The Report: Nigeria 2024
Nigeria’s global strategic importance derives from its position as having both Africa’s largest population and economy, a reality undergirded by the entrepreneurial drive of its young population. Despite the lingering effects of the Covid-19 pandemic on the economy, aggressive intervention programmes by the Central Bank of Nigeria and support from international partners fuelled a recovery in 2021, with GDP growing 3.6% that year and 3.3% in 2022 after contracting 1.8% in 2020. Growth is projected to drop slightly to 3.2% in 2023.
Country Profile
If its population reaches 377m by 2050 as is projected, Nigeria is poised to become the world’s third-most populous country, with a diverse and complex social architecture comprising more than 250 ethnic groups and a plethora of faiths. The peaceful handover of power at both the executive and legislative level following elections in March 2023 buttressed Nigeria’s status as a symbol of political stability in the region. The new government faces several pressing issues, ranging from an Islamist insurgency in the north and secessionist agitation in the south-east, to an underperforming oil sector in the south-south, in addition to sluggish economic growth and a depreciating currency. This chapter contains interviews with Ngozi Okonjo-Iweala, Director-General, World Trade Organisation; Antonio Pedro, Acting Executive Secretary, UN Economic Commission for Africa; and Omar Alieu Touray, President, ECOWAS Commission.
Explore chapterEconomy
Nigeria has the potential to reduce its reliance on energy exports and promote growth in other sectors of the economy. The prominence of the non-oil private sector is expected to increase, offering opportunities for job creation and export diversification. Eliminating differences in the foreign exchange rate and improving security conditions are expected to benefit Nigerian businesses. However, in order to improve the government's fiscal position and free up resources to reduce poverty, it has been suggested that the country reduce subsidies, increase energy revenue and limit debt growth. The implementation of key initiatives – such as the recent removal of fuel subsidies and the use of pension funds to close the deficit in infrastructure funding – is likely to help ease inflation rates and improve economic conditions. This chapter contains interviews with Kalim Shah, Senior Country Manager, Nigeria, Liberia and Sierra Leone, International Finance Corporation; Hajja Wakil, Acting Executive Secretary and CEO, Nigerian Investment Promotion Commission; and Uche Orji, Former Managing Director and CEO, Nigeria Sovereign Investment Authority.
Explore chapterBanking
While many Nigerian banks are likely to see greater profitability in 2023, they are still grappling with distressed legacy loans to oil, gas and power companies. Moreover, the cautious policies of financial institutions and the Central Bank of Nigeria (CBN) are indicative of uncertainty in the global financial sector, reflected in continued caution in the policies at home. However, the CBN’s recent policy announcements regarding cryptocurrencies may portend a more expansive regulatory posture. Ultimately, the asset quality and capital ratios of banks are set to remain strong as such institutions maintain a conservative approach to credit growth. Furthermore, Nigeria’s financial technology (fintech) segment is set to further impact banking by streamlining and widening services offered by conventional banks, as well as by creating greater competition between conventional lenders and standalone fintech firms.
Explore chapterCapital Markets
Nigeria’s capital markets have demonstrated positive growth despite the downturn in regional capital markets and global headwinds. Indeed, at the close of 2022 the rebranded Nigerian Exchange (NGX) had a 19.9% return on investment, making it the world’s fourth-best performing index. Key to sustaining this momentum in the coming years is attracting blue-chip companies to list on the NGX and easing access to capital markets by expanding retail channels. Despite turbulence in the bond and sukuk (Islamic bond) market, Nigeria continues to attract foreign and domestic interest, and new rules, tighter regulations, digitalisation and paperless transactions are likely to further enhance its attractiveness. The country’s capital markets already offer a wide range of products, and further innovations are expected to broaden and deepen the market.
This chapter contains an interview with Tapas Das, Managing Director and CEO, NG Clearing.
Insurance
The insurance sector has only skimmed the surface of what Nigeria’s economic growth could offer. However, raising gross written premium is likely to require a change in the market’s current structure. The large number of competitors – and the limited financial capacity of some of them – has made it difficult for the sector to deepen its penetration. The delay in the implementation of higher minimum capital requirements is likely to further stall consolidation in the short term, but the lingering effects of the Covid-19 pandemic and the reduction in oil output could encourage policymakers to take steps towards fostering stronger insurance providers. Raising the low rate of insurance penetration in the country is tied to efforts to address persistent levels of unemployment and poverty. Better economic conditions are expected to play an important role in supporting the sector’s growth.
