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Moving outside of Lagos: Five Nigerian cities with business potential

This year Nigeria officially became the largest economy in Africa, adding to its allure as a foreign investment destination. One of the country’s biggest assets is its 170m-strong population, which continues to spark the interest of consumer facing companies.

For many, a good place to enter the market is Lagos, the country’s commercial hub. Obinnia Abajue, executive director of personal and business banking at Stanbic IBTC, said it makes sense for foreign companies to operate in Lagos with its sizeable population of close to 20m and more developed infrastructure for business. However, the market is more competitive than other cities in the country.

“It’s the most competitive part of the country for business because you have got many people making the same decisions to locate in Lagos,” he told How we made it in Africa.

He highlighted that there are a number of other cities which investors should place on their radar, especially in terms of targeting rising consumer demand.

1. Abuja

Abuja is the capital city of Nigeria. While it has a much smaller population than Lagos, Abajue noted that it is a good place to enter the Nigerian market because it holds the highest per capita income in the country.

“It’s a small town [in terms of] population but with very wealthy people.”

2. Kano

Kano, the capital of Kano State in northern Nigeria, is the second largest city in terms of population, after Lagos.

According to Abajue, there is potential for cash and carry wholesale businesses.

This year, South African retailer Shoprite opened its first outlet in Kano, and Massmart is expected to do the same in the coming weeks. Despite the potential security risk posed by Islamic militants in the region, Mark Turner, Massmart’s Africa director, said at the Reuters Africa Summit in April: “I always want to be bold enough to say, you can’t be in Nigeria without being in Kano.”

Furthermore, a new African Development Bank (AfDB) report, titled Tracking Africa’s Progress in Figures, reveals Kano to be one of Africa’s fastest growing cities.

3. Port Harcourt

Abajue said that Port Harcourt, the capital of Rivers State, is the “centre of attention in the south of the country” due to the presence of oil companies and foreign investment in the area. He added that the city is also seeing a rise in per capita income.

Port Harcourt has access to two of the country’s busier ports and is home to the Port Harcourt Airport.

4. Aba

Aba is situated in the southeast and is also surrounded by oil wells. Abajue noted that the city acts as the trading centre of Nigeria.

“And again, there you will see strong purchasing power because a lot of trade is coming out of that place. [Aba] is the connecting spot for the hub of trade activities for the southeastern part of the country.”

5. Ibadan

“The last [city] that I would like to add is Ibadan in the southwest axis,” continued Abajue.

He noted that it is densely populated and has significant infrastructure. The capital of Oyo State has the third largest population in Nigeria, and, according to the AfDB report, is in the top 10 fastest growing cities in Africa.

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  • Port

    2 points
    1- Nigeria has great potentials BUTAny stats out of Nigeria needs to be divided by 2 or 3. So if its economy is said to be 510billion dollars, its actually maybe 200-250 billion. This is because data massaging has been part of Nigeria’s politics for too long… its a long story.

    2- You missed out a city that is FAST developing: Uyo in Akwa Ibom State. In the last eight years Uyo the city has emerged top receiver of oil allocation, this has resulted in thousands of kilometers of roads, bridges, 3 new 5 star hotels (le meridien, Hilton and Holiday Inn)Independent power plant, brand new stadium, brand new international airport (longest runway in the country) a developing seaport, etc. Uyo is definitely emerging as a prefered business location. Every investor needs to have it on the plan.

    • Not your Business

      The data on the 510 Billion dollar economy of Nigeria was independently verified by external agencies such as the IMF, World bank and the AfDB. There is no issue of “Data Massaging” here as you put it, except of course- you like most other Nigerians out there are experts at downplaying anything positive, no matter how minute.

      You also talk about Uyo what is the population of the city, does it have enough middle class to support large operations?

    • Tony Dickson

      Hype as usual. Will only believe these are 5 star hotels after I use them! Longest runway in the country. So? Is there a sustainable economy to support it. Same way Donald Duke built Tinapia, when sensible people criticised it they where abused as bad belle, what’s the fate of it today!

    • Tony Dickson

      Same with your brand new stadium, will like to see it in 5 years and see the state of it, and how many matches/events have been held there. And of that’s the best use of the money used to build it.

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