Investment Opportunities in Nigeria: The Top 4 sectors

The past year has been one of economic progress for Nigeria, with Africa’s largest economy managing to crawl back into growth territory in the second quarter of 2017.

The Nigerian government has realized that they need to make the country as attractive and lucrative as possible for offshore investors to bring their capital, skills and business trade into the country.

The need to develop the Nigerian economy offers lucrative potential returns Click To Tweet

One way is to provide tax holidays to “pioneer companies,” who are engaged in the production of export goods, establishing new industries, or expanding production in vital sectors of the economy.

Pioneer companies that are eligible under the Industrial Development (Income Tax Relief) Act can enjoy an income “tax holiday” for a period of up to five years. In addition, pioneer companies enjoy other benefits such as the exemption from withholding tax on dividends paid out of pioneer profits.

Here’s a look at investment opportunities to consider:

 

MANUFACTURING

Nigeria’s population is an estimated 186 million people. This population suggests a massive potential workforce as well as a consumer base. For a manufacturer this is an ideal scenario, not only do you have potential customers, but you also have potential employees.

The Nigerian government is eager to expand the manufacturing capability in the country, and to that end, they are offering incentives for manufacturers that are able to locally source their raw materials, for example, agro-allied manufacturers processing foodstuffs such as fruit juices and vegetable oils.

Any manufacturing industry that provides multiplier effect solutions for the economy is also looked upon favorably. An example of this would be machine tools, flat sheet metal, and spare parts manufacturing.

Finally, any investment in research institutes, especially those that focus on adaptive research and commercialization of local inventions, is looked upon favorably by the Nigerian government.

An organization that has seen the potential in Nigeria is US-based software trainer @Andela Click To Tweet

 

INFORMATION AND COMMUNICATION TECHNOLOGY SERVICES

Nigeria is one of the fastest growing internet users in the world. According to Statista, a global statistics company, there are approximately 76.2 million Nigerian internet users as of 2017. This is an increase of nearly 50 percent from the 2013 figure of 51.8 million.

There are millions of Nigerians who are interested in involving themselves in Information Communications and Technology Services (ICTS).

This new economy does not require someone to be in a specific location to provide the service needed, rather they can be located anywhere in the world.

 

An organization that has seen the potential in Nigeria is US-based software trainer – Andela. The company offers learning programmes for young adults who are wanting to become computer programmers.

Nigeria is one of the fastest growing internet users in the world Click To Tweet

The learning programme is a 2-year practical course where the learner interacts with companies around the world and assists them in building programmes, websites, and mobile applications.

After the conclusion of the programme, the learner is able to provide remote programming support to companies that they have built a relationship with.

By tapping into the underdeveloped skills of the Nigerian youth, there are countless opportunities for new economy companies to develop technology leaders of the future in Nigeria and in the rest of Africa.

The Nigerian government has set up incentives to help modernize and mechanize their agricultural industry Click To Tweet

 

AGRICULTURE

Nearly one-third of all employed Nigerians find themselves working in the agricultural sector, which is one of the country’s main foreign exchange earners.

The Nigerian government has set up incentives to help modernize and mechanize their agricultural industry. Not only will locally grown foodstuffs be promoted on behalf of the investor, business and enabling companies may receive the pioneer company status and qualify for tax incentives.

Subsidies on fertilizer and zero import duties on raw materials needed to manufacture livestock feed are some of the other incentives to attract investors to this sector.

Another is the release of grants from the Raw Materials Research and Development Council for research and development that leads to the greater domestic use of Nigeria’s raw materials.

 

PRIVATE EDUCATION

The need for skilled tradespersons, computer programmers, and agricultural workers will only increase in demand as Nigeria transforms its economy and becomes an international economic power.

At present, there is an opportunity for private education to offer specific programmes that are in demand in the country. Nigeria is a country with vast underemployment and by offering distance learning or night schools, there is potential for strong investment returns in for-profit education.

As an example, one can look at the success of Curro in South Africa, which began as a private for-profit primary and secondary schools but now even has a post-secondary offering. If a Nigerian model were created that focused on skills development, the potential returns could be very lucrative.

Nigeria is in the fortunate position to offer investment opportunities to both local and international persons and companies. The need to develop the Nigerian economy offers lucrative potential returns for those looking to invest in the above sectors, including manufacturing and private education.

These areas are in some ways interconnected, and by increasing the investment and development in one area, there is tremendous potential for spillover into the other, sectors.

 

 

Patricia Majule: Saving the Environment With Beautiful Paper Gifts

Patricia Majule started the business of manufacturing and supplying of custom party supplies, box packages, favors & gifts in 2014 and has recorded tremendous growth since then.

Her idea was born when she noticed that most people in Tanzania were importing paper supplies from abroad, instead of investing in machines becoming manufacturers. Through her business, she has been able to provide quality products made in Tanzania, at lower prices.

She takes us through her journey so far and how she’s changing the face of the Tanzanian manufacturing industry, whilst protecting the environment.


Tell us about your business and the idea behind it

My business trades as Unique Favors Tz,; we make products and provide services ranging from décor ware, gifting and gift supplies. Our products are used for parties, functions, events and can be customized for non- celebration uses, such as, business advertising and branding.

The company began in 2013 as Unique Gifts Tz, and at the time we were specialising in gifts. But, we  expanded our product line and changed the name officially, and registered as “Unique Favors Tz” in 2014.

patricia-majule

 

What ways are you contributing to the protection of the environment through your product type?

