The Nigerian Retail Report 2014/2015

1 The Nigerian Retail Report 2014/2015

2 The Nigerian Retail Report 2014/2015

Nigeria

Sector Report 2014/2015

3 The Nigerian Retail Report 2014/2015

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4 The Nigerian Retail Report 2014/2015

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5 The Nigerian Retail Report 2014/2015 ACKNOWLEDGEMENTS

Acknowledgements

Obodo Ejiro Senior Research Analyst Tel.: +234 805 074 5774 Email: [email protected]

Peter Ehigiator Senior Creative Artist Tel.: +234 802 325 1964 Email: [email protected]

6 CONTENTS The Nigerian Retail Report 2014/2015

Contents Pages

Overview 09

The Nigerian Economy 10-12 • Oil and the Nigerian economy 13-14 • Manufacturing in Nigeria 15 • Social-economic characteristics of the population 16-18 • Rebasing and the new face of the economy 18-20

Developments In Africa’s Retail Market 21-24

Profiling Nigeria’s retail outlets 25-27

Classifying Nigeria retail outlets • The traditional open market retail outlets 29 • Unit neighbourhood stores/supermarkets 29 • Multiple branch supermarket/franchises (convenience 30 stores) • Mega supermarkets/shopping malls 30-31 • The Grocery Bazaar Model 32-33 • The Best Choice model 33

Nigeria’s retail power houses 34-39

Nigeria’s major retail markets • Lagos, Ibadan and the South West 40-41 • Kano, Kaduna and the North West 41-42 • Port Harcourt, Benin and the South-South 42-43 • Aba, Onitsha and the South East 43 • Abuja 43-45

Online retail in Nigeria 46-48 • Profiles of Nigeria’s key retailers 49-50

Interview 51-52 ‘Online retail is waxing stronger’

Winning in Nigeria’s retail market 53-55

Facts For Investors 56-57

Abbreviations 58

7 The Nigerian Retail Report 2014/2015 ACRONYMS AND ABBREVIATIONS

8 The Nigerian Retail Report 2014/2015 Overview

Retail in Nigeria was once confined to traditional open markets and small local storekeepers – loosely referred to as the informal retail sector of the Nigerian economy – which serviced communities. Between 1960 and the early 1980s, there were standard retail malls which operated chain stores across the country; their number reduced because of the harsh business environment and the decline in business in that era, leaving the country without standard malls for retail business.

This gap led to the growth of the informal or traditional retail market, which traditionally constitutes a formidable part of the retail structure in Nigeria.

Today, Nigeria is experiencing a tremendous shift to a more sophisticated structure as formal or organised retail continues to gain ascendency. The distribution chain and the organisation of outlets continue to reflect those of a rapidly evolving economy as standards of living improve and as the population continues to snowball. In the past eight years, Nigeria’s population has grown from 150 million, as established by the population census conducted in 2006, to a country with an estimated population of 171 million people by 2013. In the midst of this, the middle class continues to expand even as 51 percent of the country’s population now lives in cities.

The rise of organised retail has been rapid in Nigeria in the last two decades. NBS data shows that between 2001 and 2004, the wholesale and retail sector grew by 10 percent per annum. By 2006, its contribution was 16 percent. In the first halves of 2011, 2012 and 2013, it contributed 15.58 percent, 17.05 percent and 18.44 percent of GDP respectively.

The old or traditional retail system which is adjudged to account for almost 90 percent of retail activity in Nigeria has continued to decline because of government’s policy, changes in the composition of Nigeria’s population, rising income level and increasing sophistication of the Nigerian consumer.

In the last decade, the stable political environment, consistently high oil prices, and rise in GDP have had positive impact on per capita income, which has in turn moved more Nigerians into the middle class. Today, more families shop together and organised facilities which meet their need are attracting more shoppers. Therefore, the old or traditional structure of retail continues to give way to the new.

More than ever, the Nigerian consumer is interested in a decent shopping environment, neatly-arranged and labelled commodities and the experience that goes with buying at an organised outlet.

Opportunities in wholesale and retail stem from the fact that demand has continued to rise. NBS data shows that based on the structure and level of development of the economy, the average Nigerian household spends as much as 80 percent of its income on consumables like food and drinks, clothing, transportation, shelter, education, electronics and power supply.

The average amount devoted to consumption has played a major role in elevating Nigeria to the status of a 171 million-populated retail powerhouse on the African continent.

Nigeria has evolved from being a country with 150 million population with no real mega retail store in 2006 to one with 171 million people who have about 20 mega retail stores in less than 10 years. The country has the capacity to support even more malls across its major cities.

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The Nigerian economy

nigeria’s economy is one of the most promising on the African continent. The World Bank put the country’s GDP Nigeria is considered a lower at $262.6 billion, the second-largest middle-income economy by on the African continent, in 2012. But the rebasing process of the economy the AfDB, which groups Nigeria which was concluded in early 2014 among African countries with put the value of the economy at $510 billion, making it the biggest in Africa. GDP per capita of between $786 Rebasing the economy became and $3,115 in 2013 imperative as its structure evolved over the last three decades.

Nigeria has the highest population Chart 1: GDP per capita (current US$) on the African continent, estimated at 170 million in 2013, based on Nigeria Ghana South Africa Egypt, Arab Rep. a population growth rate of 3.2 4E-11 percent per annum. The country is 4E-11 considered a lower middle-income 3E-11 economy by the AfDB, which groups 3E-11 Nigeria among African countries 2E-11 with GDP per capita of between 2E-11 $786 and $3,115 in 2013. 1E-11 5E-11 Administered as a democracy, 0E-00 Nigeria has maintained a stable macroeconomic environment since 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 1999. Between 2008 and 2012, in the heat of the global recession, Decline in the growth of the oil the Nigerian economy maintained industry is largely attributed to stable growth rates. The economy non-passage of the PIB, a piece of has grown at an average rate of 6.7 legislation which is designed to percent in the past decade. restructure operations and taxation in the oil and gas industry. In the non-oil In the past, growth was fuelled sector, high consumer demand and primarily by the oil sector but increase in agricultural output are in the last five years, the non-oil responsible for driving growth. sector has continued to grow at unprecedented rates therefore Chart 3: Growth rate of the Nigerian economy skewing the economy in the direction of the non-oil sector. Real GDP growth Oil (crude petroleum/natural gas) Non-oil 10 Growth in the oil and gas industry 8 took a sudden dive in the last 6 quarter of 2011 but began to re- 4 emerge in the fourth quarter of 2 2013. However, the contribution of 0 0.3 oil to GDP growth has been below -2 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 its actual capacity in recent times. -4 CB

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Unemployment situation 54 percent in 2012. So far, sectors Though economic growth in responsible for most of Nigeria’s Nigeria has been quite robust, growth have not accommodated with rates among the highest in the number of unemployed Africa, unemployment remains individuals in the country. Labour high in the country. In 2013, NBS is therefore cheap in relative data showed that unemployment terms, though there is often rose to 23.9 percent in 2011, from need for extensive training of 21.1 percent in 2010. According personnel to make them fit for to NPC, youth unemployment was the work place.

Chart 4: GDP, $bn 700 577.22 600 542.572 510 500 NOTE: GDP figures for 2013, 400 2014 and 2015 are 300 263 based on rebased GDP figures 200 100 - 2003 2004 2005 2005 2007 2008 2009 2010 2011 2012 2013 2014E 2015E

GDP per capita (current US$) 3,500 3,000 NOTE: 2,500 2014 and 2015 2,000 estimates are based on revised values of 1,500 Nigeria’s GDP 1,000 500 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E

Perhaps the greatest challenge less competitive than products facing Nigeria’s economy is the imported into the country. High cost chronic electricity supply problem of manufacturing has also meant which all sectors of the economy that profit level for local companies have to contend with. Incessant are not as high as should be, while power outages have meant that many have closed shop. manufacturers have to produce at extremely high cost. This has For a country like Nigeria made Nigeria-made products that depends on the external

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environment for a good number Locally, inflation is driven by factors of goods consumed, inflation is a including food and energy costs. major concern. Therefore, Nigeria’s Analysts fear that inflation rates regulatory bank, the CBN, has have the capacity to rise further in made inflation targeting a major 2014, considering the fact that it component of its monetary policy. precedes an election year, but the CBN has so far been able to rein in Also, key to its policy is the inflation by maintaining a consistent management of the exchange rate, policy tab on money supply and and external reserve. The bank’s foreign exchange flows. MPC meeting are therefore centered on agreeing to MPR which will To tackle inflation in the long term, sustain inflation at acceptable levels. government has adopted a number For the past three years, MPR, which of measures to reduce Nigeria’s is the basis for pricing other lending dependence on food import, rates has stood at 12 percent. also the government has floated a number of funds to revamp To this end, the apex bank has industries which are ailing. These been able to moderate inflation to are measures geared at increasing acceptable levels in the past three the productive capacity of the years. Within this period, inflation economy and stemming the tide of peaked at 13.1 percent in January foreign exchange flight and increase 2012, but has dropped to single in the national food budget. The digit. It recorded its lowest value yet agricultural policies have played in November 2013 at 7.8 percent. At recorded some success, albeit, most the end of January 2014, inflation of the results will be fully felt in the was 8 percent. long run.

