Nigeria Discussion Series
Nigeria – The Land of Opportunity?
Enter any discussion about Nigeria and you are generally going to talk about two things; Nigeria’s oil wealth, and Nigeria’s problems. If you live overseas then the generally becomes almost certainly. This is not to say that Nigeria does not have problems, but what a lot of people tend to forget is that one person’s problem is another person’s opportunity. The Nigerian opportunity set is larger than most people would believe, and this post attempts to give a cursory glance of some of the non-oil related opportunities in the Nigerian environment.
Based on the numbers, Nigeria is booming. The country has averaged real GDP growth of around 6% a year in the last five years. To put that in perspective, Nigeria’s growth is comparable to China’s in the same period and everyone is worried that China is overheating.
Nigeria is the last great untapped market. Nigeria has over a 140 million people, which means that it has one of the largest mass markets in the world. People stay up late at night trying to think of ways to tap into that market. Here are two examples of what tapping into that market can do for a company’s bottom line.
Telecommunications is now the dominant industry in Nigeria. It is the major success story of the current administration. Telecoms showed that if you could tap into the mass market in Nigeria you could make ridiculous money. Some are even saying that the Nigeria part of MTN is the most valuable member of the group.
Nollywood is the second industry that showcased the power of the Nigerian mass market. Quality of the movies non-withstanding, the industry is a triumph of the private sector in Nigeria. I have seen estimates of the industry’s value that are well over a billion dollars. To our pride, or shame, Nollywood is the most popular art form on the African continent and so what is has done is nothing compared to what it will do.
In addition to past successes, there are more than a few industries whose success could be dependent on reaching the mass market. Two of the most promising of these are Real Estate/Construction and Financial Services. People are making so much money off providing high-end real estate that it is ridiculous. However these same people will tell you that what they are making is nothing compared to what one could make if one could do mass housing in Nigeria. If you think that Real Estate is not going to be king in the next few years, take a look at the stock prices of the listed cement companies. As far as Financial Services go, so much money is flowing into the system (mostly pension money) that it is a real problem to figure out how to invest the money. So finding things for people to invest in is the next frontier, and there is a lot of money to be made.
Now before people start booking flights and rushing back to Naij, there is a 100 ton gorilla that I have not mentioned yet: implementation. Anyone with an IQ of above ten can see the opportunities in Nigeria, but realizing them is another thing entirely. Nigeria is where good ideas go to die. However this is less true than it was five years ago. Just as the rewards of doing business are high in this country, so are the costs. Michelin was running out of the country, just as Dunlop was raising money on the Nigerian Stock Exchange. All in all there is opportunity in Nigeria, but if you don’t want to work to realize it then you better go into the business of getting money from government, but then again if you are that type of person this is not for you anyway.
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33 comments:
Very well-written and thought-provoking post. The potential is definitely there - the challenge now is to harness it effectively.
CHINAZA, WERE U AT JIM OVIA'S PRESENTATION IN BOSTON COS THIS IS AMAZING? ANYWAYS YOU'RE AN EXTREMELY INTELLIGENT GUY SO I AM NOT SURPRISED. VERY WELL DONE. Sorry had to do that all hail king snazzy in caps...this makes sooo much sense....there are so many opportunities in Gidi that was what most of the Panel speakers at the conference were saying but then again it is the cost, capital, connects, culture and settling in to society and having a feel that are on the upside. Very well done. I think I will forward this post to Jim myself hehehe :o) Seriously.
Are you sure you dont want to start writing articles for youths in terms of society/finance - we will talk.
xx
Don't have much to say about financial services...
But with the construction industry, like you said, there are opportunities. For starters, there is a NEED for those services. In university in Nigeria (at least the one I was in), most of the major engineering departments (petroleum, mechanical, electrical) had about 5 times more students than the civil engineering department. That's sad, because Civil Engineering is a broad field with lots of sub-fields. And of course we still have the non-heavy construction.
I love the topic. I'm sure in the next one week, we'll be able to come up with more ideas on non-oil related opportunities.
