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Nigeria Innovation Opportunities

by: Kleitia Zeqo/Tatjana Guznajeva - Technopolis Group

 

Why should I read this document?

 

When confronted with the differences between your own market and the market of Nigeria you will likely feel that you must adapt your product/service significantly to make it fit the preferences and expendable income of local people. While many may see this as a challenge this can also proof to be a great opportunity for your company! Adapting to a new market, like Nigeria, will allow your company to innovate. Not only will operating in Nigeria lead to new insights to be more successful in Nigeria, you will most likely also pick up on ideas to be more successful in your home market.

 

This document provides a short overview of innovation aspects, business opportunities and challenges in Nigeria. It will also give advice on best practices for starting and developing an innovative business venture, considering Nigeria’s country context. May it help you to explore Nigeria, to innovation and success.

 

Opportunities and tips for innovation and doing business in Nigeria

 

  • Nigeria is one of the largest economies in Africa with population of more than 180 mln. people. English is the official language of the country, this facilitates interaction with customers, partners and employees.
  • The purchasing power is increasing due to a growing middle class. In higher income areas, such as Lagos, the demand of ICT services and luxury goods is relatively high, the retail and real estate sectors exhibit steady development.
  • Nigeria has large oil reserves, the economy is highly dependent on export of oil. Among numerous business opportunities in this sector are the sale of petroleum related products, oil servicing business and setting of petrol filling stations.
  • Nigeria imports high quantities of food products, therefore the Nigerian government is incentivising farmers and investors to cultivate vast amounts of arable land in the country (around 40% of land is arable). Land acquisition, lower taxation of agricultural machines and equipment for agricultural production is also open to foreign investors. Platforms such as e-farms and Farmcrowdy facilitate access to finance by connecting farmers to investors, offering returns upon harvest.
  • Currently, there is a high demand for agriculture-related technologies, storage and transport services. Food sustainability is one of the major issues on the agenda, therefore the country experiences a need for experts in this area.  
  • The National Communication Policy led to liberalisation of the Nigerian telecommunications sector in 1990’s and 2000’s and to an active mobile and Internet usage. There is huge potential for expansion of data services, IT infrastructure, mobile payment systems, hardware supplies and e-commerce.
  • Nigeria has a relatively young population, as the median age is 18.4 years. As a result, there is a growing demand for consumer technology, particularly for personal electronic devices.
  • Due to a relatively low standard of public education, Nigeria has a growing demand for private education services. Consider providing business services in tutoring, training and in supply of ICT equipment for education institutions.   
  • A relatively cheap production of cocoa, palm oil and rubber opens various business opportunities in food, cosmetics, pharmaceuticals and plastics sectors. Consider both production and trade, locally and internationally.
  • Nigeria is turning towards renewable energy sources – it has recently launched solar power plants and invested billions of dollars in solar projects. The energy sector offers large investment opportunities. In addition, there is a high demand for renewable energy training, due to shortage of expertise and technicians in installing, operating and servicing new technologies.
  • Natural attractions, such as the rainforest, savannah and waterfalls, stimulate tourism industry. Since 2015, the numbers of tourists have doubled, offering growing opportunities for the hospitality and leisure sectors, particularly for eco-tourism, tour services, development of heritage, cultural and archaeological sites.
  • Nollywood – the second largest film industry in the world . Nigeria has a growing creative industry and offers numerous opportunities for film production, animation and graphic design services.

 

On Level 2 you can find information about innovation climate in Nigeria, while Level 3 will tell you more about business activities in Nigeria.

 

 

This page will tell you about innovation ecosystem, major technology sectors, innovation and business practices in Nigeria.

 

Innovation ecosystem

 

Innovation and science are relatively underdeveloped in Nigeria, due to small R&D expenditure (around 0.2% of GDP), relatively low education standards and tertiary attainment. The lack of financial and human resources limit the current and future science and innovation potential of the country. Despite that in 2011 the government formulated the Strategic Plan for Science, Technology and Innovation,the progress in these areas has been slow so far. At the moment, the University of Lagos, is gradually emerging as a startup and innovation centre in the country.

 

In order to stimulate innovation and address social challenges, the Nigerian government aims to develop and diffuse technologies and innovations across sectors, particularly in agriculture, biotechnology and natural resource extraction sectors.