Chart 6: Inflation rates

All items (year on change) Food (Year on change)/1

14 13.1 12 10 9.5 9.3 8.6 8 7.8 8 6 4 Jul-11 Jul-12 Jul-13 Jan-11 Jan-12 Jan-13 Jan-14 Sep-11 Sep-12 Sep-13 Nov-11 Nov-12 Nov-13 Mar-11 Mar-12 Mar-13 May-11 May-12 May-13

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Inflation has not had a very barrel while in 2013, the bench significantly impact on retail mark of $79 was far below the price business in the past three years, as of the product for the whole year. prices have remained moderate in There are projections that oil may the period. The inflation numbers as well outperform government’s have meant that consumers have benchmark for 2014 therefore not had to make arbitrary provisions keeping the government and the for changes in price. Demand has Nigerian economy afloat. therefore been very stable. Within the past three years, the CBN’s goal of Global downside risks for oil were price moderation has been achieved. heightened in the face of the discovery of shale technology, but these have been largely allayed by Oil and the Nigerian economy forecasts from credible institutions One of the peculiarities of which do not envisage a decline in the Nigerian economy is the the price of oil in 2014. overbearing influence oil has on it. The economy has remained bullish The United States government’s because of oil. Oil has remained EIA and the OPEC forecast higher a driver of the economy since the oil demand for 2014, thereby 1970s. In 2012, oil accounted for increasing the prospects of rise in 90 percent of the country’s foreign price. Both institutions forecast exchange earnings and 85 percent that given the performance of the of government revenues. Chinese and the US economies and the improving fortunes of the In 2013, the ratio did not change European economies, there were much. Therefore, steady increases prospects that more oil would be in the international price of oil consumed since the world of the stabilized the Nigerian economy recession is over. Crude oil and even in the face of global recession. natural gas account for 15 percent As the world outgrows the global of Nigeria’s GDP. recession, oil continues to attract enough patronage to keep its price Domestically, the oil sector is higher than $100/barrel, this will faced with a number of challenges keep the Nigerian economy afloat including oil theft, vandalism of since it depends largely on the oil facilities, terrorism and the bullishness of the commodity. non-passage of the PIB, a bill that was designed to restructure the Brent, which constitutes a major oil industry and make it more component of Nigeria’s oil export, attuned to global standards. Most has maintained a value above of these challenges are receiving $90/barrel in the past two years, the attention of government thereby guaranteeing government which has reduced incidences expenditure and reserves which of terrorism, kidnapping and fuel importation of needed vandalism to the barest minimum. commodities. The price of oil for The economy is not, also being left the last half decade has exceeded at the mercy of the performance government’s budget benchmark. of the oil sector. Other equally In 2014, oil benchmark is $74 per important sectors are being

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considered to grow the economy. Chart 7: Oil price, production and export Crude oil price (Bonny light) Domestic production Crude oil export However, there is concerted $/b m/b effort on the part of government 140 3 to diversify the economy and 120 2.5 reduce oil’s overbearing influence 100 98.06 2 on the economy. To achieve 80 1.5 this, agriculture, a sector that 60 holds comparative advantage 40 1 for Nigeria, has been given a 20 0.5 major place in the government’s 0 0 transformation agenda. Jul-12 Jul-13 Oct-12 Jan-13 Jun-12 Jun-13 Oct-11 Apr-13 Jan-12 Feb-13 Dec-12 Apr-12 Sep-12 Sep-13 Feb-12 Dec-11 Nov-12 Mar-13 Aug-12 Aug-13 Nov-11 Mar-12 May-12 May-13 No analysis of the economy is complete without an analysis of the agricultural sector, wholesale and retail, telecommunications, and manufacturing. Agriculture employs over 60 percent of Nigeria’s workforce and accounted for 40.19 percent and 42.62 percent of Nigeria’s GDP in December 2011 and September 2012 respectively. In the 1960s, the sector contributed more than 63 percent of GDP.

The decline in agriculture has led government to deliberately target the sector for reform in recent times. In this direction, a number of policy reforms have been adopted to improve the production of rice, sugar, cassava, wheat, and cocoa (crops in which Nigeria has comparative advantage). The reform has also affected the production and distribution of fertilizers in the country. In a bid to tackle the challenge of agric finance, there have been direct interventions by the CBN and the BOI. The goal of both institutions was to provide direct financial assistance to farmers.

Also important is the retail end of the economy. The contribution of retail has continued to grow for the past one and half decade. In 2005, wholesale and retail contributed 15 percent of GDP, as at the first quarter of 2013 the sector’s contribution was 23 percent of GDP.

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Manufacturing in Nigeria Local manufacturing contributes In 2012, the contribution less than 5 percent to the Nigerian economy. Over the years, the of manufacturing to contribution of manufacturing GDP was 4.20 percent. has continued to decline steadily because of the enormous As at the third quarter of challenges manufacturers face 2013, it dropped to in the country. In 2012, the contribution of manufacturing to 3.58 percent GDP was 4.20 percent. As at the third quarter of 2013, it dropped inability to access funds for business to 3.58 percent. expansion. Some estimates have it that between 2000 and 2010, more To this end, capacity utilization than 850 manufacturing companies has continued to fluctuate but either shut down or temporarily has remained consistently below halted production in the country the 70 percent mark. In January because of the challenges they faced. 2014, figures released by the MAN In the midst of this however, some showed that capacity utilization for companies are making progress the preceding year was 49 percent. while succour comes as reforms are Generally, the challenges that beginning implemented. have beset Nigeria have made it inevitable for companies to produce Though there have been several below capacity. incentives to boost manufacturing, in terms of government bailout of Among many other challenges specific industries like textile, the manufactures in Nigeria are faced manufacturing sector remains a with lack of basic infrastructure, shadow of itself as manufactured poor electricity supply, insecurity, goods have constituted the biggest inconsistent government policies and imports in Nigeria since the 1980s.

Chart 10: Manufacturing capacity utilisation 70%

60%

50%

40%

30%

20%

10%

0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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Social-economic characteristics of the population Beginning from the 1960s when As at 2011, life expectancy the country gained independence, in Nigeria was 52 years Nigeria’s social indicators have presented a mixed picture of compared to average life development. expectancy of 58 years While life expectancy has across Africa improved, other indicators – such as literacy rate, GDP per capita, and the percentage of the poor in the society – have not improved significantly. The challenges vary In Nigeria, adult literacy rate in across zones in Nigeria as the English language is 57.9 percent country has not developed evenly compared to 67 percent for the in the past 50 years. The Northern whole of Africa. Imo and Lagos part of the country presents states have the highest adult data which is below the national literacy rates of 80.8 percent and average across most socio- 80.5 percent, respectively, while economic indicators. Sokoto has the least literacy rate of 22.1 percent. The literacy gap As at 2011, life expectancy in between urban and rural residents Nigeria was 52 years compared is very large. Literacy rate is 69.4 to average life expectancy of percent in the urban area and 58 years across Africa. In 2003, 38.5 percent in the rural area. life expectancy was 47.6 years. Household members in the North- Over the years, there has been west and North-east are four times consistent improvement in life more likely not to have education expectancy compared to what than those in the Southern regions. the figures were in the 1960s, 70s and 90s. This has also affected the Based on NBS data, about 113 population of the country as more million Nigerians lived in relative people live longer. poverty, though the indices have

Chart 11: GDP per capita (current US$)

Nigeria South Africa Egypt 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E Source: World Bank

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continued to improve. The degree 49.8 percent occurrence of poverty. of poverty varies across the six zones that make up the country. Malnutrition is highest in the north- While zones in the South have west and the north-east but lowest better figures, those in the North in the South-east and the South- have higher percentages of the south zone. Access to safe drinking poor. About 69.1 percent of the water ranges from 30 percent in population of the north-east is the North-east region to about 75 regarded as poor, while 71 percent percent in the South-west. Access of the population of the north- to basic sanitation ranges from 45 west is regarded as poor. In the percent in the North-east to 70 south-south, 55.5 percent of the percent in the South-east region. population is poor; in the south- There is a clear divide between the east, the percentage of the poor is North, which is less developed, and 59.5; while the south-west, has a the South which is more developed.

Chart 12: Per capita income ($, 2012)

8,000 7,508 7,000 6,000 5,000 NOTE: 4,000 Rebased figures on 3,000 the economy showed that its per capita 2,000 1,605 1,555 income had risen 1,417 943 to $2,688 for 2013 1,000 - South Africa Ghana Nigeria Sub Sahara Kenya Africa Source: World Bank

Chart 13: Life expectancy 95 Nigeria Ghana South Africa Egypt, Arab Rep. 85

75

65

55

45

35

25 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Source: World Bank

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Chart 14: Population that is poor (%), 2012

80 71.4 69.1 69 70 59.5 60 55.5 49.8 50 40 30 20 10 0 North West North East South West South South South East National Source: NBS

Rebasing and the new process gives a more accurate face of the economy picture of changes which have taken The rebased figures of the place in the economy between Nigerian economy which were 1990 and 2014. It also unpacked released early 2014 revealed a the economy thus giving a clearer number of interesting changes picture of economic activties which which have taken place in the were hitherto concealed under Nigerian economy. While the other sectors. The process pushed figures it confirmed the rise of Nigeria’s GDP to 26th place in the retail, telecommunication, real global economy. On per capita estate and electricity supply, it also income scale, Nigeria’s ranking also underscored the reduced influence improved globally, moving from of crude petroleum and gas on the the135 position to 121st, with per economy. Essentially, the rebasing capita income of $2, 688 in 2013.

