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Innovating in Nigeria’s commercial hub Lagos

On Sunday Nigeria became Africa’s largest economy after it rebased its GDP to better reflect current consumption and output. The rebasing revealed an economy of just above US$500bn, nearly double the size originally thought.

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DHL Express Nigeria makes use of a commercial boat to transport express cargo in Lagos.

The city of Lagos, spread out over a number of islands and the mainland area, is the undisputed engine room of Nigeria’s economy. With close to 20m people, it is also the continent’s most populated city. Like many fast-growing frontier market cities, Lagos struggles with significant traffic problems. Cars, motorbikes, busses and citizens all hustle for space on the congested roads. While there have been improvements in recent years, it can still take hours to travel a relatively short distance.

DHL Express recently introduced an innovative solution to overcome this challenge when it launched a commercial boat to transport express cargo between the international airport and Lagos Island, where the majority of in- and outbound shipments are concentrated.

“We have previously battled with increasing traffic in Lagos,” says Randy Buday, DHL country manager in Nigeria. “Often times a courier van takes up to three hours to collect and/or deliver customer consignments between the airport and the city centre.”

He says DHL considered a variety of options, including a helicopter, as an alternative to using a van but most were not cost effective. A boat had previously been considered but there were problems with getting approvals from maritime authorities. In addition, curfews restricted the movement of private or commercial boats. However, after considerable negotiations with the Nigerian maritime authorities, DHL was granted permission to operate a commercial boat.

The vessel decreases the transit time between the Island and the mainland to 18 minutes. “The biggest benefit is DHL Nigeria’s speed advantage over its competitors. The boat also makes a great marine billboard to all of the cars waiting in traffic on the bridges while they see the DHL Express boat speeding customers’ consignments to their final destination on water,” says Buday.

Despite its already massive size, Buday points out that Lagos remains one of the fastest growing cities in Nigeria. He says the city holds untapped business opportunities in areas such as hospitality, retail, e-commerce and healthcare.

An African powerhouse

Following its rebasing exercise, Nigeria overtook South Africa as the continent’s largest economy. South Africa has traditionally been seen as Africa’s ‘go-to’ country from a business perspective.

The rebasing revealed a more accurate picture of the make-up of Nigeria’s economy. According to Renaissance Capital, the services sectors’ shares of GDP jumped to 53%, from 29% previously. This is partly due to the surge in telecoms’ contribution, to 9% of GDP versus 1% previously, and the emergence of a new sector, ‘Nollywood’ (1.2%). Agriculture’s share of the economy declined to 22% from 35%.

According to Charles Brewer, managing director of DHL Express in sub-Saharan Africa, the company has long seen the potential in Nigeria’s economy since launching its first Africa office in the country in 1978.

“The growing global interest in Africa as a destination for investment is well documented, due to Africa being home to some of the world’s fastest growing economies. Investor interest in Nigeria has particularly peaked over the years as sectors in the country have diversified due to the growing consumer market and rising middle class,” says Brewer.

Despite Nigeria’s new-found status, the country still faces significant challenges with infrastructure, insecurity in the north, and an over-dependence on oil for government revenues.

Roelof Horne, portfolio manager at Investec Asset Management, says that with its more developed infrastructure and financial systems, “South Africa will remain one of the most important economies on the continent, though this rebasing will be a significant step in establishing Nigeria as a true African powerhouse”.

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  • samuel Bello

    The spirit is high with DHL Yellow Speed

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