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Upcoming industries Nigeria: Good times for the non-oil industries

Africa is rich in raw materials, but on the spot materials are seldom processed. Nigeria, with 140 million  inhabitants is the most densely populated country on the continent, is one of the places were it is starting to change. The domination of the oil sector is slowly decreasing.

In the showroom of Innoson, in the city Nnewi in the southeast of Nigeria, a dozen of gleaming motorcycles are shown. We are the first company that puts a fully, in Africa produced, motorcycle on the market within 5 years. Nnamdi, a man in his thirties sits behind his desk in modern clothes. ‘Nigeria stands on the beginning of an industrial revolution, he claims’. Except Innoson, numerous industrial companies have been raised in the past few years. Nnamdi has faith in the future. ‘After Asia, it is now the turn of the African economical tigers.’

The industrial growth in Nigeria has resulted in an increasing export. In 2007 the value of the non-oil export rose with 27 percent to 170 billion naira (more than 1.1 million euros) according to the Central Bank. In neighbouring countries Niger and Cameroon are plenty of car parts from Nigeria for sale: brake pads, oil filters, batteries, etc. Also shoes, fruit and pasta go across the border. Export to other continents is rare. Foreign investment funds such as the American Orbis and the Dutch Intereffekt invest in Nigerian companies that are listed on the stock market. The Dutch FMO is interested in Nigeria too.

Corruption decreases
The corruption, a huge problem for years, is decreasing. The country is no longer in the top 10 of most corrupt countries, that is compiled by Transparency International each year. The government of president Umaru Yar’Adua genuinely tries to improve the business climate, says Charles Aniekwilo of the Nigerian Chamber of Commerce. ‘During the military dictatorship, that lasted until 1999, that was totally different’. On his motorcycle Aniekwolo drives trough the city. This goes much faster past the traffic jams than with the car. He agile passes by. ‘In the past, entrepreneurs complained a lot about the government officials who demanded bribes in Nigeria, Aniekwilo tells in his office later on. ‘Nowadays, I hear almost no one about that anymore. With the right contacts you can usually arrange something.’

Days without power
In recent surveys of United Nations Industrial Development Organisation (UNIDO) it is shown that companies in Nigeria recently had problems with the poor power. Sometimes there is no power for days. A diesel generator of your own, making the flow three times as expensive as through the national electricity, is needed. The government tries to solve the problems by letting independent entrepreneurs build power plants. These entrepreneurs are allowed to close their own supplier contracts with companies.

Electricity capacity increases
Bart Nnaji is one of the independent entrepreneurs on the electricity market. In the city Aba his own company Geometrics built a plant of 188  megawatt. It is fair that Nigerians complain about their government, says the CEO. But the solution is easy to find. If the government fails, you as an entrepreneur take command yourself. The new plant, for which Geometrics received a loan from among others the world bank, will raise the total Nigerian Electricity capacity by 5 percent.

At an industrial area at the edge of Aba there are trucks with concrete driving back and forward. Nnaji, who was a teacher in robot technology at the University of Pittsburg in the USA, is one of thousands highly educated Nigerians who have returned to their home country. ‘Nigeria has lots of possibilities, Nnaji says. Unfortunately, they are currently unused. I want to help change this.’

Good company
The large population in Nigeria is a huge potential market. Also industries from the Netherlands are represented. Heineken has built a brand-new brewery nearby the city of Enuga a few years ago. With more than 8 million hectolitre a year the Dutch firm sells more beer in Nigeria than in the Netherlands. Friesland Foods has a factory in Lagos where dairy is produced. Products of Peak and Three Crowns the two brandnames of Friesland Foods in Nigeria are being sold until the smallest towns.

Promising sectors
Important upcoming sectors in the non-oil industry are car- and car parts, shoes, clothes and nutrition sectors. Also in the IT-sector and the financial services is a growth shown. The Nigerian banking sector is reformed and more and more companies, as the by the Dutch government supported Health Insurance Fund offer insurances. Also the Nigerian film industry is experiencing the Golden Ages. Nollywood, as the nickname goes, produces about two thousand movies a year.

Nigeria
Capital: Abuja
Inhabitants: 143 million (2008)
Area: 923.773 km2 (27 x Nederland)
Languages: English (business language), Hausa, Yoruba, Ibo, Fulfulde
GDP: 126,7 billion US dollar (estimated in 2007 )
Economic growth: 5.8 percent (2007)
Important trade partners : Import from: Germany, US, UK, France. Export to: US, India, Spain, France

More information:
Dutch EVD, country associate Nigeria, +31(0)70 778 86 43, nigeria@info.evd.nl , www.evd.nl/nigeria

Text and photography: Gerbert van der Aa
Source: BM may 2009
Publicationdate: May the 3th  2009

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