Sectoral distribution of GDP (pre and post rebasing) 2010 2010 2011 2011 2012 2012 2013 2013 old new old new old new old new Agriculture 30.34 24.00 30.99 22.8 33.08 22.4 34.69 21.97 Industry 46.08 25.81 44.29 27.85 40.59 26.72 36.26 25.64 Manufacturing 1.89 6.60 1.86 6.46 1.88 6.67 1.94 6.83 Crude oil and 42.68 15.5 40.86 17.52 37.01 15.89 32.43 14.4 Natural gas Services 23.58 50.22 23.72 49.35 26.33 50.91 29.04 51.89 Telecommunication 0.77 9.10 0.78 8.74 0.82 8.73 0.86 8.69 and Info services Motion pictures, - 0.88 - 1.01 - 1.20 - 1.42 sound recording and music production

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Chart 15: Percentage growth Norminal GDP, 2013

Electricity, Gas, Steam and Air Supply 44.4 Motion Pictures, Sound Recording and Music 33.5 Financial Institutions 32.3 Arts , Entertainment and Research 27.2 Plastic and Rubber Products 23.8 Coal Mining 20.2 Basic Metal, Iron and Steel 20.1 Metal Ores 17.9 Food, Beverages and Tobacco 17.2 Education 17.1 Water Supply, Sewerage, Waste Management and 17.0 Cement 16.6 Pulp, Paper and Paper Products 16.6 Chemical and Pharmaceutical Products 16.5 Real Estate 1 6.0 Accommondation and Food Services 15.4 Motor Vehicles & Assembly 15.4 Trade 15.3 Inssurnce 15.2 Other Services 14.4 Air Transport 14.4 Professional, Scientific and Technical Services 14.3 Oil Refening 14.1 Publishing 14.1 Livestock 13.8 Fishing 13.7 Human Health and Social Services 13.6 Administrative and Support Services 13.5 Quarrying and Other Minerals 13.5 Wood and Wood Products 13.4 Public Aministration 13.3 Transport Services 13.3 Water Transport 13.3 Electrical and Electronics 12.9 Road Transport 12.7 GDP at Basic Prices 12.4 Telecommunications and Information Services 12.3 Rail Transport and Pipelines 12.0 Forestry 12.0 Crop Production 10.4 Non-Metallic Products 9.7 Post and Courier Services 9.7 Other Manufacturing 8.2 Construction 7.2 Broadcasting 6.4 Textile, Apparel and Footwear 2.6 Crude Petroleum and Natural Gas 2.1 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 Source: NBS

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The new numbers give a better perspective on the actual size of the Nigerian economy.

Chart 16: Structure of GDP (%) -rebased series

Manufacturing Services and others Mining construction, etc Agriculture 120

100

22 34 33 32 33 33 24 23 80 34 37 49 43 19 21 20 60

37 39 41 39 38 39 32 40 27 33 50 50 51 20 25 21 21 24 24 26 27 26 29

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: NBS

Chart 17: Final consumption in Nigeria (N’billion) 35.00

30.00 28.76 26.32 25.00 22.85 22.94

20.00 18.98 16.24 16.09 15.00

10.00

5.00

2007 2008 2009 2010 2011 2012E 2013E Source: NBS

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Developments in Africa’s retail market

One of Africa’s major attractions in recent times is the rise in consumption on the continent. The bank further Once thought to be the laggard, estimates that the tide has turned significantly in the last decade as Africa continues consumption spending to establish itself as ‘the new retail will be $1.77 trillion frontier’. by year-end 2014 and With a population of over 1.03 $1.78 by 2015 billion (15 percent of global population), retail spend of almost $0.9 trillion (N144trn) in 2013, a $1.8-trillion economy which is the continent’s major economies. expected to grow by 5.3 percent in 2014, Africa is becoming a The middle class, which is driving force to reckon with globally. The most of the growth, is loosely continent’s population is expected defined by the AfDB as anyone to hit 2.4 billion by 2025. who spends between $2 and $20 a day (in purchasing-power parity For the past five years, higher terms). return on investment from major African countries has meant that Africa’s middle class has been more investments flowed into the growing at 3.2 percent per annum continent, especially during the since 1983. It is estimated that global financial crisis. This in part more than 34 percent of Africans, led to rising real income which also 300 million people, can be led to higher consumer spending described as individuals in the in the foremost economies in middle class, up from 27 percent Africa. in 2000. The AfDB classifies the middle class into three: the lower, The AfDB projects that consumer middle and upper middle class. spending in Africa will almost double in the next decade. The Of the 300 million people who bank further estimates that make up Africa’s middle class, consumption spending will be half are referred to as the floating $1.77 trillion by year-end 2014 and middle class (the lower). These $1.78 by 2015. are individuals that can revert into poverty very easily, because Most of the growth in Africa’s of economic shocks which could consumption is fuelled by occur to them. There is always a population growth, rising fortunes floating middle class in Africa. on the continent (the growth of the middle class), change in the There is the more stable part of the structure of its society (as more middle class (which may be loosely Africans now live in cities), and referred to as the “mid-middle relative political stability in most of class”). These make up about 30

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percent of the total middle class. consume more than $20 daily; They, as well as the upper middle they make up 10 percent of the class, are those who provide middle class. Currently, the World robust consumer growth. In the Bank classifies half of Africa’s 54 past five years, more Africans have countries as either middle- or migrated to the mid-middle class, high-income countries. By 2060, though the percentage between the number of middle-class the three groups has changed Africans is expected to hit 1.1 rapidly over the years. billion, with more African living in cities, which is expected to further On the top of the pyramid, the expand the wholesale and retail higher middle class are those who landscape in the country.

Chart 18: The middle class in Africa (% spending per day at purchasing power parity)

Lower (less than $2) Middle ($2-$20) Upper (more than $20)

6% 8% 12% 10% 22% 20% 18% 30%

72% 72% 70% 60%

1980 1990 2000 2010

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Chart 19: GDP, current prices, US$, bn, 2013

South Africa 349.4

Nigeria 309.1 Egypt 247.8 NOTE: Angola 210.7 Nigeria’s rebased GDP firgure for Morocco 108.8 2013 stood at $510

Libya 88.7 Sudan 65.9 Tunisia 46.0 Kenya 44.5

Ethiopia 44.0 Ghana 43.3 Cameroon 27.1

0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0

Source: World Bank, IMF

Retail contributed more to most up shops in West Africa, especially local economies in Africa in 2013. in Ghana and Nigeria, though the At the beginning of the year, South retail outlets will be fully operational African retail market got a boost in 2015. Also, South Africa’s Spar when the world’s largest retailer, Group Limited, in partnership with Walmart, expanded its international an Angolan company, opened a business with a 51 percent stake in store in Luanda, Angola’s capital. South Africa’s retail and wholesale The Fouani Group, which retails giant, Massmart. The $2.4 billion electronics, also opened new shops deal gave Walmart access to 50 across Africa, especially in Nigeria. million new customers, while using Massmart’s footprint to expand into Apart from these investments, other African countries. western producers along with their local (retailers) partners increased During the year, Imara S.P. Reid their brand offerings and established Stockbrokers, a Johannesburg- new supply chains across Africa. based investment bank, announced The Spanish clothing retailer, Zara, that South Africans, who had entered the Kenyan market through invested in retail through it, a distribution agreement with had committed as much as $2.5 local retailer, Deacons. On its own, million to retail endeavours in sub- Deacons launched its Massimo Dutti Saharan Africa. Mid-2013 saw the clothing line in Kenya in 2013. announcement by French retail giant, Carrefour, that it would set African retailers such as South

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Africa’s Shoprite, which operates in are some positive indications more than 16 African countries, and already. Nakumatt, which is based in Kenya and has stores in neighbouring Most forecasts are positive about Uganda, Rwanda, and Tanzania, sustainability of the trend in retail have done a lot of expansion. growth. The continent’s economic outlook for the next five years is In Nigeria, Black & Decker promising. Its GDP is expected launched over 20 household to grow by 5.3 percent in 2014. machines; BlackUp Paris, a Sub-Saharan Africa is expected maker of personal care products, to grow at 6.1 percent in 2014. launched four beauty products, In 2010, according to the AfDB, in conjunction with Montaigne poverty level as a percentage of Place, a Lagos-based retailer; total population was 48.5 percent; while Maybelline New York, by 2020, it is expected to be 20 also a personal care products percent. The data suggests that manufacturer, formally introduced in the future more African will be its products into the country. empowered to consume.

The IT and electronic section of the retail market received a Africa’s Shoprite, which operates in barge of new releases from Apple, BlackBerry, Samsung, Tecno, more than 16 African countries, and LG, Nokia and Panasonic. This Nakumatt, which is based in Kenya amounted to more raw materials for local retailers and millions of and has stores in neighbouring dollars in spending for customers Uganda, Rwanda, and Tanzania, who could afford new brands. The impact of these changes will be have done a lot of expansion felt more in 2014, though there

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Profiling Nigeria’s retail outlets

Though the types of retail outlets in Nigeria can be classified The traditional open along the lines of the NAICS which provides a platform for market retail outlets the collection of comparable constitute over 70 percent statistics across North America, for of the retail structure of the purpose of this report, retail outlets are classified differently. the country, the trend is changing in many cities This report clasifies Nigerian retail outlets into four categories, based on their structure and While the traditional open market scale of operation. Nigerian retail retail outlets constitute over 70 outlets are classified into: the percent of the retail structure of traditional open market outlets; the country, the trend is changing unit neighbourhood stores or in many cities. The traditional supermarkets; multi-branch system is gradually shrinking supermarkets/franchises; and mega while other forms of retail are supermarkets/shopping malls. expanding.

Attributes leading to switch from traditional to formal retail in Nigeria

Close to home 2 Convenient to get to 1 ,8

Food and Groceries are good value 1 ,7 Clean and hygienic 1 ,6 Efficient checkout counters 1 ,6 Wide product range and variety 1 ,6 Good range of fresh products 1 ,5 High quality fresh food 1 ,5 Staff provide good service 1 ,3 Everything I need in one store 1 ,3 Low prices for most items 1 ,3 Better selection of high quality brands 1 ,2 Good quality instant cooked foods 1 ,2 Easy to find what I need 1 ,05 Modern and comfortable store 0 ,09 Attractive and interesting promotions 0 ,09

Source: Euronmonitor (Nigeria Lifestyles 2010), Accenture (2012)

25 The Nigerian Retail Report 2014/2015

A number of factors are environment present the platform responsible for this. that accommodates that culture.

