retail
The industrial sector of what is arguably Africa’s largest economy is a diversified group of producers and outputs. With a wide range of accessible feedstock, from agricultural products to hydrocarbons, along with Africa’s biggest consumer market, the possibilities are substantial. The volume of output is small, however, and Nigeria is forced to import most of what it consumes, including the raw materials and intermediate goods its industries use. Cyclical pressures, along with structural challenges, have contributed to a challenging environment. Yet this has not slowed capital spending, and with a large consumer market the outlook is encouraging for many industrial segments. The retail sector is based on the latent potential of Nigeria’s population, currently estimated at 184m and growing. Firms hoping to cater to that block of consumers must overcome challenges such as finding land to build retail space, importing goods and managing currency risk. The central’s bank decision to change its currency policy is currently the most important factor for the retail sector. Once retailers gain some certainty on that, the next steps will likely be to take stock of balance sheets and capital requirements, then begin the process of utilising current retail capacity at malls.
This chapter contains an interview with Okey Enelamah, Minister of Industry, Trade and Investment.Explore chapter
While oil may be Nigeria’s breadwinner, agriculture remains the most important component of the country’s economy. The sector is the largest employer and accounts for 23.9% of GDP. And yet for many years the agriculture industry took a back seat to hydrocarbons, with Nigeria rising to be a key global producer. However, with the fall in the price of oil, the country’s high dependence on imports and a weakening currency, domestic agricultural is taking centre stage once again. In the coming years, the West African nation is likely to become a substantial producer of staple food crops, such as wheat and rice. At the same time, moves are afoot to rejuvenate traditionally strong segments like cassava and cocoa. While it remains to be seen whether the government can meet many of the ambitious targets it has set for these crops, the commitment to reducing imports and inflationary pressures, and boosting lending should ensure that production continues to increase, edging Nigeria closer to self-sufficiency and strong export growth.
This chapter contains an interview with Audu Ogbeh, Minister of Agriculture and Rural Development.Explore chapter
During the 1970s Nigeria had a prosperous, export-orientated mining industry. Before the discovery of oil, the West African nation had developed strong production operations for coal, tin and columbite. The discovery of hydrocarbons eclipsed these activities and relegated mining to an economic footnote. However, with the recent decline in the global price of oil and reductions in production due to violence in the oil-producing Delta states, the government in Abuja is looking to revive the country’s mining sector. The government is becoming aware of the latent prospects of the industry and, as such, is putting in place a strong regulatory and taxation environment that should reassure investors about the security and potential of their capital in Nigeria. Nevertheless, given the paucity of mineral data and the high capital requirements of exploration in this nascent market, foreign entrance into the sector is likely to come from acquisitions and partnerships in the short to medium term.
This chapter contains an interview with Kayode Fayemi, Minister of Mines and Steel Development.Explore chapter
Media & Entertainment
The Nigerian media industry is in the midst of what many local players consider to be a sea change. The rising popularity of ICT across the nation over the past decade and a half has had a major impact on the way Nigerians access media on a daily basis. This has created a range of challenges for print and broadcast media entities. The print industry, for instance, faces high levels of competition and falling revenues, as a steadily rising percentage of its output shifts online, where sufficient marketing and advertising models have yet to be fully developed or implemented. Furthermore, while broadcasters in particular are increasingly looking to the internet to help them reach new customers and larger markets, many Nigerians lack access to basic ICT services. However, the shift to digital is ultimately expected to be a boon to the industry, in that it has the potential to drastically expand the reach of local media producers, both domestically and further afield, with huge implications for revenues.Explore chapter
Health & Education
The current trajectory of the health care sector is defined in large part by the potential offered by Nigeria’s demographics and income profile. However, realising that potential will necessitate major investment and reforms to ensure that both public and private infrastructure can keep pace with demand. With an 184m-strong population growing at 2.7% per year, propelling the country to the upper ranks of the global population tables, the burden on public social services is great and growing. This is placing a strain on the under-resourced and underfunded public health system, but is also opening up the way for private providers. The education sector is also feeling the pressure created by the country’s demographics. Without further reform and attention, the state school system – currently underfunded and understaffed – is likely to come under severe stress. However, if the government is able to adapt accordingly, it can capitalise on the current youth bulge, facilitating a rise in economic productivity and a drop in the dependency ratio.
This chapter contains an interview with Isaac Folorunso Adewole, Minister of Health.Explore chapter
In conjunction with SIAO, OBG explores the taxation system, examining Nigeria’s investor-friendly environment.
OBG talks to Ituah Ighodalo, Managing Partner, SIAO, on strengthening the tax system and increasing revenues.Explore chapter
OBG introduces the reader to the different aspects of the legal system in Nigeria, in partnership with Ajumogobia & Okeke.
OBG talks to Ovie Ukiri, Managing Partner, Ajumogobia and Okeke, on the development of privatisation in the power sector.Explore chapter
This section includes information on hotels, government ministries and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.Explore chapter
Table of Contents
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Articles & Viewpoints
On supporting economic recovery with targeted investment in youth and infrastructure
On enhancing bilateral relations
On efforts to attract investment throughout the country’s 36 states
On mobilising private sector investment in targeted areas
On leveraging competitive advantages to attract investment
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
OBG & Nigeria