 

The private sector is lacking public financial support and assistance from institutions that could promote entrepreneurship and remove trade barriers. Due to economic growth in the last decade, business and innovation climate are gradually improving.

 

Innovation sectors and technology

 

Nigeria has not yet developed dominant innovation and technology sectors, but public support in sectors of agriculture, energy, ICT, electronics, natural resource, biotechnology and infrastructure is expected to make these sectors most innovative. Due to a large young population (around 170 mln. people), the technology, e-commerce and fin-tech sectors show promising signs of growth and inventiveness. To untap the potential of those sectors large investments in development of infrastructure and transport system are needed.

 

Despite that digitalisation in Nigeria is relatively slow, cloud solutions and use of artificial intelligence technologies for customer support are becoming popular business ideas among young entrepreneurs. Hence, the ICT sector has a potential of becoming one of driving forces of innovation in the country.

 

Innovation culture and practices

 

Nigerians still experience difficulties in accessing credit, due to high interest rates and severe request for collateral from financial institutions. Financial risks associated with new products or business models are perceived to be high, while political and economic instability increases insecurity. Hence, population and local companies in Nigeria are risk-averse.

 

Since 2014, Nigeria has faced hard economic setbacks due to the oil price crash. Investment in non-oil sectors, such as agriculture, science and technology, opens new business opportunities and thereby stimulates innovation. Big technology corporations like Facebook, Amazon, Microsoft, IBM, Google recognise Nigeria’s economic potential and mark the country as their tech investment hotspot on the African continent. Such developments boost confidence of the local population, and therefore a positive shift towards entrepreneurial mindset and innovation are expected.

 

This page highlights major economic sectors and iconic products, shows business trends and explains how easy it is to do business in Nigeria. In addition, you will find the list of websites, which provide some hands-on information.

 

What is the country known for?

 

Sectors

 

The biggest sectors: petroleum and gas, agriculture, mining, film industry and tourism.
The service sector accounts for 60.1% of GDP, while agriculture and industry represent 21.6% and 18.3% of GDP respectively.

 

Iconic products

 

Corn, cocoa, millet, palm oil, peanuts, rice, rubber, sorghum, yams, refined and crude petroleum, coal, lignite, gold, uranium, iron ore, coal, tin, zinc, limestone.

 

How easy is it to do business in Nigeria?

 

Based on the World Bank ranking:

 

  Nigeria EU Average Emerging Markets Averag
Overall - ease of doing business 169 30 83

 

Due to high inflation rates (14.2% in 2018), corruption, political and economic instability, high poverty rate (around 50% of population), low access to finance and a lack of a highly skilled labour, it is relatively difficult to do business in Nigeria. Inefficient bureaucratic processes complicate the process of starting business, registering property, getting electricity, paying taxes, trading across borders and dealing with construction permits. Having said that, Nigeria is an important economic player in Africa, it has a free market economy, increasing consumer base and many untapped natural resources. In addition, the country offers good protection to investors and a comprehensive package of incentives.

 

Business trends in Nigeria

 

Nigeria is integrating technological innovations in the financial services sector, leading to a growth of the retail banking sector and the use of e-banking services. Due to support of foreign investors, local banks are increasingly using Artificial Intelligence (AI), Big Data, blockchain and robotics technologies.

 

Adoption of digital technologies and an increasing use of social media have led to new business opportunities in media, entertainment and marketing industries.

 

Consumers are increasingly using online services to purchase goods, therefore e-commerce is growing.

 

More hands-on info

 

 

 
 

Bibliography

 

Level 1:

 