Firstly, the population is Nigeria’s emerging middle class is growing and becoming more confident and comfortable with sophisticated; secondly, trying new products; also, they government’s policy on some are interested in breaking with aspects of traditional open the traditional retail system where market retail (especially possible. The traditional, informal street trading) is making the retail infrastructure is often environment less conducive for viewed as unprofessional and such retailers (Government’s operating from places that are not objective, especially in Nigeria’s in tune with the best of advanced first-tier cities, is to make retail societies. In light of this, the past more organised and taxable). decade has seen an increase in the Also, more families shop number of all other types of retail together and the organised retail outlets across the country.

Retail outlet census, Nigeria 2005 2010 % growth (2005-2010) Total 606,505 829,860 36 Urban 452,657 551,557 22 Rural 153,848 181,127 18 Source: AC Nielsen Nigeria

The number of retailers registered The number of outlets as at year with Nigeria’s major business end 2013 is expected to have search engine, v-connect.com, has increased far more than what it increased rapidly over the past was in 2010 because the industry five years, reflecting the increase has grown significantly within in formal retail. Total number of this period. New sophisticated retailers registered on the network multiple branch supermarket/ as at March 2014 was 3,170, with franchises have sprung up across concentration in large cities. the country and megastores Surveys by AC Nielsen which has and supermarkets which were extensive presence in Nigeria shows hitherto located in just one place that between 2005 and 2010, the have expanded to take into number of retail outlets across the account the development of new country increased by 36 percent. suburbs and city centeres.

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Distribution of retailers accross V-connect data base

42%

22%

8% 8% 6% 6% 3% 3% 2% 2%

Lagos Others Oyo Rivers Abuja Ogun Cross River Ondo Kano Delta Source: Vconnect

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28 The Nigerian Retail Report 2014/2015

Classifying Nigeria retail outlets

The traditional open market retail outlets The traditional It is estimated that This has led Most Nigerians retail market is the transactions worth governments across still patronise these most common in more than N1 billion the country to outlets because Nigeria. This system are carried out by continue to impose of their proximity of trade comprises these retailers daily. trade restrictions to homes, the roadside retailers Where they are on them. However, personal shopping and those who not well regulated, they still make up a experience they offer, operate from stalls traditional open remarkable part and the cost of the in the open markets. market retailers of the retail commodities they Essentially, this do not pay taxes, industry. offer consumers. retailer class includes and may deface Prices are often all transactions that the environment negotiable in this occur on stalled traffic where city plans do class of outlets. Other and on congested not support their than this, they hardly street corners. existence in the offer the alluring particular areas where shopping experience they conduct their which more businesses. sophisticated outlets offer.

Unit neighbourhood stores/supermarkets Unit neighbourhood Often, these Unit neighbourhood stores or commodities stores/supermarkets supermarkets in are stocked and have been known to Nigeria are those dispensed to grow into multiple stores that do not customers who live branch supermarkets/ have more than within the vicinity franchises. Often, the one branch. They of the stores. Before entrepreneur begins are located within the re-emergence with one outlet neighbourhoods they of multiple branch and spreads as the serve and bear an supermarkets, these business becomes assortment of items stores served as the more profitable. Many which are needed alternative to the major franchises by households. They traditional open have developed from are often owned by market outlets. Unit neighbourhood single individuals and stores/supermarkets. operated by family members and a few employees.

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Multiple branch supermarket/franchises (convenience stores)

Multiple branch The distinguishing In some cases, these supermarkets/ factor between Unit outlets offer unique franchises in neighbourhood customer experiences Nigeria are small stores/supermarkets and services which or medium-sized and multiple branch mega malls offer. In retail outlets which supermarket/ other cases, too, they offer assortments franchises is that in are organised like of products and are the case of the later, departmental stores. scattered across the same shop is major cities. replicated in several locations. Good examples of this type of outlets include Best Choice and Addide which have major presence in Lagos.

Mega supermarkets/shopping malls

Mega supermarket/ Often, they are shopping malls are patronised by large multi-product the middle class. offering retail outlets The resurgence of in the mould of sophisticated retail Shoprite, Grocery outlets in Nigeria can Bazaar and SPAR. be credited to this Their selling point set of retailers. There include the unique are still less than customer experience 20 of this type of they offer, quality outlets spread across products, and in some Nigeria. cases low prices.

In the 1960s and 1970s, there were in the hands of the traditional several organised retail outlets retail structures. in Lagos, Kaduna, Port Harcourt and Kano. In that era, large The disappearance of the middle multinational retail outlet chains class has been attributed to drastic like Leventis, UTC, Lennards, Bata, decline in the manufacturing sector Chellarams and Kingsway were of which was a major employer of present across Nigeria, but by the labour in the period before 1980. early 1990s, because the middle The textile industry, and other class had virtually disappeared, light production plants in the the number of organised retail country, served as structures which stores reduced, leaving the market accounted for large number of

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employments across the country. now has seven outlets in the But the turn of the millennium country. Among the foreign saw a change of events, as big retail investors, it has perhaps foreign retail investors began to the most-aggressive expansion re-emerge across Nigeria. Apart plan. It already has three malls from the large international in Lagos, and one each in Kwara, investors, many local businessmen Kano, Oyo and Abuja. By year-end have taken up the challenge to 2014, it plans to have one more modernise retail. outlet in each of Abuja, Anambra, Delta, Enugu and Oyo. Ultimately, Currently, foreign retail investors Shoprite plans to have 50 stores have some of the biggest stand- spread across Nigeria in the near alone retail investments in the future. Shoprite plans to bring country. the number of its outlets to 14 by year-end 2014. The biggest are South African Shoprite, and Spar (a Dutch chain The success of the foreign outlets run in Nigeria by the Artee Group). has led to the proliferation of Spar also owns the Park ‘n’ Shop foreign and local mega outlets outlets, which has six departments and retail distribution stores. What (three of the outlets are in Lagos; more can you say? What more two are in Abuja, while one is will you like to know about the currently in operation in Port composition of their sales and Harcourt). A new outlet is to be their operations? What are the opened in Port Harcourt before further opportunities which these the end of 2014. companies are not seeing?

In the electronics section of the retail market, Cash ‘N’ Carry is Few players dominate the multiple a major player. It is one of the branch supermarket/franchises major electronics and household (convenience stores). Addide and appliances retailers in Nigeria. Best Choice are some of the most Cash ‘N’ Carry currently operates common in Lagos. While Best eight stores nationwide which Choice has 260 stores in operation, offers technologically advanced Addide has 23 with ambition to electronics brands at affordable increase this number to 20 in the rates. The combination of the next three years. The multiple- company’s passion for retail with its branched mini super marts/ sensitive price model has endeared convenience stores have a common it to many Nigerians. All products characteristic. are sourced directly from the manufacturers. In the near future, They are often owned by one Cash ‘N’ Carry plans to extend its investor or a group of investors and operations to Apapa, Festac, Lekki, open new branches as the business Ajah, Abuja, Port Harcourt, Kano, records higher profit. Examples Owerri, and Delta State. include The Everyday Group and Grocery Bazaar which operate Shoprite, which opened its first from Port Harcourt and Lagos mega store in December 2005, respectively.

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The Grocery Bazaar Model

The fist, of the two existing the best of wet-markets (better Grocery Bazaar (“gb”) outlets pricing, local knowledge, product was established strategically at a & taste) to offer a balanced location which is underserved by affordable and convenient standard retail outlets, yet densely shopping experience to the populated. This strategy has been ordinary Nigerian. largely successful in the last five years. The company has a unique understanding of no-frills According to the Founder/Chief discounting and a clear vision Executive Officer of the business, of the grocery retail industry in Mr. Samuel Ejeh, “one of the major Nigeria which it is leveraging on to restrains to our expansion has not provide consumers with a unique been profitability, but restriction shopping experience. imposed by the structure of mortgage in Nigeria.” gb’s ultimate Mr. Ejeh points out that the vision is to become a chain of large advantage which larger retail scale retail outlets which have a outlets have over small unit single management. Herein lies stores scattered across a the uniqueness of gb. large geographical area is the opportunity costs associated Grocery Bazaar is a select with space, and the cost of doing assortment mass grocery retailer business. that was established to address the grocery shopping concerns gb is of the view that a hybrid of the ordinary Nigerian, and to model that combines supermarket take advantage of the emerging convenience (systems, structures grocery retail opportunity in the etc.) with wet-market selling country. (discounted pricing, assortment, etc.) –the “super-wet market” The company is a hybrid of both model is better suited to the the “wet” and “super” markets, majority of Nigerians. as it combines the convenience of supermarkets with the This hybrid of supermarket affordability of wet-markets to and wet-market combines the form what it calls a “super-wet benefits (price and convenience) market”. of both retail models. The practice in Nigeria is to have either This retail concept combines the better pricing (wet-market) or best of supermarkets (structure, convenience (supermarket), but convenience, systems) with not both. gb’s hybrid combines

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both to creates a balance suitable ordinary Nigerians. to the ordinary Nigerian. Conventional supermarkets are Even though ‘supermarkets’ and ‘wet too expensive for most ordinary markets’ would account for the bulk Nigerians because of the cost of how Nigerians in urban centers associated with the level of shop for groceries in the near future, convenience they offer, while conventional supermarket and traditional wet-markets offer traditional wet-market models do cheaper prices but with almost no not quite meet the needs of most convenience whatsoever.