I'll be back, I am time constrained.
Regarding the comment you left on my blog about hosting every month, that's fine, as long as there are no other hosts in line.
@ dg, thanks a bunch
@ mona, "thank you very much" (Elvis style) oh and if you are going to drop thing, please pick 'em up after. LOL
@ nilla, in nigeria supply follows demand. And the real estate demand is laten,t in that it has not materialized to the extent that it is expected to, and so you can understand why people aren't gagging to be civil engineers. As far as ur other comment, my ego can do with a little bruising and so I'll gladly serve as an alternate.
Inspiring!
I discovered a new blog, and you are promptly added to my reader. I also like to hear from folks that have actually made the move and not just talking about making such moves. Okay now to the discussion. I see a lot of oppourtunities in Financial services, since there is a dearth of liquidity, however there is a high level of 'percieved risk' (real or made up). I see an oppourtunity for Nigerians living abroad standing in that gap as a form of insurance for the foreign investor. We understad the language, we know the culture etc. With regards to real estate, I met a Costa Rican that invests heavily in Nigeria, because he did the same thing in Costa Rica he his using the same model in Lagos.
Summary;
1.There are many oppourtunities in any emerging market such as Nigeria. Moreso with the 140million people.
2. However not everybody should implement the ' going home to do business' model.
3. Only unique models will survive in Nigeria. Transplanting ideas to Nigeria will not neccessarily work. Dunlop and Michelin is not an example of a failed Nigerian economy, but an example of a failed MODEL for the Nigerian economy.
4. There are other areas other than telecom worthy of your investment. That is the biggest point of snazzy's post. I love that part. Some banks now give you mortgages from Yankee for properties in Naija.
I will be back to yab snazzy though about two statements he made. LOL.
@ omodudu, you mean I am not on your reader already! what nonsense.
To be honest, from what I have seen in the months I've been back, the only things I think Nigerians abroad who plan to remain there can provide are funding and contacts to technical partners. Though the foreign investor may believe differently which is another thing. Anyone that plans to do anything about liquidity is going to have to be based here, cos there are so many interconnecting things around that you cannot be anywhere else.
If you are going to come at me for the China comment, don't; only economist folk would know or care why there are holes in the example.
Apart from that bring it on men!
The greatest limitation to entrepreneur worldwide is money.
Despite the massive opportunities that exist in Nigeria, it is unfortunate that the government is yet to create ways to assist small and medium sized businesses. As you very well know, these are the work-horses of any economy, they drive and sustain the economy, not the mega-size corporations. The apparatus created by the government (Small and Medium Enterprises Equity Investment Scheme (SMEEIS)) to facilitate the issue of capital- as raised by Omodudu - has not worked very well to the advantage to budding entrepreneurs. If this is fixed, more people will invest.
Secondly, for business to thrive, the issue of infrastructure must be addressed, creatively, just as that of rule of law. Businesses would thrive better where the legal and judicial system work.
Many are making inroads into the Nigerian business terrain, but expectedly, many are failing because of the factors listed earlier. The success stories we hear and read of are sadly an insignificant proportion of what they ought to be.
very well written and stimulating post.
nigeria as a whole should focus on human resources rather than than the oil- related opportunities that has brought nigeria so many problems.
Due to the poor quality of movies from nollywood, I have never viewed it as a valid part of the business sector. i was wrong
Great post snazzy
@ imnakoya, I can see where you are coming from, and the points that you raised are valid. However there are people starting SMEs everyday, they know what you know and are doing it regardless. And there are more of them now than there were five, ten years ago. So you are looking and saying the environment is bad, other people are looking and saying now is the time. Are there fewer success stories than they would be if Nigeria were better? Definitely, but there are successes and the number is going up. All I am saying is that while it is hard, there are more ways to succeed in nigeria than people realize.
@ cng, I'm sorry I didn't quite hear you. Did you admit you were wrong? Is the sky turning purple, are those pigs flying?
Seriously though, the major money is still in oil, but there is substantial money to be made in the non-oil. Also like you said human focused is best, and non-oil employs more people than oil.