World Population Review Nigeria. (2018). Nigeria. Retrieved from: http://worldpopulationreview.com/countries/nigeria-population/
Onuzo, M. (2017). Growing the middle class in Nigeria: A 3-year Blueprint. The Government and Business Journal. Retrieved from: https://govandbusinessjournal.com.ng/growing-the-middle-class-in-nigeria...  
Omeh, D. (2018). Oil and Gas Investment Opportunities in Nigeria. Wealth Results. Retrieved from:  https://www.wealthresult.com/oil-and-gas/investment-opportunities-in-nig...  
Labour Force Statistics. (2017). Employment by sector Report. Retrieved from: http://nigerianstat.gov.ng/elibrary
The Central Intelligence Agency. (2018). Nigeria. Retrieved from: https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html  
Ufiobor Akpososo, K. (2017). Nigeria Agriculture and Sustainability: Problems and Solutions. Novia University. Retrieved from:
https://www.theseus.fi/bitstream/handle/10024/132525/Ufiobor_Kelvin.pdf....
PWC. (2015). A Guide to doing Business in Nigeria. Retrieved from: https://www.pwc.com/ng/en/assets/pdf/a-guide-to-doing-business-in-nigeri...
Nigeria Law Today. (2014). e-Commerce evolution in Nigeria: opportunities and threats. Retrieved from:  http://nigerianlawtoday.com/e-commerce-evolution-in-nigeria-opportunitie...  
Iwuoha, J.P. (2013).  The business of Education in Africa – 7 lucrative opportunities you can exploit in this huge and growing market. Retrieved from: http://www.smallstarter.com/browse-ideas/7-education-and-training-busine...  
Atoyebi, O. (2016). Buhari inaugurates Nigeria’s first solar power plant in UI. Retrieved from:  https://punchng.com/buhari-inaugurates-nigerias-first-solar-power-plant-...  
Akpan, U. and Okafor, P. (2017).  FG, states, others invest $20bn in new 20 solar projects Vanguard. Retrieved from:
https://www.vanguardngr.com/2017/12/fg-states-others-invest-20bn-new-20-...  
World Travel and Tourisms Council. (2017). Economic Impact Nigeria. Retrieved from: https://www.wttc.org/-/media/files/reports/economic-impact-research/coun...
Financial Quest. (2017). Investment opportunities in Tourism in Nigeria. Retrieved from: https://financialquest.com.ng/investment-opportunities-in-tourism-in-nig...  
Cokodeal.com. (2017). Opportunities in the Nigeria’s Movie Industry. Retrieved from: https://medium.com/@Cokodeal/opportunities-in-the-nigerias-movie-industr...  

 


Level 2:

 


UNESCO. (2018). Nigeria Country Report. Retrieved from: http://uis.unesco.org/en/country/ng?theme=science-technology-and-innovation  
Nigerian Government. (2011). Science, Technology and Innovation Policy. Retrieved from:  http://workspace.unpan.org/sites/internet/Documents/UNPAN048879.pdf
Lawoyin, J. (2018). Nigeria Rising. Retrieved from: http://nigeriarising.co/#thestory   
Olaleye, O. and Egesimba, P. (2018). Nigeria, hotbed of technological innovation in Africa. Sun News Online. Retrieved from: http://sunnewsonline.com/nigeria-hotbed-of-technological-innovation-in-a...  
Business Day. (2018). The Most Innovative Companies and Institutions in Nigeria. Retrieved from:  http://businessdayonline.com/reports/Innovation%20Report%202017%20(Executive%20Summary).pdf

 


Level 3:

 

The Central Intelligence Agency. (2018). Nigeria. Retrieved from: https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html   
Chatham House. (2016). Nigeria’s Solid Minerals Sector: Alternative Investment Opportunities. Retrieved from: https://www.chathamhouse.org/sites/default/files/events/2016-05-19-Niger...
Statista. (2018). Inflation Rate in Nigeria. Retrieved from: https://www.statista.com/statistics/383132/inflation-rate-in-nigeria/   
Kazeem, Y. (2018). Nigeria has become the poverty capital of the world. Quartz Africa. Retrieved from:  https://qz.com/africa/1313380/nigerias-has-the-highest-rate-of-extreme-p...  
Pulse. (2018). Trends set to impact Nigeria’s banking industry. Retrieved from: https://www.pulse.ng/news/business/trends-set-to-impact-nigeria-s-bankin...  
Okusaga, B. (2018). The Nigerian: Evolution, trends and projections for 2018. Retrieved from: https://www.thecable.ng/nigerian-evolution-trends-projections-2018   
McKinsey. (2018). Africa’s growing giant: Nigeria’s new retail economy. Retrieved from: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insi...
Cocreatit. (2018). Advantages of doing business in Nigeria. Retrieved from: http://cocreatit.com/doing-business/advantages-of-doing-business-nigeria/

 

Last updated: 10.05.2021 - 08:28