The Best Choice model

Best Choice shops are retail outlets pricing, products, infrastructure within neighbourhoods. They offer and most importantly customer high quality FMCG products at satisfaction. competitive prices. The company has been able to Best Choice was set because of the position its outlets as the favourite desire of its managers to organise convenient store by providing the current, largely unorganised the best in category products in retail sector in Nigeria. The the neigbourhood at best prices. business is run on a franchise Hence, ensuring that people are concept whereby the Business not required to travel to super Associate (Franchisee) invests markets to get quality products. money and enters into a contract with the company (Best Choice). Currently, with over 260 outlets and more than 350 Stock keeping Post the contractual agreement, unit, Best Choice has already made Best Choice rents, furnishes and a strong presence felt in Lagos. brands the outlets. Also, all the The company is in the process of products are made available to mapping more areas to cover the these outlets by Best Choice. The length and breadth of Lagos and company ensures that all the the rest of Nigeria as a whole in Business Associates maintain the order to help Nigerians reap the outlets as per the high standards benefits which the Best Choice set by Best Choice, in terms of brand offers.

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Nigeria’s retail power houses

Nigeria’s 170 million inhabitants are not scattered evenly across There are nine cities in Nigeria the country. The country has a landmass of 923,768 km² with a that have population figures in population density of 185/km². excess of one million For instance, Lagos state has a population density of 4,193/ km² while Taraba state has a population density of 40.73/ km². After 2010, Nigeria became more urban than rural

Given this spread, retail business 200 owners have to pitch their 162 160 outlets in the most advantageous Urban Population places. Some locations are 120 Rural Population more favourable for large retail 80 81 businesses while others can at best sustain small outlets. (in millions) Population 40 0 Basically, Nigeria’s cities can be 1950 1960 1970 1980 1990 2000 2010 2020 2030 categorized into two types: the First tier cities and the Second tier cities. The First tier cities have the highest population densities, There are nine cities in Nigeria that the most sophisticated consumer have population figures in excess classes; they also have the best of one million; these are mostly infrastructure and the highest First tier cities, the largest of which concentration of middle class are Lagos, Kano, Ibadan, Kaduna individuals. and Port Harcourt. Lagos city has a population of over 10 million On the other hand, the Second people, Kano city has a population tier cities also have high of 4.1 million people, Ibadan has population figures. They do population of 3.8 million while not however have as many Port Harcourt has a population of individuals in the middle class 1.8 million. as the First tier cities. But the second tier cities also make Benin City has a population of up a large market for potential 1.3 million while Aba has the investors and indeed since much least population among the nine of Nigeria is becoming urbanized, most populated cities in Nigeria. a lot of Second tier cities are fast Other prominent cities in Nigeria changing in status. Apart from the include Onitsha, Warri, Asaba, two types of cities, Nigeria has Jos, Niger, Oshogbo, Akure, many towns and villages which Enugu town, and Abeokuta. cannot be directly classified as The population figures of most cities, a lot of retail activity takes Nigeria’s first tier cities dwarf place in these towns; small retail those of South Africa’s most outlets are best for these places. populated cities.

34 The Nigerian Retail Report 2014/2015

The most attractive locations for scale and structure of outlet can new big retail outlets are often however be decided by the investor the first tier cities of Lagos, Port after further analysis, but most small Harcourt, Ibadan and Abuja, due to Nigerian towns can sustain any the sophistication of the population, form of organized small retail outlet, population density, ease of access while the bigger outlets seem to to retail outlets, and superior thrive better where density and infrastructure. The decision on the purchasing power are high.

35 The Nigerian Retail Report 2014/2015

Ten most populated cities in Nigeria (mn) 2013 2020

Lagos 10.1 12.6

Kano 4.1 5.1 3.9 Ibadan 4.8 1.8 Kaduna 2.3

Port Harcourt 1.3 1.6 1.3 Benin City 1.6

Maiduguri 1.2 1.5

Zaria 1.1 1.4

Aba 1.0 1.2 0.9 Ilorin 1.2

Source: NPC, BRIU

But more than population figures, both the general economy and the Nigeria has the advantage of the retail sector in particular. concentration of youths in its population. According to the UNFPA, In recent years, the youth market one third of Nigeria’s population, has been in the forefront of 57 million, are young people consumption of new phones, between the ages of 10 to 24 years, electronics, fashion related materials, another survey by the NBS puts the processed food, and educational population of youths (15 – 35 years) material. As income levels continue in the country at 64 million with to rise and as purchasing power females accounting for 51.6 percent. continues to increase, it is expected But the definition of youth in Nigeria that the youths will maintain their exceeds this bracket, as the country position as a major consumption defines youths as those between the power house in the country. 18-35 years age bracket. However, unemployment remains a major challenge to fulfilling their In the period between 1991 and consumption potential. 2006, the youth population grew from 22.5 million to well over 30 In terms of demographic location, youth million, according to the NBS. In are concentrated in the urban centers absolute terms, there are more as work is aslo more readily available in young people in Nigeria today than those areas, the quality of life in urban any other segment of the population; areas is often more sophisticated hence this comes with its peculiarities for the attraction for youths to the cities.

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37 The Nigerian Retail Report 2014/2015

State population (mn), 2013

14 12 10 8 6 4 2 0 Edo Oyo Imo Ekiti Kogi Abia Yobe Osun Kano Delta Ondo Ogun Niger Kebbi Lagos Rivers Borno Kwara Enugu Benue Taraba Ebonyi Bauchi Sokoto Jigawa Gombe Katsina Bayelsa Plateau Kaduna Zamfara Anambra Abuja FCTAbuja Adamawa Cross River Cross Nassarawa Akwa Ibom Akwa Source: UNFPA

Population density, 2013

3,500 3,000 2,500 2,000 1,500 1,000 500 - Edo Oyo Imo Ekiti Kogi Abia Yobe Osun Kano Delta Ondo Ogun Niger Kebbi Lagos Rivers Borno Kwara Enugu Benue Taraba Ebonyi Sokoto Nauchi Jigawa Gombe Katsina Bayelsa Plateau Kaduna Zamfara Anambra Nasarawa Abuja FCTAbuja Adamawa Cross River Cross Akwa Ibom Akwa

Age composition of Nigerian youths, 2006 Male Female

47% 53% 56% 52%

15-29 20-24 25-29 30-35

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By year end 2015, the market of Jabi Lake. in organized retail real-estate anticipates about 200,000 square Also at Abuja, is an audacious metres of space. In Lagos the plan by the Churchgate Group to Persianas Group is expanding the construct the N156 billion World Palms shopping mall. This will Trade Centre projects, which will berth about 40,000 square metres include the 40,000 square metres of additional retail space and is Capital City Mall, which will be due for delivery by 2015/2016. a destination offering the finest Also, South African owned, Novare collection of luxury brands and Private Partners and RMB Westport international boutiques, as well are bound to offer retailers more as global dining choices and VIP options when they both deliver cinemas. their 22,000 square metres Lekki Mall and 14,000 square metres Resilient Africa, a property Osapa Convenience Centre development and investment respectively, by year end 2015. company will by the end of 2014 have spiced retail experience in UACN Property Development southern Nigeria by providing over Company, (UPDC), is also poised 53,280 square metres of retail space to complete its 10,000 square across four major cities through metres Festival Mall by the its ongoing; 13,800 square metres fourth quarter of 2014. But other Delta mall, 13,300 square metres Nigerian cities are also in focus, Benin city mall, 13,300 sqm Owerri in Abuja, a partnership between mall and the Asaba Mall, which Actis and Duval Properties, an boasts of the same retail space. indigenous real estate investment Also in the same geographical and development firm is nearing location, the Anambra state completion of the 27,000 square government and African Capital metres Jabi Lake Mall, to be Alliance would have delivered the delivered by late 2015 in a unique 15,000 square metres Onitsha Mall waterside location on the shores by year end 2015.

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Nigeria’s major retail markets

Festac, Ejigbo, Satellite town, Kirikiri, Navy towns and the Apapa, Ajenjule axis, these large markets have been largely ignored by major retailers

Nigeria throws up a number of a lot of important indices. Lagos has investment opportunities for the most shopping malls and the retail business, the opportunities most organized retail structure in become even more obvious when Nigeria. the population is analyzed from the point of view of individual cities. The To this end, it accounts for a large biggest cities for retail in Nigeria percentage of Nigeria’s retail spend. are Lagos, Port Harcourt, Ibadan, There are over 10 large shopping Kaduna, Warri, Kano, Abuja, Benin malls, of international standard in City, Aba, Zaria, Onitsha, Enugu Lagos with major ones including, and Onitsha. Each has a sprawling The Palms Shopping Mall, Adeniran population and the required Ogunsanya Shopping Centre, Ikeja composition of individuals that City Mall, Cocoa Mall Park Lane and shop in modern retail outlets, but the City Mall among others. Lagos is often specific locations which are home to the operations of Shoprite, best for retail must be identified Park n Shop, Grocery Bazaar, Addide, by investors, so as to get the Best Choice among other major best advantage. In the past half a retailers. decade, more retail investment has flowed into these cities in form of Major retail mega outlets in Lagos establishment of new retail outlets are located in Ikeja, Lekki, Marina and the improvement/expansion of and Surulere which cater for the existing ones. upper class. They are located in parts of the city that have superior infrastructure and are designed Lagos, Ibadan and the South West to serve residences within their For the past 10 years, Lagos, which vicinities and beyond but there are is Nigeria’s most populated city and opportunities for mega stores in its commercial capital, has grown sprawling location within Lagos, to become a megacity. It has the like Festac, Ejigbo, Satellite town, most densely populated surface Kirikiri, Navy towns and the Apapa, in Nigeria and the most diverse Ajenjule axis, these large markets composition of individuals from have been largely ignored by major across Nigeria live in Lagos. The retailers. Apart from this, there condition of Lagos does not in most are opportunities for small scale cases reflect the rest of Nigeria, as chain stores across the state. The the state is ahead of other states on population of Lagos city will be

