Dynamic Export

Nigeria is just beyond the scope of many Australian exporters, but with a little foreknowledge and an understanding of where the country is heading, this African nation could be very lucrative indeed.

To an average Australian, Nigeria brings forth mixed thoughts and feelings. To some, Nigeria is viewed with reservations, but to many; Nigeria represents the largest market and fastest developing economy in Africa. Historically, Nigeria is not in the bracket of Australia’s traditional trading partners; as such, the trade volume between the two resource-rich countries remains low. Having said that, globalisation and information technology have practically made it possible for organisations and entrepreneurs to do business anywhere in the world where there are viable opportunities.

Nigeria has many such investment opportunities for Australians to explore. Moreover, Australian businesses stand to do better in Nigeria than most Asian and Middle East investors because both countries have English as official language, belong to the Commonwealth, are governed by democratically elected leaders, and share the same values of human rights and rule of law under the British judicial system.

Recent economic reform initiatives have opened Government-backed business opportunities in agribusiness, telecommunications and ICT, energy generation and distribution, oil and gas exploration, construction and infrastructure development among others. For example, in 2001, only 150,000 Nigerians were connected to mobile phones; today, more than 70 million Nigerians are active mobile phones subscribers courtesy of the rapid flow of foreign direct investment. With a population of more than 150 million people, Nigeria stands as an investor’s delight in Africa.

New exporters

Nigeria’s economy is currently experiencing the resurgence in the middle class as a result of strong economic activities in the oil and gas, telecommunications, entertainment and commerce sectors. Nigerians in this economic bracket indulge in acquiring luxuries such as furnished new homes, brand new cars, designer labels, electronic gadgets, and choice wines. These acquisitions are considered necessary to announce the change of social and economic status. The growing appetite for luxury goods in Nigeria provides viable opportunities for Australian businesses to enter the supply chain or develop shopping malls in partnership with state governments or local companies.

According to the latest 10-year forecast from Global Construction Perspectives and Oxford Economics, China will overtake the US as the world’s biggest construction market by 2018, and the fastest growth will happen in Nigeria. The forecast is already coming true with the Federal and State governments’ new policy of developing the nation’s infrastructure through public private partnerships (PPP). The new PPP initiatives have resulted in the concession of airports, roads, bridges and public buildings. Australians can be part of this new approach for infrastructure development in Nigeria.

Existing exporters

Nigeria’s primary economic strength comes from the export of natural resources. Despite huge deposits of oil and gas in the country, steady supply of electricity remains a major source of worry and burden to every Nigerian and business in the country. Nigeria’s unreliable power situation offers Australians great opportunities in energy generation, distribution, consultancy and equipment supply. Australians are guaranteed opportunities because of the Nigerian Government’s vision 2020 target to generate 60,000MW electricity from less than 7,000MW obtainable today.

Visiting Nigeria in December 2009, I observed that Nigeria’s Federal Government is truly working hard to improve the power situation in the country with a flurry of activities taking place in the power sector. My advice for intending Australian investors is to ensure they partner with either the Federal or State Government in a PPP for any power project as a sure berth into the market.

In the 1960s, Nigeria experienced a massive economic boom because its economy was based on agribusiness, coupled with high global demand for oil. The present Nigerian Government has thus launched major economic reform initiatives that are expected to switch the country from oil and gas dependence to an agribusiness and technology-driven economy. Australians can explore the Nigerian Government’s 40:30:30 co-financing formula for the agribusiness sector. This unprecedented system enables foreign investors to come up with the initial 40 percent of take-off capital, while the Government brings 30 percent to the table and guarantees a local bank loan for the remaining 30 percent. It is a win-win outcome for both investor and Nigeria.

The Federal Government of Nigeria provided more than US$8 billion in early 2009 as low interest loans to local farmers and foreign investors who intend to start commercial farming and processing of produce in the country. Australians with an interest in agribusiness could seek partnership with Nigerian state governments.

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