Nigeria remains a viable investment destination among leading global corporates despite a number of challenges that Africa’s largest economy continues to grapple with. The sheer size of its constantly growing population, its expanding middle class and vast human and natural resources mean that many corporates the world over continue to cast their eyes upon the nation in search of ways to tap into its vast investment potential.
While most sectors have been directly or indirectly affected by the decline in oil revenues, other sectors have continued to thrive, though perhaps more sluggishly in the past few months.
One of those sectors is technology, and a number of global technology powerhouses continue to thrive in Nigeria, having established their presence in the country for a substantial period. The successes of companies such as Cisco, Oracle, Huawei, Ericsson, IBM and Microsoft, to mention a few, are testament to the rewards that the business environment in Nigeria can provide.
And there continues to be an interest in the Nigerian business landscape even from new players. Uber, the multinational online transportation network company headquartered in San Francisco, commenced its operations in Lagos in July 2014. Uber recorded exponential growth in in its first six months of Nigerian operations with a tenfold growth in supply – this means that there were ten times more Uber drivers in Lagos compared to when Uber entered the market. In terms of demand, a hundred-fold growth was recorded over the same period. Furthermore, after only 16 months into their Lagos launch, the car-hailing app has provided 30% more rides than it did in London in its first 16 months!
Another technology company making its way onto the Nigerian landscape is PayPal. The worldwide online payments system launched in Nigerian in June 2014, allowing Nigerians to make online payments for products and services globally. In research conducted by Ipsos in November 2014 on behalf of PayPal in Nigeria, PayPal was noted as the second most often used online payment system among Nigerian online shoppers (after Google Wallet/ Google Checkout which is likely mostly used to purchase apps from Google Play). It was also found that PayPal’s popularity and usage was growing, to the extent that 72% of online shoppers in Nigeria who were aware of PayPal agreed it was the safest online payment method. Consumers also agreed PayPal was fast, convenient and a safe way to pay online. Although users in Nigeria are currently unable to receive payments and create merchant accounts, the company has made assurances that it is looking into this and other offerings for the Nigerian market.
Another successful story is Netflix. The global provider of streaming films and television series recently opened up its service to the Nigerian audience. Netflix has reportedly added 1.3 million customers within its first few months of operations in Nigeria. The vast array of viewing content on the Netflix platform is now available with the promise of local content to be featured in the near future. Netflix has also been subsidised on major Nigerian telecoms networks in order to make the streaming service more affordable, given the data usage requirements.
These technology companies continue to make waves in Nigeria in spite of the economic issues the country is facing. Nigeria’s current problems are well documented but the country has experienced some relief, especially with the recent currency devaluation. The pegging of the Naira to the US Dollar at a rate which was not reflective of market indicators led to much uncertainty. Investors were unclear about the actual currency value for goods and services and adopted a cautious approach. Now, with the devaluation, the expectation is to see improved business activity in the Nigerian market.
If this plays out as anticipated, we can expect an environment that further promotes investment from global corporates. This is positive not only for sectors such as real estate and finance, but for the wider economy and country as a whole.
Co-authored by Timi Adesanya