Explore chapterEnergy
With Africa’s second-largest proven crude oil reserves – 36.9bn barrels as of 2021 – Nigeria remains a key global energy player. Despite the rise in crude oil prices resulting from Russia’s invasion of Ukraine, structural challenges facing the industry in Nigeria have constrained its ability to maximise export revenue from hydrocarbons. The country has the potential to benefit significantly from its natural resources by implementing reforms and improving infrastructure. Moreover, with many European countries seeking alternative gas supplies, Nigeria can attract investment to upgrade its energy infrastructure. The successful enactment of the Petroleum Industry Act in 2021 and government initiatives to improve security in the energy sector should play a crucial role in reviving interest in Nigeria's hydrocarbons reserves. This chapter contains an interview with Olumide Adeosun, CEO, Ardova.
Explore chapterIndustry
Transitioning from Africa’s largest economy to most industrialised one is contingent on its efforts to boost production, reduce its dependence on imports and drive the export trade. For those changes to materialise, manufacturers need reliable, affordable access to electricity and other vital infrastructure, while potential investors require attractive regulatory frameworks to inspire confidence and encourage market entry. The fact that the country’s top-performing manufacturing subsectors are not operating close to their full potential offers hope that with reformed policies in place, the sector’s untapped capacity can be mobilised and expanded to cater to the large, rapidly expanding consumer market. Developments in the petroleum and agro-production subsectors could also provide a platform for sustained and broad-based growth. This chapter contains an interview with Seleem Adegunwa, Managing Director, Rite Foods.
Explore chapterMining
With greater government support and a growing role as a generator of export earnings, Nigeria’s mining sector is poised to maximise its considerable potential in precious metals and gems. Total revenue from the sector is expected to rise by 25% to N3.6bn ($8.5m) in 2023, reflecting its resilience, as well as continued federal and state support. The implementation of new mining regulations is expected to help reorganise, decentralise and localise production, while efforts to combat illegal mining and the resulting environmental and social damage are progressing. Re-investing new wealth into infrastructure development is crucial, given that mining is a power-intensive industry that requires modern equipment, as well as reliable transport and logistics infrastructure. This chapter contains an interview with Bose Owolabi, Managing Director, Dukia Gold & Precious Metals Refining Company.
Explore chapterAgriculture
Agriculture remains a linchpin of Nigeria’s economy, contributing nearly 25% to GDP and employing 70% of the country’s workforce. To leverage its arable land and favourable climate, and reverse its status as a net food importer, greater investment is needed to develop Nigeria’s downstream food processing and agri-business industries. The sector faces a number of challenges across its value chain, while global factors continue to affect prices. Climate change is exacerbating these challenges, as Nigeria experienced widespread flooding in September and October 2022. A combination of new initiatives and a stronger resolve to address the challenges facing the sector could improve output and quality. This chapter contains interviews with Ayodeji Balogun, CEO, AFEX Commodities Exchange; and Sefihait Kone, Managing Director, Bayer Nigeria.
Explore chapterICT
With a population of close to 220m and an internet penetration rate of 51% at the beginning of 2022, Nigeria’s large ICT consumer market offers room for growth, making it an enticing prospect for local and international investors, particularly with the population forecast to reach 377m by 2050. Inadequate policy implementation has long prevented the sector from reaching its potential, but the government’s willingness to enter into public-private partnerships is a reason for optimism. Moving forwards, the burgeoning, responsive financial technology space and wider start-up ecosystem are bright spots for the domestic economy. Greater public-private cohesion in those areas would give the government an opportunity to collaborate with the country’s most innovative minds to develop effective solutions to macro and socio-economic challenges. This chapter contains interviews with Kashifu Inuwa, Director-General and CEO, National Information Technology Development Agency; and Olu Akanmu, President and Co-CEO, OPay Nigeria.
Explore chapterRetail
The second-largest contributor to GDP, the retail sector has long been a driver of growth and a bellwether of Nigeria’s economic trajectory. Several challenges have impeded the sector from fully leveraging the potential of its large consumer market, such as inflation, volatility in the exchange rate and a vulnerability to external price fluctuations. However, there is room for optimism, highlighted by the continued expansion of retail real estate offerings. Although the Covid-19 pandemic had a negative impact on traditional retail activity, it also spurred a growth in e-commerce. The fast-moving consumer goods segment underpinned recovery following the pandemic, reflecting a general shift in consumer preferences that began during the health crisis and continued through 2022. With household consumption set to reach N96trn ($228.7m) by 2025, Africa’s largest consumer market is poised for considerable growth. This chapter contains an interview with Ebele Enunwa, CEO and Founder, Sundry Markets.