40 The Nigerian Retail Report 2014/2015

12.6 million by 2020. trader between traders from North Africa and those from the coast. The Lagos is just one of the major highly city is perhaps best known for the populated cities in the South-West; groundnut pyramids which dotted others are Ibadan, Oyo, Abeokuta its landscape in the late 1960s. and Oshobgo. Ibadan is the second most populated city in the South- Though both Kano and Kaduna West. We estimate that it has a have population numbers that can population of about 3.9 million sustain any form of retail business, people. It is the capital of Oyo State, none of them has the same number and until the late 1970s was reputed of sophisticated malls as Lagos. to be the largest city in Sub-Sahara The major encumbrances to retail Africa. At Nigeria’s independence, development in both states in in 1960, Ibadan was the largest and recent times have remained the low most populous city in the country purchasing power of the people, and the third in Africa after Cairo and the apprehension over security and Johannesburg. problems which have characterized the north for almost half a decade. But Ibadan which was the centre of recently, Shoprite opened its Bayero administration of the old Western Mall in Kano signaling that business in Region of Nigeria, is home to mostly the area is still worth the risk. individuals of Yoruba extraction, though there are quite a number Geographically, Kano urban area of Nigerians from other parts of covers 137 sq. km. and comprises the country and indeed Africa who six local government areas: Kano make their homes in Ibadan. Municipal, Fagge, Dala, Gwale, Tarauni and Nassarawa- with a There are several outlets in the population of almost 5 million. Most city but there are opportunities for of it is underserved and remain expansion of organised retail in the fertile for retail investment. city. Recently, Shoprite unveiled an outlet in the city. It has the intention On the other hand, Kaduna to opening another one soon. Major is home to about 1.8 million areas which have dense population, yet are underserved include Oluwole, Bodija, Gate, Ojaba/ Geographically, Kano Akpata and Challenge/ Ojo. urban area covers 137 sq. km. and comprises Kano, Kaduna and the North West In the Northern part of the country, six local government Kano and Kaduna hold a very areas: Kano Municipal, remarkable place for retail. In particular, Kano City is the second Fagge, Dala, Gwale, most populous in Nigeria, with Tarauni and Nassarawa- an estimated population of 4.1 million people. For centuries, Kano with a population of was a center for trade in Northern almost 5 million Nigeria. It was the melting pot of

41 The Nigerian Retail Report 2014/2015

people. It is perhaps the closest to what obtains in the south with respect to the composition of We estimate that the its population; Kaduna presents population of Port a fine mix of all ethnic groups in Nigeria all cohabiting in a Harcourt will hit 1.6 northern state. But it does not million by 2020 have the same number of people or the purchasing power which those in Lagos do. Important cities Harcourt. Inspector-Gee Wholesale in to Kaduna State are Zaria and And Retail Stores, Prince Nomay, Kafanchan. Wine And Spirit Affarz, Chuks Investment Company Nigeria, Mc Port Harcourt, Benin Keso Integrated Services are the and the South-South most prominent. Most of these The biggest city in the South- outlets have expansion plans within South is Port Harcourt; though the metropolis. there are other important cities like Warri, Asaba and Benin which As the population continues to equally command a respectable grow and several hitherto remote amount of retail activity. Port areas open up, new suburbs like Harcourt has a population 1.3 the Greater Port Harcourt City and million people, its population other more developed areas like is as sophisticated as that of Rumuogba, Elelenwo, Rumuokoro, Lagos with perhaps even higher Rukpokwu, Borokiri Town, still offer purchasing power per individual. interesting opportunities for big We estimate that the population of retail investors. Port Harcourt will hit 1.6 million by 2020. Rivers is located is home to Equally important in the South- some of Nigeria’s major refineries South is the City of Benin. It and host a number of important currently has a population of oil companies. It also has a 1.3 million people and is one of thriving small-scale manufacturing the oldest cities in Nigeria. Its industry. population is expected to hit 1.6 million by 2020. New settlements This has contributed to the are springing up in Ikpoba sophistication of the city; major Hill, Sapele Road, The GRA and retailers in Nigeria have rated Port Ekosodin. Though the purchasing Harcourt next to Lagos in terms of power of people in the city may retail activity, purchasing power not be as high as that of Port and infrastructural development. It Harcourt, it still holds opportunity has also enjoyed an atmosphere of for retail investors who are peace and prosperity as oil prices interested in expanding their and the volume of oil produced has businesses. continued to rise. There are other important places There are already a number of like Akwa-Ibom city, Warri, Asaba, booming retail outlets in Port and Calabar which should draw

42 The Nigerian Retail Report 2014/2015

the attention of retail investors. Abuja Most of these cities are oil Abuja’s population almost hit the producing and have seen massive 1 million mark in 2013. The city is investment in various classes of the capital of Nigeria. A lot of retail infrastructure in the past 10 years. activity in Abuja is formal albeit, They have also proved to be major informal retail still makes up a investment destinations. The reasonable part of retail business in governments in these areas give the city. investors incentives for investing. Abuja has witnessed a huge influx of people which has led to the Aba, Onitsha and the South East emergence of satellite towns Onitsha and Aba are the most such as Karu Urban Area, Suleja, populated cities in the South Gwagwalada, Lugbe, Kuje and Eastern part of Nigeria. By year smaller settlements. The masses of end 2013, Aba’s population was individuals in these satellite towns estimated at 1 million while that make up the major retail market in of Onitsha was a little short of 1 Abuja. million. Aba is the manufacturing hub of the South-East with most Though most of the mega retail of the light manufacturing in the outlets are in the center of zone taking place there; on the Abuja itself, there are immense other hand Onitsha is home to opportunities for retailer who can most of the commerce in the zone. take advantage of establishing major concerns in the satellite Onitsha is home to the famous towns. Some estimates put the Onitsha market which is famed population of Abuja at as high as the biggest open market in as 3 million people. Abuja is West Africa. There are investment sometimes given the status of a opportunities for big retailers state rather than a city. especially in the capital cities of both Anambra and Abia, where Onitsha and Aba are located. Abuja has witnessed a Other prominent cities in the South-East include Enugu. (which huge influx of people was once a source of coal for which has led to the Nigeria), Awka, Nnewi, Owerri and Abakaliki, where the famous emergence of satellite Abakaliki rice is grown. The South towns such as Karu East is known for its dynamism and the proliferation of small Urban Area, Suleja, businesses. Onitsha was projected Gwagwalada, Lugbe, by the World Bank as the fastest growing urban center in Nigeria in Kuje and smaller 2010; it is home to SabMiller, one settlements of the most successful brewers in the country.

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The size of Nigeria’s market inevitably makes it a consumption powerhouse. Demand has risen across several product lines including electronics, food and mobile phones. The figures below show the number of some products purchased across Nigeria in 2013.

Smart mobile phones sales across Nigeria 2013

30,000,000 25,560,306 25,000,000

20,000,000

15,000,000 10,518,090 10,000,000 7,947,019 7,095,197 5,000,000

- Lagos North Nigeria South Nigeria Grand Total

Audio home systems sales across Nigeria 2013 400,000 363,928 350,000 300,000 250,000 200,000 161,151 150,000 123,924 100,000 78,853 50,000 - Lagos North Nigeria South Nigeria Grand Total Source: JFK

44 The Nigerian Retail Report 2014/2015

Flat pannel TVs sales across Nigeria 2013 900,000 853,124 800,000 700,000 600,000 500,000 399,778 400,000 282,050 300,000 200,000 171,296 100,000 - Lagos North Nigeria South Nigeria Grand Total Source: JFK

Most populated cities in Nigeria 2003 (million)

Lagos 10.1 Kano 4.1 Ibadan 3.9 Kaduna 1.8 Port Harcourt 1.3 Benin City 1.3 Maiduguri 1.2 Zaria 1.1 Aba 1.0 Ilorin 0.9 Jos 0.9 Ogbomosho 0.9 Oyo 0.8 Enugu 0.7 Abeokuta 0.7 Onitsha 0.6 Warri 0.6 Sokoto 0.6 Okene 0.6 Calabar 0.5 Osogbo 0.5 - 2.0 4.0 6.0 8.0 10.0 12.0

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Online retail in Nigeria

Nigeria has a fast-growing number of the two classes of people which traditionally drive internet usage and online retail: youths and the middle class

Online retail was localized in class and the convenience it offers. Nigeria less than 10 years ago. Analysts believe that because Before then, most Nigerians who Nigeria remains one of the largest had to purchase things that were internet markets in the world for not available on local shelves had the foreseeable future, online to resort to foreign platforms like retail can only grow. The country e-bay and Amazon or wait till they has a fast-growing number of travelled aboard. Not that Nigeria’s the two classes of people which online retailers have suddenly traditionally drive internet usage made everything available, but and online retail: youths and the they have helped replicate some middle class. of the luxuries which foreign online retailers offer locals. With internet penetration, according to the World Bank, at By early 2014, the number of 32%, by December 2012, Nigeria online retailers in the country is the biggest internet market stood at roughly, 60, with some in Africa (Though the level of significantly, bigger than others. internet penetration may really The market has continued to be much higher, considering the attract new entrants and venture number of Nigerians who use capitalists who have invested their phones to access data on massively in most of the online the internet). Of the Nigeria’s 115 startups. Over the past few years, million mobile phone subscribers, the number of individuals who according to data made available made purchases online continues by the NCC, 64 million use their to increase. The bulk of purchases phones to access internet services revolve around light electronics, regularly. Between 2000 and 2012, luxury goods, groceries, clothing, internet penetration grew from phones, books, food items and a paltry 0.06% to 32%, and there other small commodities. are indications that this trend will continue in the foreseeable future. Like most sophisticated retail activities, e-retail or online retail The major factors fueling the took root in Nigeria because growth of online retail in Nigeria of expansion in the use of the include the growth of the middle internet, rise of the urban middle class, improved internet literacy,

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better guarantee of transactions met the needs of most locals. online, enhanced internet But as time progressed, the banking capacity of local banks, assortment of products improved convenience and the creativity of with retailers even focusing on online retailers. specific commodities. Among Less than a decade ago, Nigeria’s the most popular are Jumia, few online retailers did not Konga, DealDay, and Taafoo, e.tc. fully meet the needs of the According to Ventures Africa as population in terms of the at late 2013, Nigeria’s internet assortment of what they offered business industry was worth $250 and the kind of strategy that million.