Like WOW!!!...Snazzy your good...damn!!!...
God i'm so sorry never ever going to judge a man by the kind of friends he rolls with...Snazzy i'm sorry...
Men this guy concur on Mona's advice on the articles all the way.
Keep up the good work.
@ dimples, as far as backhanded compliments go that has to be one of the more impressive ones. Though I doubt my friends would agree with me. And I would say that u were underestimating my friends.
Anyway, I am curious as to how you know me. Cos unless you were the one that shot me down last year, I don't know any girls from hatfield that are man u fans.
Great post!
Not throwing a wrench in the wheel, the Nigerian Government must be keenly aware that sustaining democratic principles, enhancing security for life and property, and rebuilding and maintaining infrastructure are necessary for the country to attract investment, both local and foreign.
f@snazzy, I still do not buy the idea that you have to be on the ground. I think that is sort of thinking small, and a mentality that you have to do it all. From my personal experience there are many competent Nigerians on ground and they have been quite trustworthy too. If I have my little firm in manhattan selling the idea and my buddies and them implementing the plans we have agreed upon give to them. They seem to know how to get things done anyway. I feel the returns on my presence in Nigeria will be limited. Argh I will be back with my critique. Its not about China. Its about Nija's 6% growth. Thou shalt not use economic indeces anyhow. Great read. I am loving this.
@ nigeria politricks, it is one of the sad truths that many businesses succeed inspite of government. Still there are government agencies like Pencom, Nafdac and FIRS that are bucking against the trend of incompetent government agencies. As someone I know once put it, "It is premature to say that Nigeria's government is now heading down the right path, but one can say that we are slowing down or stopped on the wrong one"
@omodudu, this is what I mean when I say you have to be here. If for example you want to create a REIT, there are two big issues that you are going to confront; transfer of title, and taxation. The technical skills of structuring a REIT can be done anywhere (which is the technical part), but convincing FIRS to change the tax code, and governors to stop using consent to chop money can only be done here. Even finding business of the scale that you would require to furnish you with the kind of liquidity you would need for it to work, neccesitates that you build up the kind of contacts database that you cannot access overseas. The work required to get REITs up and running is nothing required to the work needed to set up a corporate bond market.
Also look at the guy that was pushing the idea of a credit bureau in Naij. It took him like three years to convince the banks (main beneficiaries of the information) that it was worth supporting.
You have to consider that you have to create the market in Nigeria, and I just don't see how you can do that in absentia.
I understand.
I did not hear about the credit rating system thing. That would be nice. But in a country like Naija, the system would be up for too much gaming and credibility go suffer. We shall see sha. Nice to know. I will be inviting you to a platform very soon. I hope you will accept that invitation.
I just thought about something, isn't it kinda phony to use vehicles that work well in the West and expect them to work the same way in emerging economies. eg REIT's. There are some fundamental assumptions of such vehicles that do not hold in Nigeria. Isn't that where the investors are getting it wrong. My views that you dont need to be a rocket sceintist to make it in economies like Nigeria, but boy o boy you will need to be very flexible and creative. I will re-read your stuff when I get home. I am interested in this topic o.
Great writeup...
Snazzy/Omodudu: Credit rating? You are referring to Credit Registry? http://www.creditregistry.com/main/whycreditregistry.asp
Snazzy: "there are more ways to succeed in Nigeria than people realize"
What exactly do you mean? What is "success"?
Not everyone can get into real estate (Lagos), oil and gas, or telecoms. These are big-ticket items for many entrepreneurs. In my opinion, the "many ways of success" you mentioned are open to those who have very deep pockets and access to cash, or strong connection with the government.
@imnakoya, I don't agree with your terms for what it takes to succeed in Nigeria. I think you are thinking small by saying: "In my opinion, the "many ways of success" you mentioned are open to those who have very deep pockets and access to cash, or strong connection with the government."
For example, I met someone who made a million Naira planning a wedding. She is basically one of the top Wedding planners in Nigeria and No she does not have government connections or very deep pockets. She simply uses other peoples money to plan weddings.