Explore chapterConstruction & Real Estate
With the sector recovering from the stresses of the Covid-19 pandemic and the government’s key financing schemes experiencing notable success, Nigeria’s construction landscape is beginning to look brighter. While the real estate sector has enjoyed a rebound since pandemic-related restrictions began to ease, the lack of affordable housing is a growing concern that has been exacerbated by inflation, volatility in the exchange rate and the rising cost of building materials. To bridge the gap, the government could mobilise private sector investment by implementing land reform and measures to manage construction costs. The future success of the government’s economic diversification measures are likely to play a significant role in determining the long-term health of the property market. This chapter contains interviews with Attahiru Bala Usman, Managing Director, Allott Nigeria; and Kingsley Muwowo, Managing Director, Shelter Afrique.
Explore chapterTransport & Logistics
The increasing integration of the transport sector with the growing economy is underscored by the need to move huge amounts of natural resources and merchandise to support mining, agriculture, energy and manufacturing. Efforts to bridge such infrastructure gaps, particularly in road and railway systems, has led successive governments to allocate funds to transport projects. Despite the governance challenges and budgetary constraints, several large-scale projects have boosted Nigeria’s capacity to move goods and people between inland communities and growing coastal cities. Addressing security challenges and leveraging institutional financing for project development are expected to be crucial to the expansion and maintenance of the road, rail and air links that underpin the sector. This chapter contains an interview with Adetayo Bamiduro, CEO and Co-Founder, MAX.
Explore chapterDelta State
Situated at the epicentre of the petrochemicals industry, Delta State has the third-largest economy among Nigeria’s states, accounting for around 21.5% of the country’s oil output as of March 2023. While its internally generated revenue is predicated on oil and gas proceeds, the state has seen an expansion in other areas of the economy, with the non-oil and gas sector accounting for 52.5% of GDP in 2020 following a recent push for economic diversification, compared to 41.9% in 2013. In that vein, Delta State’s primary growth potential is in agri-business, light manufacturing, health care, tourism, energy and mining. Given the levels of unemployment, maximising support to foster this potential is set to play a crucial role in accelerating the diversification drive, as well as in consolidating its poverty reduction gains and attracting foreign direct investment. This chapter contains an interview with Ifeanyi Okowa, Former Governor, Delta State.
Explore chapterGombe State
Gombe State has a strong agriculture sector, and has the potential to further develop its agro-industry, mining, manufacturing and energy sectors to accelerate economic growth. Ranking first in Nigeria’s 2021 and 2022 subnational ease of doing business surveys, the state’s business environment has attracted a significant number of micro-, small and medium-sized enterprises. Moreover, with GDP growth projected to more than double over the next decade and a relatively robust debt-to-GDP ratio, the unemployment rate is anticipated to fall significantly, and per capita income could double by 2030. Regardless, more remains to be done to reduce poverty, increase private sector investment in infrastructure and attract foreign investment. This chapter contains an interview with Muhammad Inuwa Yahaya, Governor, Gombe State.
Explore chapterHealth & Education
Although Nigeria’s growing population poses a number of challenges to the provision of health care, the sector’s longer-term investment prospects remain promising, as the Covid-19 pandemic created more opportunities for private sector innovation. Moreover, further reforms and greater government spending on health care have the potential to create significant positive outcomes. As for education, demand is expected to continue to outpace supply, and a lack of resources could impact mobility opportunities for the country’s young, growing population. Despite inadequate funding in Nigeria’s public schools, new educational institutions are entering the market to provide critical skills in science, technology, engineering and maths, providing students with the skills needed to contribute to the country’s development. This chapter contains an interview with Pieter Slabberts, Managing Director, Eurapharma Care Services.
Explore chapterTax
Nigeria’s tax system has undergone a significant transformation due to the enactment of three annual finance acts, which have amended a total of 19 pieces of legislation, and 167 provisions of tax and fiscal laws – changes that have included a gradual shift from direct to indirect tax and a higher value-added tax rate. While many stakeholders have continued to advocate for a total overhaul of the regulatory framework, annual reviews of existing laws have led to attempts to align legislation with current economic realities, eliminate ambiguities and impediments to investment, and increase tax revenue. Although challenges to strengthening the regulatory framework remain, the ongoing reforms provide considerable scope for increased fiscal robustness. This chapter contains an interview with Yomi Olugbenro, Partner and West Africa Tax Leader, Deloitte Nigeria.
Explore chapterThe 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 country and details on current visa requirements for tourists.
Explore chapterContents
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Ngozi Okonjo-Iweala, Director-General, World Trade Organisation
Omar Alieu Touray, President, ECOWAS Commission
Antonio Pedro, Acting Executive Secretary, UN Economic Commission for Africa (UNECA)
Uche Orji, Former Managing Director and CEO, Nigeria Sovereign Investment Authority (NSIA)
Hajja Wakil, Acting Executive Secretary and CEO, Nigerian Investment Promotion Commission
