Agriculture is a major branch of Nigeria’s economy, and about 70% of the population engages in subsistence farming.1 The sector accounted for around 21% of total GDP in 2017.2 Major crops in Nigeria include cashew nuts, cassava, cocoa, groundnuts, maize, palm oil, rubber, and soybeans, among many others.
Agriculture was Nigeria’s dominant sector for most of the 1960s, with palm oil and groundnuts making up 47% of the country’s exports.3 The country was also a major producer of cotton and cocoa, and export cash crops accounted for 66.4% of its GDP. However, Nigeria’s agricultural sector has shrunk since the discovery of oil in the 1970s, which led to a heavier dependence on oil revenues.
The country is currently on a drive to revive its agricultural industry, with signs of success. Between 2011 and 2014, Nigeria raised food production by 21 million metric tonnes, and sharply reduced reliance on food imports.4
In 2016, the government of Nigeria launched the Agriculture Promotion Policy (APP), to build on its success. The APP aims to raise productivity in domestically focused produce such as maize, milk, rice, soybeans, and wheat. Other crops will be prioritised for export markets, including cashew, cocoa, cotton, sesame, and oil palm.
The APP encourages networking between private investors, farmers, and other stakeholders to enhance agricultural quality standards, and deepen the industry’s infrastructure. This agricultural revival creates opportunities for Singapore businesses and investors to find a foothold in the country.
Around 60% of Nigeria’s arable land remains uncultivated. This represents many opportunities for investment, from commodity trading and transportation, to the fabrication of small-scale mechanised technologies for on-farm processing.
1 “Nigeria-Agriculture”, Nations Encyclopaedia 2 Statista 2018 3 “Can Farming Ease Nigeria’s Woes”, Forbes, 8 June 2017 4 “Nigeria has potential to be Africa's agriculture leader”, Fresh Plaza, 23 November 2017
Nigeria is an attractive market for makers of fast-moving consumer goods, due to its sizeable population of around 190 million. Furthermore, 43% of the population is under the age of 15, and around 20% are aged between 15 and 24.5 This gives Nigeria the biggest youth population, just after China and India.
The country’s middle class is also growing, with Nigeria predicted to become one of the world’s top 20 economies by 2030. This combination of youth, size, and rising discretionary income present an attractive demographic to consumer goods businesses.
Consumer goods currently make up around 18% of Nigeria’s GDP, and are the third largest contributor after agriculture and services. McKinsey estimates that between 2008 and 2020, there is a S$55 billion growth opportunity in the food and consumer goods sectors within the country – the highest growth potential of any African nation.6
The rising demand for consumer goods matches the rest of the continent: at the Africa Singapore Business Forum (ASBF) on August 2018, panellists noted that young Africans are keen on global brands, and quality products are affordable prices. Africa’s spending is projected to hit S$5.5 trillion in a few years following 2018, on the back of strong consumer and business growth.
Despite growing consumption rates, manufacturing in Nigeria is still dominated by a single sector: food & beverage, which makes up 65% of consumer-oriented manufacturing.7
Singapore companies can tap this opportunity to fill import-dependent niches, such as apparel, home and personal care products, real estate, and transport vehicles. These goods are seen as necessities by the growing urban population.
Consumption in Nigeria is anticipated to surpass S$34.4 billion by 2020. By 2025, Nigeria is expected to drive 15% of Africa’s household consumption growth.8
5 CIA World Factbook 2018 6 “Africa’s growing giant: Nigeria’s new retail economy”, McKinsey & Company, December 2013 7 “Nigerian Industrial and Consumer Goods: Overview & Opportunities”, kpakpakpa, 16 May 2018 8 United Nations Department of Economic and Social Affairs, 2017
Nigeria has experienced rapid population growth and urbanisation – the country’s population has grown from 46 million in 1960 to about 190 million today, and is projected to hit 550 million in 2070.
The population surge brings requirements for large infrastructure investment, particularly in areas such as the inter-city highways and bridges, national power grid, and rail networks. However, many of these investments are still lacking due to low tax revenue.9
In particular, Nigeria faces a severe housing shortage, with the current deficit standing at around 17 million.10 The Family Homes Fund, an organisation tasked with creating affordable housing in the country, has earmarked around S$3.8 billion to create 500,000 new homes by 2023. Singapore businesses involved in construction, or real estate, can find opportunities in the country’s urgent home-building campaign.
During the Africa Singapore Business Forum in August 2018, panellists noted three key areas in which Singapore companies can contribute: the construction of affordable housing and serviced apartments, working with local partners in construction, and using the advantage of international debt financing and government support in the building of homes.
Nigeria spends a significant portion of its budget addressing infrastructure challenges – in 2016 alone, the Nigerian government invested around S$4.5 billion in infrastructure development.11
The country has also launched a Nigerian Infrastructure Fund, guided by a Five-Year Infrastructure Investment rolling plan. This aims to further boost infrastructure in the areas of agriculture, healthcare, motorways, power, and real estate. Singapore businesses in these sectors can find ample opportunities in Nigeria.
9 “Nigeria’s low infrastructure investment finds explanation in poor non-oil tax revenue”, Business Day, 30 January 2018 10 “Nigeria’s housing deficit hits 17 million”, The Guardian, 28 January 2018 11 “The absolute sense of infrastructure investments in Nigeria”, The Guardian, 27 November 2017
Nigeria is Africa’s largest oil producer, and the sixth largest oil producing country in the world. Nigeria produces only high value, low sulphur “sweet crude”, such as the country’s marker crudes Bonny Light and Forcados.12
The country can produce up to 2.5 million barrels per day, and appears to have an even greater potential for gas. In 2000, Nigeria’s gas production was approximately 1,681 billion standard cubic feet.
Nigeria’s downstream oil industry has four refineries, with a capacity of around 438,750 barrels per day. However, these usually operate at just 40% capacity. The country often sees shortages of refined product, and uses imports to cater to domestic demand.13 There may be opportunities for Singapore’s oil and gas companies to contribute their expertise in this area.
Despite having significant oil reserves, Nigeria has not fully optimised its oil production. A major factor behind this is the Niger Delta Crisis, which has seen sporadic attacks on oil facilities and pipelines. Many of the country’s major oil fields are located in the Niger Delta, a poverty-stricken location where inhabitants are protesting oil pollution.14
The Nigerian government is committed to resolving the issue, through an amnesty and rehabilitation programme for youths behind the attacks. Nigeria has also set up the Niger Delta Development Commission, to improve living conditions in the Niger Delta, and address infrastructure issues. Energy investors should keep an eye on the situation; a resolution to the crisis can mean a significant boost to Nigeria’s oil sector.
12 Nigerian National Petroleum Corporation 13 “Overview of the Nigerian Oil & Gas Sector”, Business 14 “Oil exploitation and its socioeconomic effects on the Niger Delta region of Nigeria”, Springer Link, 18 May 2016