The world’s largest brands have taken Nigeria as an investment hotspot, from General Electric to Unilever, the Economist Intelligence Unit (EIU) report on Enabling a More Productive Nigeria: Powering SMEs has said.
The country’s attractiveness has been further bolstered by favourable demographics and a rising middle class.
Nigeria is now Africa’s leading economy, overtaking South Africa last year to become the continent’s largest nation in terms of GDP. Its commercial capital, the mega-city of Lagos, has surpassed the Egyptian capital, Cairo, to become Africa’s biggest city in terms of population.
According to the EIU, for Nigeria to take its rightful place among the world’s top emerging markets, the country must overcome a series of obstacles.
The report added that most pressing are economic diversification, job creation and a more effective conversion of growth into what matters most: rising incomes for the country’s 173 million citizens.
The report also said, to support SME productivity, Nigeria’s government must stabilise macroeconomic policy and install a more transparent tax and customs system.
The study added that light-rail infrastructure and port development are critical to support Nigeria’s commercial ecosystem, and should be prioritised at a time of fiscal consolidation.
“Nigeria’s road and rail system remains insufficient, but landmark transport projects are already delivering benefits for SMEs and new projects could herald significant gains in facilitating the movement of people and goods,” said the study.
“However, in an era of low oil prices, fiscal consolidation is expected to hit capital spending and the government faces tough choices on what to prioritise.”
The study added that investments should continue to be directed towards light rail transit to enable faster commuting for city workers, and towards infrastructures feeding the country’s vital port systems.
“Rural businesses, long isolated from the biggest market opportunities, are now able to operate over larger geographies.”
The study said Nigeria had the ingredients for a vibrant solar energy market, including a sunny climate and unmet consumer need.
Under the new Buhari Administration, Nigeria’s privatisation of the power sector holds promise for fixing the country’s energy supply, but its impact will not be felt in the near term.
