Nigeria has made remarkable economic improvements in the last decade. With a GDP growth rate of 6.6% in 2012, and an average annual growth rate of 9% since the year 2000, there is no doubt that Nigeria is amongst the fastest growing economies in the world. The positive growth is as a result of the government’s investments in infrastructure, a thriving private sector, and the expansion of the telecoms sector amongst others. Additionally, the rise in purchasing power of the average Nigerian has attributed to the growth of the economy thus creating more opportunities for businesses to thrive.
According to a survey carried out by Renaissance Capital in 2011, Nigeria’s middleclass, which accounted for 23% of the population is growing rapidly and will continue to fuel GDP growth in the short to medium term. The emergence of a new spectrum of middle class citizens has been a major source of attraction of foreign direct investments into the country. Despite the infrastructure challenges and the harsh operating environment faced by businesses, many large global retailers such as KFC, Shoprite and other manufacturers of consumables have identified Nigeria as a hotspot for investments. The country’s large market size, increasing income rates and the positive economic outlook among other factors has continued to attract many global players into the country.
The current increases in consumer spending on semi-luxury items are also indicators of a rising middle class society in Nigeria. Shopping malls for example are springing up in many parts of the country and have become a haven for young Nigerians who are eager to acquire consumer goods and basically anything that is trendy. In a similar fashion, the demand for both new and fairly used vehicles has also increased. According to figures from the Nigerian Port Authority (NPA), Nigeria imported 24,158 new vehicles in the first half of 2012, representing an increase of 15% from 21,024 recorded in the same period of 2011. Car imports are expected to increase further in 2013, given the positive outlook of consumer purchases in the country. Further, the demand for the latest smartphones, personal computers (PC’s), iPads and other gadgets has been on the rise, thereby making Nigeria a major market for many of the large global phone and PC manufacturers like Samsung, RIM, Nokia and HP.
Other trends that indicate the growing wealth in the country include the rising number of private school attendees; rising real estate prices across the country and the rising number of Nigerians who travel abroad for holidays or educational purposes.
Many macroeconomic projections show that the African continent will be the major destination for investments in the 21st century, with Nigeria, Ghana and South Africa as the leading hubs. The Global Development Outlook 2010 projected that there will be a shift in wealth from the developed economies to emerging markets due to the projected rise in consumption expenditure by inhabitants of these countries.
The positive outlook for the African continent in terms of economic growth, investments in infrastructure and the ongoing reforms in the Nigerian power sector and so on, show that there will be an economic boost in the near future. A shift is also expected from the lower class to the middleclass, as many Nigerians would break out of abject poverty and inevitably open business opportunities to more investors.