As Nigeria continues to grow economically, so do the trade opportunities for South African businesses.
According to Hennie Heymans, managing director for DHL Express South Africa, despite Nigeria recently taking the number one spot as the largest economy in Africa, it remains an untapped source of growth, and with internet and telecommunications technologies providing global reach, there has never been a better time to explore cross-border trade opportunities.
DHL’s own small and medium enterprise (SME) research on internationalisation, conducted with IHS Global Insight, revealed that SMEs who trade internationally are twice as successful as those who trade only within their own market.
“Nigeria is bursting with opportunities given its diversifying sectors, and has become the market to consider within Africa given its exceptional growth.”
Heymans warns though that it is vital for business owners to research the environment before entering the market. “Entry into the Nigerian market may seem cumbersome, but the market, catering to a population of over 170m, is relatively open to businesses outside of the traditional oil and gas sector given that the larger population has created a demand for fast moving consumer goods, health care products, as well as a need for retail, food, telecommunications and other consumer related necessities.”
Businesses also need to consider possible challenges, says Heymans. “Potential supply chain disruptions are a concern due to traffic gridlocks in most major cities, as well as congestion and possible delays at customs. The power grid is also under constant pressure which results in most companies relying on generators for their power supply.”
Other aspects to bear in mind are the country’s unique and diverse regions, cultures and people. Companies often make the mistake of moving into Africa with a ‘one size fits all’ approach. According to market intelligence agency WARC, West Africans have an outlook closely aligned to the US, therefore understanding the differing cultures and their preference is important when considering expansion. “More importantly, business entering the Nigerian market, or any market for that matter should not only understand the different cultures but respect them,” says Heymans.
He adds that businesses need to bear in mind that Nigeria, along with many other African countries, is an emerging economy and with this will come unique challenges and require patience, persistence and flexibility when conducting business.
“The emergence of the Nigerian market is relatively new. There is always the question of risk versus reward when investing in any country in Africa, and Nigeria is no different. These risks can be mitigated and managed with proper planning and the assistance of trusted and established partners. Whilst perceived risks may be high, the rewards are equally high since Nigerians are discerning consumers and will readily pay for quality products and services. When expanding into unfamiliar regions, both in Africa and globally, businesses should partner with a trusted supplier who is experienced in the field and one that is able to provide advice and support in the region,” concludes Heymans.