This brings me to about 8 or so years ago when I was telling a friend that cinemas would make loads of money in Nigeria and they argued with me till thy kingdom come that cinemas would be unsuccessful in Nigeria. And so the story goes that a few years later Silverbird Cinemas opened and started making dough.
Summary, we are only limited by our thoughts and imaginations. There are possibly millions of money making opportunities in Nigeria and those who are determined and resourceful will make is four sure.
Thanks Snazzy for your post. You really brought some insight
So ujustwanarite huh?Very nice,interesting and thought provoking post.I'll be back to make my comments.
To Aimie: Of-course there opportunities in Nigeria. Making 1 million is good and will be better if the person can maintain a steady stream of income in that magnitude. It doesn't make sense making 1m today and be dry for another 12 months. Beside what 1 million is to that person is not what it is to me or you; success is relative, and that is where I coming from.
@imnakoya, You are right in that few people can start glo, but i think you are also ignoring the fact that more people can start small businesses that wholesale recharge cards because glo exists. Success is relative, but the more sectors get that get opened up, the more people can find their own definition of success, even if it is a job that pays N20,000 a month as opposed to minimum wage of N7,500.
@omodudu,continuing on the REITs example, they are a way to diversify investment in real estate, but you have to look at it in the real sector sense to. Nigeria has one of the largest housing deficits in the world, and we have to fix that one way or another. So if you are saying REITs will not work, do you have something that will?
@ aimee, I agree with you. Govt connects are not necessary in some areas. I chose nollywood, but event management like you mentioned is another one.
@ onb, thanks a lot
@ mrs somebody, still waiting for your thoughts.
@ Snazzy
RE: hosting
Glad you understand. I'll put your name up again as an alternate.
That is why I fail to recognize Nigerians who remain in the West working 9 to 5. I honestly believe majority of Nigerians in the diaspora lack true ingenuity and are easily satisfied with making money from 9 to 5 jobs. The country is a huge market and affluent, business opportunities everywhere, why then do people choose to make money and remain abroad is beyond me.
Ingenuity is what we need, people who know what people want and are able to provide those services. Influence your firm or wherever you work to invest in Nigeria. Let them know there is a country where people do not mind spending and that country also has a huge population.
wow Snazzy...youve made great points here. I have seen a shifting in the economy in nigeria...I do agree that you sould initially anyways be on ground to start off/work on whatever it is you're planning...I believe if you work hard...think hard...play smart...I think one could end up turning some serious profits back home... Well done Snazzy with this...I look fwd to more write ups from you
As i always say..lol i never grew up in Nigerian and only started going to Nigeria in my late teens...
The first time i steped into that country i saw nothing but potential and opportunity.. My Parents live in Abuja and have done so for 15yrs.. i just used to see that that place as a blank canvass where u could just make money from any idea!! and people did ...
It was not like Lagos then oversaturated but like i said a blank canvass..
I remember when G.S.M First ever came out my friend had been working on a scheme for all these ring tones.. where and who did he not go to for investment they all turned him down saying it wont last it wont go no where.... Now Bobo don Real Land He is one of the biggest providers of real tones, ring tones etc etc!! a simply idea has made him a young Millionaire!!!...
When i used to come back to London from my Trips to Abuja when i told people the opportunities over there they could not believe i always believed in Nigeria i knew telecommunications would take off it was just a matter of time.. Nigerians are motivated business orientated basically have a good head on them.. Look at a simply thing like internet banking Nigeria was one of the first African countries to provide that service...
Even a friend of mine in Abuja started off a simply idea ONE NUMBER basicallly a Nigerian 192..
Since GSM Nigeria has grown and changed rapidly as long as you have the guts and the will to battle it out in Naija E Go better for you Forget the Government, Oil companies, Private business's are booming as is Nollywood that even the government has had to take notice..
Although jobs are still hard to get in Naija but my freinds as young graduates have jobs and earning gooood Pay!! better than some of us abroad sef!!
