Business conditions of Nigeria v UK


Peter Savage continues his series of articles on maximising business opportunities with a sideways look at opportunities in with emerging markets

Due to the efficiency (ahem) of TV Bay’s management and my own scheduling skills, I find myself, the day before going to press, writing an article whilst sitting in a hotel in Lagos, Nigeria. So, for a completely left field approach, here is a quick overview of business conditions in Nigeria compared with the UK.

Having been invited here by a supplier’s representative to discuss financing with the national TV authority, it seemed sensible to arrange meetings with banks and businesses here to see if there were any opportunities for our industry in this infamous market.

Differences and similarities

First things first: my arrival. It is bizarre not only to land in a suit then walk out into 40 degrees of heat while you all sit in snowy, sub-zero England – but also then to be met by a customs system that is worse even than that of the US. It took an hour and a half to enter the country. I then spent the same amount of time stuck in traffic. Why? With 150 million people, Nigeria is the largest populated country in Africa. Five million plus people live in Lagos which is the largest and busiest port in north Africa. With practically no infrastructure, everyone travels by car down the equivalent of one dual carriageway. If you think you have seen congestion when travelling in the UK, think again.

On our first day here we had eight meetings with various businesses and banks. The first major point that came to mind was that this is a country of not inconsiderable wealth. However, as with many emerging market countries or raw material based economies (Russia included), most of that wealth is held by a few and, despite having a vibrant economy, there is a distinct lack of capital available.

As with our own economy, Nigeria went through a banking crisis last year. It resulted in only 14 of about 30 banks maintaining their banking licenses having been forced, by the government, to merge or be absorbed by larger banks. Now where have I seen that before? These banks have restricted capital so they only lend to prime credits. The remaining customers have to pay huge interest charges for any access to capital. Again, there is a distinct similarity to the current UK economy.

Opportunities and potential

Half way through the day I began to understand why the Nigerian economy has been tarred with the sceptical brush. Ignore the scammers and the phishing emails that are an unfortunate bi-product of the Internet; the problem is far more basic. The country seems to lack the planning processes that are required by the UK banking industry when asking or applying for credit. How many times over the last couple of years have I stressed the necessity for, and value of, good business planning? And how often have I advocated spending some money at the start of a project to ensure you have a coherent plan of where and how your business is going to develop – so you then have something to measure, control and forecast against?

And it is here that, with huge untapped wealth in Nigeria, there is also huge untapped opportunity for UK businesses – if we do a bit of business planning. For instance, the license for the start of a new second national broadcaster has just been issued; mobile phones are still relatively in their infancy; the Internet is slow and unreliable; the phone systems are poor. But, hey, what potential! How many entrepreneurs would like to take their knowledge of the market and go back 20 years to the start of a new trend – using today’s technology?

Work with, not against, this emerging market

Here in Nigeria it seems to be par for the course to be able rock up to a funding meeting and say you are looking to raise $40 million dollars – without having a cohesive business plan on how why and what it is needed for.

If UK businesses were prepared to work with these guys, putting together a defined corporate structure on European lines, it would give foreign investors the confidence to invest sensibly into the Nigerian economy without assuming that they are being scammed or that there is no control of the economy.

Nigeria certainly has all the raw materials: there is a queue of ships waiting for two weeks to unload imports paid for out of excess oil, gas, cocoa and other local revenue-spinners. And the business class has the other key to success: the contacts to unlock the bureaucracy (even a £30 million upgrade of a television facility has had to be sanctioned by Nigeria’s parliament). This type of bureaucracy would stifle the normal speed of entrepreneurialism in Europe but, here, they just simply say it’s all being done in Nigerian time. And, trust me, that is a long time. But you do get there in the end.

Left attack

Apologies, again, that this is a bit left field but I hope this insight into Nigeria, written live in Nigeria, might be of interest. And, yes, if you would like advice on exporting to emerging markets – Nigeria or elsewhere – we have a division within Azule Consultancy that helps businesses exploit these opportunities, whether they want us to do the work or to learn how to do it themselves.

Next month … back to the good old English economy and hopefully the green shoots of recovery will be sprouting.

If you would like to discuss, in confidence, export opportunities for your business, contact peter.savage@azule.co.uk. If you missed previous articles in this series, or would like to comment via our blog, look at www.azule.co.uk.


Tags: iss037 | azule | finance | business | nigeria | banking crisis | N/A
Contributing Author N/A

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Reproduction of the content strictly prohibited without written consent.

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