Source: NCC

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A number of factors have helped to buoy the online retail encumbered e-commerce in market, for instance, Shopaholic Nigeria, key among which are Nigeria prides itself as the first poor internet services, crisis of online clothing store to introduce trust in online transactions, poor the Cash On Delivery payment infrastructure especially road system. networks and electricity. Jumia became the first retailer to This has made the cost of offer Next Day delivery service. transaction extremely high. In the Nigeria’s online retailers have midst of this, margins are relatively also adopted strategies like pay low since e-retailers have to wage with cash or card at delivery, free a price war to outwit each other delivery in Lagos for items above and the store next door, which N10, 000, etc to move the market. most customers would rather do But it is clear that online retail is still business with. Therefore methods at a nascent stage of development like payment on delivery have in Nigeria albeit, it is set to grow.

Major online retailers in Nigeria S/N Outlet name Established Specialty 1 Jumia Nigeria 2002 General merchandise 2 Konga 2002 General merchandise 3 Kaymu Nigeria General merchandise 4 Taafoo 2009 Fashion and gadgets 5 Shopaholic Nigeria 2009 Clothing and perfumes 6 Dealdey 2011 General merchandise 7 MyStore Clothing accessories 8 Kara 2012 General merchandise 9 Adibba 2013 General merchandise 10 Gloo.ng 2012 General merchandise 11 mycomputervillage.com Computers and accessories 12 HelloFood 2012 Food vendor

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Profiles of Nigeria’s key retailers

JUMIA KONGA In Nigeria, what Online Shopping is today referred is a pioneering to as Jumia.com ecommerce company began as Kasuwa. in Sub Saharan Africa com. The change was founded in June 2012 by the outcome of an overwhelming serial entrepreneur, SimShagaya. Konga response to the online shop’s operates as a first party retailer as well offerings. According to some analyst, as a marketplace for over 150third party within 6 weeks of its launch, there retailers, providing a catalog of over were over 1.8million visits. 150,000 products across 12 categories. With its exceptionally low prices Kongahas grown to be one of the top and discounts, exclusive products brands in Nigeria in record time. In March and legendary flash sales, it 2013, Naspers acquired a 50 percent continues to grow. It recorded some stake in Konga. Konga received funds firsts, including being the first retailer from Investment AB Kinnevik, a Swedish to offer the Samsung Galaxy S3 investment company and over $15 phone online. Jumia’s inception was million from investors including Naspers due to the vision of two outstanding and Kinnivik. In October 2013, Konga entrepreneurs, Tunde Kehinde and announced that it was moving into a Raphael Afaedor. new 120,000 sq ft fulfillment centre. At JUMIA.com, Nigerians can Demand for the company’s expect the latest mobile phones, services has grown astronomically laptops, electronics and home since inception. On the 29th of appliances. Additionally, there November, 2013, Konga.com crashed are over 20,000 book titles and an and remained offline for 45 minutes extensive catalogue of beauty, hair, because of the pressure of demand. baby and children’s products. The site experienced unprecedented In 2012, Jeremy Hodara and high traffic as a result of its ‘Fall Yakata’ SachaPoignonnec founded and promotions. Sales on that day were launchedAIH, an African e-commerce the same as the total amount of sales startup with an aim to grow online made in the whole of December 2012. businesses around Africa. Jumia is However, Kongahas increased its server part of the AIH group and the Aim for capacity to prevent downtimes in the Jumia is to mimic Amazon’s success by future. In December 2013, Human IPO delivering a wide range of items, from selected Konga as one of the African. toys to generators across Africa. Shortly after the startup of the business, JUMIA MYSTORE launched in five growing countries, MyStore.com.ng offers which include: Nigeria, Egypt, a wide assortment Morocco, Kenya and Cote d’Ivoire. of products across In 2013, the business was growing at categories like Mobiles, a substantial rate in Nigeria and needed Electronics, Fashion to expand to contribute in the domestic accessories, Apparel and Footwear, Kids, market, Jumia Nigeria opened the first Home and Kitchen, Sports, furniture, ecommerce campus in West Africa auto-parts, Books, Entertainment by moving to a 90,000 square foot amongst others. With millions registered warehouse located in Lagos. users, it attracts thousands of internet JUMIA Finished a great year in 2013 users across the country monthly. by becoming the first African brand The site prides itself as a vendor which to win the World Retail award in Paris offers products and bulk purchase as the Best New retail launch. In 2014, services to customers across Nigeria. It Jumia extended its services to Uganda accepts payment options such as Cash enabling people to shop online and on Delivery, Net Banking, Credit Cards, have products delivered to this region. Debit Card and Fast Next-Day delivery.

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Ecommerce in Nigeria will management and strategy grow not only on deep internet consultancy, “in the United penetration but also on the back Kingdom, sales in physical stores of increase in disposable income are lower, due to growth in online and better education on the shopping, which now represents process of buying online. If the more than 10% of the UK’s retail future of retail follows the pattern sales and is growing annually at which has played out in more around 14% to 16% per annum. developed countries, then the This is expected to be sustained future of retail is online. till 2018”. Massive expanssion of online retail is possible and According to Roibis, a UK based expected in the immediate future.

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‘Online retail is waxing stronger’

A major player in the online retail landscape, Konga is among the most successful players in the industry. Its CEO, Sim Shagaya, speaks on development in the industry.

How has e-commerce evolved in the last 3 years? With increasing internet penetration, the way Nigerians buy and sell is dramatically changing. Over the past few years, e-commerce has constantly evolved from being a foreign concept to a generally acceptable and trusted way of shopping. With the introduction of better and secured online payment systems, the fear of using a credit card is gradually eroding, making the e-commerce platforms a soon-to-be mainstream way of shopping.

A substantial increase in the number of online retail stores has been The Nigeria’s e-commerce observed as more business owners market is developing rapidly, are taking their stores online. Many with an estimated growth rate businesses in Nigeria now use the of 25 percent annually, and it is Internet as a platform to advertise believed that the country’s over and sell their products and services, 170 million population will help thus reducing physical dealings increase this recorded growth. between buyer and seller. A Mckinsey report in November 2013 titled ‘Lions Go Digital: E-commerce has grown so much The Internet’s transformative that it can now be considered as potential in Africa’, Africa’s iGDP an important driver of economic (which measures the Internet’s growth. The recent rebasing of contribution to overall GDP) Nigeria’s Gross Domestic Product identified that the Nigerian (GDP), ranks Nigeria as the world’s internet sector contributed about 26 largest economy, and the 0.8 percent to the country’s GDP. largest economy in Africa, and it is believed that with growing What is shaping the country and internet penetration, e-commerce where do you see it in the next would begin to make a significant five years? contribution to this growth. A country’s prospects for online

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retail success are closely related buying everything; every new to internet penetration and how category we introduce, from books many people use the Internet. to automotive and industrial According to data revealed by products are met with strong the Nigerian Communications engagement and sales. Commission (NCC), Nigeria had 56 million internet subscribers Give us a demographic as at September 2013, while description of those who are international bandwidth brought buying online, where are these by undersea cables has increased people domiciled? about 26 times to more than 9,000 Most of the people who buy online gigabits per second (9 terabits) over are between the ages of 25 and the past four years. 44. These people are mostly the upwardly mobile, working class In the next five years, e-commerce category of people. They have would be a revolutionary platform more disposable income and are that solves unemployment and likely to spend more cash than drives economic growth. It is other age groups. expected that GDP attributable to internet would be relatively big in Surprisingly, it seems that the male Nigeria and e-commerce would be folks buy things online much more a dominant component of iGDP. frequently than the female folks. On Konga.com, about 60% of customers Do you think e-commerce firms are male, and about 40% are female. in Nigeria are offering the kind of assortment of products that Predominantly, most orders come is broad enough to prevent from within Nigeria, although there Nigerians from buying from are some orders made from other foreign online retailers? countries. In Nigeria, most of the Yes, they are. Right now, Konga.com customers are from Lagos and has a lot of foreign products that Abuja. have been imported from the all over the world. This caters to the needs What have e-retailers in Nigeria of those who prefer to buy foreign not gotten right so far? made products such as designer It is important to note one can have wears. We also have local merchants the best website in the world that on our platform who produce and sell features products with the cheapest good quality products that can match prices you can find anywhere - but it those imported from other countries. won’t mean a thing if you don’t have This, we hope, would encourage the a good logistics solution in place to growth and consumption of locally enable you to get the right products made products. to people on time. Prompt delivery is very important for any successful What are people buying online online retail business. And in and what are they not buying? Nigeria, many e-retailers haven’t We have observed a trend of high gotten that right. This can be purchases in these categories: attributed to challenges faced in the Phones and laptops, beauty country such as poor infrastructure, products, fashion items and home poor transportation system, and a appliances. Actually, people are dysfunctional postal service.

