Thessa Bagu is the founder and managing director of Naijalink Limited, a market entry and advisory firm focusing on international companies seeking to do business in Nigeria. Dutch-born Bagu has been living in Nigeria since 2006. Betsy G Henderson spoke to her about opportunities in Nigeria and some of the foreign investment success stories she has come across.
Highlight some of the industries in Nigeria you believe hold the greatest opportunities for foreign investors.
Opportunities are everywhere in Nigeria. It depends on your approach to the market.
There are a lot of prospects in agriculture because Nigeria wants to be as self-sufficient as possible as the food import bill is too high. In terms of agriculture, I would suggest farming inputs and low-tech equipment that help farmers be more efficient: seeds, agro-chemicals as well as mechanisation and irrigation technologies.
Beef processing, livestock rearing and aquaculture offer possibilities; again, because Nigeria imports more than it produces. Cattle fattening is a new focus owing to conflict between ethnic groups in traditional grazing areas. This has promise if you can do it on a large scale and efficiently.
Another really big sector is construction. Nigeria is one of the largest construction markets in the world. The country needs building materials and equipment, from cranes to tiles and everything in-between as most of these are currently imported. But you need a good price or quality proposition. There are options in either low-cost building materials for the mass market or supplies for high-end finishes. For example, businesspeople can focus on the big mansions and flats that are being built here in Lagos, which require nice finishes, such as taps and door handles.
There is also potential in education and healthcare if you have facilities that can compete with international standards. Nigerians spend a lot on educational training overseas and almost $1 billion a year on medical tourism to go abroad for serious medical care.
Another industry of interest would be health supplements. People don’t like to go to doctors and prefer to buy over-the-counter products at the pharmacy. Food supplements and immune boosters are a huge market. There are also a lot of children who need care and supplies. One successful market entry over the past few years was a Turkish diaper manufacturer that captured significant market share by providing a local alternative for diapers.
Solar energy would be another good option, for residential homes and industry. For example, Heineken – or Nigerian Breweries, as it is called here – announced it is transitioning to solar energy and biomass. There is potential to cater for individual households because you either don’t have electricity or, if you do, you don’t have enough. Everybody depends on expensive diesel/petrol generators.
You cannot talk about Nigeria and not talk about digital solutions. Lagos is home to three unicorns (tech companies with valuations in excess of $1 billion), and it’s amazing to see what is happening in the digital space. At the same time, about 80% of all software is imported. Cloud services are highly untapped, as are data centres.
Another area is mining. Nigeria has 44 natural minerals in commercial quantities and apart from the quarrying side of mining, there is always a need for equipment. People are going into areas such as gold mining and zinc. It’s not just setting up a mine, but also mining services, mining technology and support.
Identify some of the foreign investment/trade success stories you’ve come across in your work.
There are so many of those. Usually people think of the bigger companies, like MTN, DStv, Uber, Microsoft, and Google but there are many other examples.
Last year, we worked with an Irish company called Revive that is the number one vitamin and dietary supplement company in Ireland. It sourced a partner in Nigeria and went from having very small shipments to being all over the country and having a very handsome revenue from Nigeria. The products are some of the most expensive on shelves but also the best quality. It is a good example of positioning at the high end of the market.
Then there is the University of Limerick, also from Ireland. It started to promote its courses in 2015 and has a representative in the region. By taking the market seriously and being in people’s faces, it grew from almost no Nigerian students to Nigeria being the university’s second-largest market.
I know of a horticultural seed company that is another success story. Its intention was not to make a quick buck but to add value to Nigerian customers and grow the market. It has only been here a few years and is already one of the largest seed companies.
Another is a tech company that provides solar lamps for the poultry industry. It’s a niche but much-needed product because there is often not much electricity on the farms. Poultry raising requires a lot of lamps and the company is doing well.
We’ve also worked with a UK company in oil and gas solutions. It puts a tent onto oil rigs to create a safe zone that enables welding without shutting down production. In Nigeria, if you want to be successful, you’re either dirt cheap or you bring a novel solution to a problem.
Providing quality products and working with an effective partner with an on-the-ground presence, capacity building with clients, and providing cost-effective solutions to persistent problems are all factors that contributed to these respective companies’ success.
Overall, to be successful here, you have to commit to this country. You need to have a capable partner and you must support that partner to do well, or get your own boots on the ground. However, you cannot appoint a distributor and sit in your armchair in another country. It’s not easy, things can take a long time, and Nigeria is not a cheap place to operate. But if you commit, have a long-term goal in mind, and work with capable people, you can have a successful business in Nigeria. At the end of the day, Nigeria is a relationship economy; who you work with matters.