The Report: Nigeria 2022

With a population of over 200m, Nigeria is a large and diversified economy, despite the government’s reliance on oil and gas revenue. While the Covid-19 pandemic and subsequent oil price crash caused a contraction in economic growth in 2020, it also led to rapid digitalisation across commerce, education and communication. This shift is expected to put Nigeria in a favourable position for recovery in the

Country Profile

Nigeria is the 14th-largest country in Africa by land mass and is culturally diverse, with a population of more than 200m spanning over 250 ethnic groups. It is rich in natural resources, with some of the largest proven oil reserves in Africa, and has a strong agriculture sector, with major exports including rubber, cocoa, peanuts and palm oil. The country gained independence in 1960 and declared itself a federal republic in 1963. The presidential election in 1999 ushered in a period of relative stability and marked a return to civilian rule, providing strong foundations to support a post-pandemic rebound.

This chapter contains interviews with President Muhammadu Buhari; and Helen Grant, Member of Parliament and UK Trade Envoy to Nigeria.

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Nigeria faced new economic headwinds in 2020. While the country’s growth has traditionally been stymied by issues such as electricity shortages, bureaucracy and a lack of transparency, the pandemic added a new set of challenges. GDP contracted by 1.9% in 2020, reversing a three-year period of consistent – albeit moderate – expansion. Youth unemployment, a long-standing challenge for Nigeria, was also exacerbated by the Covid-19 crisis. Nonetheless, the Nigerian economy remains diversified, with the non-oil sector accounting for 90.8% of real GDP in the first quarter of 2021. Moreover, concerted efforts have laid the groundwork for a post-pandemic economic rebound, and the IMF projects that GDP growth will recover and expand through to 2025. This chapter contains interviews with Yewande Sadiku, Executive Secretary and Nigerian Investment Promotion Commission; and Jumoke Oduwole, Special Business Adviser to the President.

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Financial Services

Both Nigeria’s banking system and capital markets have seen significant changes over the course of recent years. Indeed, measures implemented in 2020 to restructure loans, enhance oversight and boost accountability are expected to create stronger sector players in the longer term. Meanwhile, an ongoing focus on financial inclusion has led to the emergence of new segments, including non-interest finance, microbanks, bancassurance and payment service banks. However, the economic effects of the Covid-19 pandemic are still expected to affect the banking system in the short term, including loan quality, profitability and currency stability. Even so, the Central Bank of Nigeria has identified banks as key players in a sustainable recovery due to their ability to strategically allocate credit to fuel widespread growth. Meanwhile, continued steps towards demutualisation and the launch of the Growth Board in 2020 will make the Nigerian Stock Exchange more competitive. The wider investment landscape is also set to benefit from ongoing efforts to bolster financial inclusion and promote awareness of the advantages of capital markets as an alternative to conventional banking when it comes to funding business expansion and growing and preserving individual wealth. This chapter contains an interview with Samaila Zubairu, CEO of Africa Finance Corporation.

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Nigeria is Africa’s top oil producer and possesses the largest proven gas reserves on the continent, making it a key player in the global energy market. However, despite its wealth of resources, the country has been unable to meet domestic demand and has one of the lowest net electricity generation rates per capita in the world. The pandemic aggravated this trend, as 2020 saw a steady decline in global demand for petroleum products. However, optimism for an improved macroeconomic environment in 2021 bodes well for investment in the energy sector, with growing opportunities in the nascent renewables segment as the country looks to expand electricity access to underserved communities. This chapter contains an interview with Mele Kolo Kyari, Group Managing Director of the Nigerian National Petroleum Corporation.

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Nigeria has a varied industrial sector, and although the pandemic disrupted international supply chains and local operations, the performance of some industrial segments in Nigeria bucked the trend. Major projects continue to push ahead, such as Nigeria’s first privately owned oil refinery and new cement plants, while government plans to add greater value to agricultural output kicked off with external financing. The construction of new free zones is also ongoing, providing investors with more opportunities close to seaports and in the hinterlands. Other segments such as metal and cement are poised for growth, with producers to benefit from high local demand. Overall, the government sees industry as a way to diversify receipts and cushion the fallout from future oil price declines. This chapter contains an interview with Jean-Marc Ricca, Managing Director of BASF West Africa.

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In recent years focus has returned to agriculture as an important source of revenue for a diversified Nigerian economy. But despite the sector’s robust performance, the country remains vulnerable to food insecurity and is unable to meet domestic demand. This is explained by low levels of irrigation and an outdated land tenure system which have kept agricultural productivity low and caused post-harvest losses. Moreover, the Covid-19 pandemic has further exacerbated the challenges that were already present in the sector, as lockdowns and panic-buying not only contributed to a hike in food prices but also disrupted supply chains. Hence, plans to revitalise agriculture are expected to be centred on increasing local production and improving the value chain. This chapter contains interviews with Mezuo Nwuneli, Managing Partner, Sahel Capital Agribusiness Managers; and Osazuwa Osayi, Co-founder and Co-CEO, Farmforte.