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Winning in Nigeria’s retail market

Winning in Nigeria’s retail market takes a combination of factors Generally, retailers face because of the peculiar challenges the environment presents. Even the same problems though retail has become a thriving which all businesses in industry in Nigeria with 34% CAGR growth in the last 5 years, the Nigeria face operating environment has not been as conducive as it should be. Retailers complain about the same takes more than a day to complete, challenges that other businesses a similar journey would last less than face, they also have problems which 15 hours in South Africa. plague their industry specifically. Recent moves by the federal Generally, retailers face the same government to revolutionaries problems which all businesses in the rail system has not yielded the Nigeria face including the poor desired results yet, while most roads state of electricity supply, difficulties remain work in progress. Nigeria’s associated with logistics as well railway network stands at 3,557 as security problems. The general kilometers with 3,505 kilometers still cost of doing business is high. on the narrow gauge. This has made major retailers like Woolworths leave the country. Figures from the national rail corporation show that passenger Perhaps the biggest obstacle facing and freight traffic in 1964 was an retail business in Nigeria is the average of 11.3 million and 2.9 absence of a viable and low cost million tonnes of freight, by 1974 distribution networks connecting these figures had dropped to only Nigeria’s cities to the sources of supply 4.3 million passengers and a dismal of their merchandise. This is partially 1.1million tonnes of freight. By 2003 responsible for the concentration of passengers traffic had dropped to major outlets in such cities as Lagos, 3.0 million while cargo had dropped Abuja and Port Harcourt. very sharply.

In Nigeria, roads are often in poor According to Nigeria’s ministry condition, air travel is expensive, of transportation, the total road there are very few viable air cargo network in Nigeria is estimated at operators and the rail system is at a 200,000 km, this represents the nascent state. Anyone who has had principal means for freight and to transport retail material across passenger movements across the Nigeria from Lagos, where the country. Road transport assumed nation’s main port is, to Kano which a more significant role and became is in northern Nigeria, has to contend the most utilized mode of freight with an almost comatose railway movement since the collapse of the line, or a road network which is poor. rail system in the 1970s/80s. Today, The 1,130 kilometer journey still road transportation accounts for

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nearly 95% of all modes of transport full potential. Government’s and estimated N200 billion growing inefficiency at regulating business at 10% per annum compared with in Nigeria comes in the form of other developed economies such as double taxation, corruption and South Africa, UK and US. extortion by government officials, unnecessary levies and duties, The present administration across bureaucratic bottlenecks at various the country has make moves to both government agencies like CAC, improve rail and road transportation NAFDAC, among others. across the country. Government has taken bold steps to embark upon The high cost of obtaining business Public-Private Partnership initiatives licenses is also a major problem. geared towards tackling the challenges In Nigeria, it is not uncommon facing the development of the road for state, federal and municipal infrastructure in the country. But there government taxes to clash. This is still a lot to do in this endeavor. imposes unnecessary pressure on the retailers as they often have to pay Another major challenge to retail the same levies to the states, central is the state of poor electric supply in the country. Generally, poor electricity supply has lowered the non-oil sector’s growth in Nigeria, There is huge burden GDP figures released by the NBS. of getting goods

Retailers have to provide for cleared at the ports their own electricity because the state’s power supply has failed to meet the demands of an ever government and in some cases local expanding population. But there governments. In essence there is no have been mild improvements centralization of the tax system. from 2,500mega watts in 2011, the amount of electricity generated in There is also the huge burden of the country had risen to 3,751mega getting goods cleared at the ports. watts, with peak demand forecast Consignments are not only delayed, pegged at 12,800 mega watts. high demurrages are collected. Corrupt government officials have Retail businesses have had to been known to make unnecessary grapple with having to integrate demands from those bringing in the huge cost of generating their items for the retail market. own electricity into their operating expenses and still breaking even. Also relevant to the retail business This has led to the higher prices is the security situation in the and thinner margins for retailers country. While the North East has its and consequently, the collapse of a own peculiarities, since an Islamist number of local retail businesses. militant group has continued to Nigeria operates a mixed economy decimate the population and make where government plays a role it ungovernable, other parts of as regulators of major businesses. the country have more amenable But government policy has not security situation, albeit there are helped retailers to achieve their the occasional disturbances which

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occur from time to time. Making an industry which A strategy which most retailers have adopted is the use of private accommodates almost security operatives which has 30% of the workforce to also driven costs upward for retailers. Apart from the occasional function properly should occurrences of security breaches be a priority which come in form of minor robberies at often isolated retail outlets, the country is stable in engaged in one form of economic terms of security and the people are activity or the other in 2010, the warm and accommodating. wholesale and retail trade sector accounted for about 12.09 million But there are some challenges which of these, this gives an indication are peculiar to the retail business of the training need of the retail in the country. One of which is the sector in Nigeria. availability of inputs for the business. Local retailers have had to grapple Online retailers have their own peculiar with difficulty in getting inputs which challenges, though the industry is drive modern retail business. There growing at leaps and bounds, its are few companies which supply development is encumbered by the basic inputs like software that drive same challenges which face regular retail businesses, furniture for retailers retail. In particular, it has challenges and other retail specific hardware. with the level of performance of the telecommunications infrastructure, To tackle this challenge, local retailers but this has improved over the past have had to resort to employing the few years. services of South African software suppliers when they are not able to Developing formal retail in Nigeria is get local software which can drive a task that will take the ingenuity of their processes, to this end; there is local retailers as well as the structures the problem of getting the necessary of government to achieve. Foreign support to keep the software retailers who have come into the functional. country must make a deliberate effort to patiently understand the Also, because the organized retail peculiarities of the environment as market is still nascent, manpower well as the immense opportunities remains a major encumbrance. which the country offers. Like the rest of the country which has a problem with quality of On the part of the government manpower, retailers have the same of the day, making an industry problem. Often, retailers have which accommodates almost to train attendants to manage 30% of the workforce to function their outlets because there are properly should be a priority in few individuals who can match terms of policy. Associations which the demand of the modern retail operate in the industry should also environment. Therefore though be at the forefront of effecting at the national level, 48.53 million legislations which positively persons were reported to be impact on retail.

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FACTS FOR INVESTORS Population 170million (2013 EST) Location West Africa ; bordered by Cameroon, Chad, the Gulf of Guinea, Niger and the republic of Benin Capital Abuja Main Tribes Yoruba, Hausa, Fulanis, Igbo, Urobo, Ijaw Religion The northern region is predominantly Muslim The southern region is predominantly Christians Language Major local dialects: Yoruba, Hausa, Igbo. Official language is English Time Local Time is GMT +1 Visa Visa is required, expect for nationals from West African countries Proof of fund to cover the stay and a round-trip airline tick- et are required, as is a yellow fever inoculation certificate. Cash is the main source of exchange; credit cards and traveler’s tuques are rarely accepted except at major ho- tels, airports, restaurants, etc. Money Naira (NGN) is the local currency; $1 = NGN165 (2013 avg.) Note of denominations 1,000, 500, 200, 100, 50, 20, 10 and 5. Weather Weather is generally favourable year-round; rainy season peaks April-July Lagos (southwest)-The populous city in SSA and the com- mercial capital of the country. Kano (north) - Second-most populous city in the country; eco- nomic centre of northern region; has an international airport. Major Cities Abuja (central)-Capital city and major commercial hub, with presence of major govt. offices, MNCs and embassies. Port Harcourt (southeast)-A major industrial centre; large presence of oil-related MNCs, but also affected by militan- cy; city has an international airport and two seaports. Lagos (South Western Nigeria which is also the economic hub of the country). Major industrial hubs Lagos: Ilupeju, Agbara, Ikeja, Ota Ogun State Trade Zone Lekki Free Trade Zone Calabar Free Trade Zone Airports Four international airport and 18 domestic airports Lagos-Murtala Muhammed International Airport (busiest airport) Abuja-Nnamdi Aminu Kano International Airport (second –busiest airport) Kano-Mallam Aminu Kano International Airport Port Harcourt- Port Harcourt International Airport Telecommunications A number of companies including South African MTN, Eti- salat, Celtel and Glo. These also provide data and internet services Health (southwest) - The Yellow fever inoculation certificate is a must. populous city in SSA Some zones in the country have HIV prevalence rates. and the commercial Vaccination against hepatitis B, tuberculosis and meningo- capital of the country coccal meningitis is recommended, while malaria protec- tion measure are important. Private clinics/hospitals are easily available in major cities, but generally don’t accept medical insurance or credit cards.

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FACTS FOR INVESTORS How many meetings Three on average, four if traffic congestion is light one can realistically manage in a day Time from airport to Re- 45 minutes without traffic naissance Capital office Travel Largely air and land. Water transport is minimal and rail transport is being resuscitated Taxis provided by car rental services and hotels are consid- ered safe Major international airlines operate in the country, includ- ing Virgin Atlantic, Lufthansa, Air France, British Airways. Meetings A relaxed attitude towards timekeeping is ; business deals progress at a slower pace than in US or Europe Greeting in English with a handshake is a common practice, although women usually do not shake hands es- pecially in the northern part of the country, and Nigerians prefers to be addressed by their last name and titles if any Plugs/voltage Voltage used is 240V, Plugs used are D or G, GSM 900/GSM 1, 800 frequency Miscellaneous British date format is followed in the country Banking hours: Mon 0800-01500, Tue-Fri 0800-1330 Country code +234 and outgoing international code is 009

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Abbreviations

PIB Petroleum Industry Bill BOI Bank of Industry MAN Manufacturing Association of Nigeria AfDB African Development Bank CBN Central Bank of Nigeria NBS National Bureau of Statistics GDP Gross Domestic Product GRDP Real Gross Domestic Product EIA Energy Information Administration OPEC Organisation of Petroleum Exporting Countries US United States of America OPEC Organisation of Petroleum Exporting Countries MPR Monetary Policy Rate MPC Monetary Policy Committee NPC National Population Commission IMF International Monetary Fund UNFPA United Nations Population Fund

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