Industries and Companies have realised the potential in young Graduates and pay them accordingly this is where oil comapnies come into play.. Because what an a aquaintance of mine gets for being an event planner for one of these oil companies is ridiculous amounts of Naira a month!
My mother is always insisting i come back to Naija and capitalise on the the Corperate Events sector in Abuja as it is not as saturated as lagos even lagos could do with some competition..lol;)
Real Estate in Naija maaan!! Property people bought in the so called outskirts of Abuja then, like Jabi,Lugbe, karo are worth Big Bucks now not to mention property in Maitama Asokoro and Wuse 2. Also those construction companies that more ore less own Gwarimpa and all new housing schemes popping up and around Abuja..And the latest trend in ABJ is Plazas!! Goodness if you own Plaza or even a shop in a Plaza your own better since Our Darling Minister Mallam Nasir el-Rufai has knocked down virtually every corner shop in ABUJA If's it not in a Plaza forget .. even Mai Suya get shop for plaza..lol!!
Now Nepa has even been Privatised they now have a charge key system which i thinks works, no more over priced bills from nepa and you can( we hope ) guarantee constant light.!!
Even a simply thing like Event Planning is big Business ...
These are just small small examples..
Nigeria is booming oh!! Siddon dere!!...lol:)
My opinions!...
osanoboa ...na sidon i dey! lol
@ donzman, I would not say that diasporans (is that a word), lack ingenuity. A lot goes into starting a business in Naij and making it successful, that's why most people in Naij have a 9 to 5 too.
@ dhawk, yep I agree, and it's always a pleasure to have you darken my doorstep.
@ abujababe. I like your examples cos u showcased both opportunities for both small and large businesses.
One ironic thing though, PHCN (NEPA) is going through one of its worst patches just before the privatization gets finalized
@ tfm, are you looking over your shoulder worrying that abuja babe will grab you and toss you back to naij? I was until I remembered I was back home already.
Hey Snazzy! Great post! My friends and I are always thinking about potential opportunities in Nigeria considering the fact that there is abundant demand and not enough supply.
I have several family members who have started very lucrative business back home. Unfortunately, they complain about the lack of infrastructure - reliable electricity, bad roads and corruption. Nevertheless, thank you for acknowledging the potential financial gold mine that is Nigeria.
All we keep hearing is there r opportunities in Naija.There is no denying it that there r opportunities in Naija,but has anyone talked abt what u need to do to grab the opportunities we r talking abt if you don't have parents,Uncles,Aunties,cousins etc that can place u where the opportunities r.
I always keep hearing the shout to go back to Naija from everybody, u no how many graduates the universities in Nigeria r churning out every year and why only 10percent gets a job after graduation?Its cos the so call rich ppl's kids that schooled outside Nigeria goes back home with a certificate from over here and the companies in Nigeria will definately hire them cos they have a certificate from the US or UK,so that makes them better than the ppl in Naija and we also need to change our mentality in Naija that a certificate over here is not better than a certificate in Naija.
I know someone personally in Naija that has 2 Masters degree and still does not have a job and I bet u that if u carry a P.E Certificate from over here to naija u will get a job easily(this is what I have seen)
I am not saying u shd not move back to Naija if you want,thatz everybody's wahala,but ppl shd stop making noise abt opportunities in Naija to ppl outside and make it to ppl in Naija.The only reason a Nigerian company will do business with u is if u present ur US or UK contacts,certificates etc.
I schooled in Naija all my life and worked in Naija for close to 2yrs and left to me it is still the same ol' damn politics.
@ naijabloke, I totally agree with you that implementation is key. It's just that most people focused on the opportunity part of the post, and not on the translating opportunity to success is very hard part. The question mark in the title is there for a reason.
As far as the foreign versus domestic degree, I actually posted on that in november of last year, basically saying the same thing you were.
Even with the bias, the unemployment thing is more a function of a very narrow economy than of anything else.
Fair or not, only people with money and/or access can develop new sectors, and start new businesses. The consequence though is that it creates jobs, and that is a good thing regardless.
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