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Nigeria is one of Africa’s largest ICT markets in terms of its share of telecoms subscribers and internet users, and this sector is set to grow in 2021, even as other areas of the economy remain constrained by the pandemic. ICT is being prioritised as part of the country’s longer-term goal of developing a digital economy supported by its large, youthful population. Indeed, the government has made progress on removing several barriers faced by telecoms providers and created opportunities for the private sector as it works to boost broadband penetration across the country. In addition to improving the ecosystem for entrepreneurs, infrastructure development and the future deployment of 5G will be crucial to Nigeria reaching its goal of fostering a digital economy. This chapter contains interviews with Isa Ali Ibrahim Pantami, Minister of Communications and Digital Economy; and Olugbenga Agboola, Co-founder and CEO of Flutterwave.

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The Nigerian retail market remains fragmented and dependent on informal sales channels such as neighbourhood markets and kiosks, which account for 90% of retail activity. As in most emerging markets, the bulk of household expenditure in Nigeria is directed towards food. But with traditional in-person shopping limited by lockdowns, and many households facing tighter budgets, the sector contracted by 8.49% over the course of 2020. Nonetheless, retail activity showed signs of recovery by the end of that year. Nigeria remains attractive for investors and retailers that apply growth strategies tailored to specific consumer preferences. While macroeconomic headwinds and currency volatility have weighed on consumer spending power in recent years, price sensitivity is leading to new opportunities for smaller packaging, localised retail developments and the sale of essential goods. This chapter contains an interview with Juliet Anammah, Chairwoman, Jumia Nigeria; and Chief Sustainability Officer, Jumia Group.

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Construction & Real Estate

Construction in Nigeria has recently been constrained by relatively low public investment and high operating costs. Moreover, its real estate sector experienced a challenging 2020, characterised by a drop in demand, movement restrictions and global supply chain disruptions. However, renewed prioritisation of infrastructure projects – particularly in energy, housing and transport – is expected to drive recovery as the country bounces back from the Covid-19 crisis. Looking ahead, one segment poised for growth is affordable housing. The authorities’ prioritisation of developing such units and facilitating cheaper mortgage options should help more residents become homeowners in the coming years. Overall, reducing dependence on imported building materials is key. While border closures and transit restrictions stalled building activity, it also prompted developers to source materials locally – a trend that is expected to continue. This chapter contains an interview with Babatunde Fashola, Minister of Works and Housing of Nigeria.

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Transport and Logistics

Although transport networks have historically been underfunded, the government is prioritising their development, as enhanced connectivity is key to supporting growth in non-oil sectors. Demand for transport is set to rebound in the second half of 2021 as the economy reopens and the African Continental Free Trade Area is in force. The most significant gains in the coming years are expected in the road and port segments, with urban rail projects progressing more slowly. As Nigeria is the most populous country on the continent, investors continue to see notable potential in the transport sector but have traditionally been deterred from investing in other areas of the economy because of concerns about infrastructure capacity. As such, redoubled cooperation between the public and private sectors to develop multi-modal nodes will be crucial. This chapter contains an interview with Emmanuel Ezenwere, CEO and Founder of Arone.

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Health and Education

While Nigeria has made notable progress on several major wellness indicators in recent years, the country is grappling with health and social consequences stemming from the Covid-19 pandemic, in addition to structural challenges related to its public health system and the rollout of universal health care (UHC). However, with Nigeria’s large and young population, the longer-term prospects for investment in the sector remain promising. As the government works to meet education financing needs, new opportunities are present throughout the sector, including improving infrastructure and providing modern teaching materials. Getting young children in school will require a multi-pronged approach by the public and private sectors in the coming years. It will become increasingly important for stakeholders to identify future industries for students to be trained in, which should help address the country’s high underemployment rates, in turn, transforming the Nigerian economy through sustainable progress. This chapter contains an interview with Moji Adeyeye, Director-General of the National Agency for Food and Drug Administration and Control.

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The state of Kaduna was founded in 1912 by British colonial ruler Lord Frederick Lugard. Throughout its colonial history, it served as the political, administrative and economic centre of the north of Nigeria. As an academic centre with many tertiary educational institutions, Kaduna earned the nickname “the Centre of Learning”. In recent years state authorities have worked to develop Kaduna’s business climate. The Kaduna State Infrastructure Master Plan is the state’s long-term strategy for coordinated infrastructure development. The plan lays out interventions in the key sectors of transportation, housing, education, health, water and sanitation, and agriculture, with total projected expenditure amounting to N20trn ($53.4bn). The plan aims to ensure that Kaduna becomes a model for urban development by 2050 as it leverages its strategic location in the northern urban corridor. This chapter contains an interview with Nasir Ahmad El-Rufai, Governor of Kaduna State.

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The Guide

The Guide contains listings of leading hotels and resorts in Nigeria for both business and leisure travellers, helpful information for new arrivals to the emirate and details on current visa requirements for tourists.

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