One of the products we make at Unique Favors Tz is uniquely designed cardboard, made by using the leftover egg shells from chicken eggs (maganda ya mayai in Kiswahili language).

Egg shells help curb environmental waste by reducing the waste that would have probably been increased by throwing away eggshells right after usage.

In Tanzania , eggs are consumed in large quantities due to the existence of many small scale entrepreneurs selling them in kiosks and bars, and also due to the fact that chicken livestock farming is popular in Tanzania.

Secondly, we use paper products to package gifts, as opposed to plastic.

Plastic bags are known to be a form of waste which cannot decay; which is why there has been a movement by the government to reduce and completely ban the use of plastic packaging in Tanzania. In five to ten years, my products will have contributed significantly to curbing environmental pollution.

What strategies have helped your business grow these past few years?

Very good & friendly customer care.

Continuous research and product quality improvement.

Customer feedback and follow up’s.

Great staff and business partner training.

The uniqueness of our products.

Those are just few of our strategies.

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What opportunities lie in Africa and how much are young people tapping into them?

I’ve always believed that Africa is full of opportunities and many of them are hidden in industrial operations. Firstly the industrial sector is one of the most untapped sectors in Africa, especially by local natives, yet the most rewarding sector.

Majority of the youth dare to start a business with a focus on the retail phase, but they lack the courage and resilience to grow their businesses to an industrial level. Many other youth reach the idea level and fail to proceed to the implementation level.

 

patricia-majule

Tell us the setbacks you’ve faced in the course of establishing your business and your survival method(s)

 

  • Most of our product line and service offering is very new and unique to our community. Therefore, we have spent a lot of our time educating them in order to get buy-in.
  • At times raw materials which are needed for production are scarce; coupled with price fluctuations, this tends to be a challenge.
  • In our society it is not normal for people to see you developing a product and being in industrial, especially at a young age like mine, so there is a belief that somebody else could do my job better, and hence there is little support and a lot of bad-mouthing.

But ,at the end of the day our survival methods are to: be courageous, patient, and resilient and know that as long as we are being ethical and legal, everything is fine. Society will catch-up later.

 

Be courageous, patient, and resilient Click To Tweet

What great success has your business recorded in the past few years?

Our business has been successful in so many ways. Firstly, by introducing new unique products to the market, we got a very positive response from customers, which lead to significant company growth. Also we have been able to create temporary and permanent jobs to majority of the natives in Tanzania.

 

patricia-majule

What makes your business unique?

The products we manufacture in- country, the paper party supplies and the egg shell cardboards, are customised and very unique because everything is made from scratch. Most of the party supplies in our country are fully imported from China, so they tend to have common styles and lack that unique style.

Have clear and positive priorities, be consistent in pursuing your goals Click To Tweet

What are your top 3 books?

Smart Money Woman by Arese Ugwu

The Intelligent Investor by Benjamin graham

Getting Things Done by David Allen

 What’s the one business mantra you’d want every business owner to know?

Have clear and positive priorities and stick to them, be consistent in pursuing your goals.


What is your company doing to protect the environment?

Let us know more  here.

Abai Schulze: Your initial purpose has to be strong

Abai Shulze - ZAAF Collection

Abai Schulze moved to to Addis Ababa in 2013 to start ZAAF – a company that specializes in handcrafted luxury leather handbags and accessories produced by Ethiopian artisans. The Ethiopian-American entrepreneur has been able to combine her background in economic development and love for fine arts and creativity into a successful brand. Through ZAAF, she seeks to create unique products, open up avenues of opportunity for talented local artisans, and promote brand Ethiopia.

Schulze graduated from George Washington University where she majored in Economics and minored in Fine Arts. At the core of her entrepreneurial journey, which she terms as an exciting adventure, is to be able to impact people on an individual level. She spoke to me about how she has been able to grow and market her brand.

Taking advantage of learning opportunities

Schulze, who was born in Ethiopia and adopted by an American family at age 11, remained connected to her culture. She travelled to Ethiopia during her summer breaks to do volunteer work. It was during one of these trips that she interned with USAID where she worked with artisans and designers, and helped them to create websites to market their products internationally.

This enabled her to see how businesses work in Ethiopia. Frequently visiting the country also gave her the opportunity to witness its economic transformation firsthand and ignited the desire to return in her.

Her senior thesis analyzed Ethiopia’s potential for exporting textile. “I wanted to go into that field but it didn’t make sense because the initial capital is huge and you have to have actual hands on experience,” Schulze said.

She later found out that Ethiopia has the finest leather in the world which it exports to European countries to be used as raw material by famous brands.

“I wanted to tap into that,” she said. “Why not make it at home, by our own people, add value to it, export it, and market and rebrand Ethiopia?” “That was my initial take on it,” she added.

245f7c_84bce64e62b54c219c0d9393cc7e3b33Schulze’s plan was to get some work experience in the US and go to business school before starting her own company. After graduation she interned at the Overseas Private Investment Corporation and later worked at Ashoka. It was while there that she met many entrepreneurs who inspired her to start her own company.

“I changed the timeline and decided to jump in,” she said. “I told myself, ‘If it fails, I am still young, I can start over.’” She then made the physical move to Ethiopia. “You can’t do this type of business from a distance,” she said. “I had to leave everything behind and focus on ZAAF.”

Branding and marketing ZAAF

In trying to figure out how to brand and market ZAAF, Schulze kept in mind the different connotations that come with products made in Africa. “A lot of it has that NGO feeling,” she said. “The language used is often, ‘It is made by poor people. Buy it otherwise they won’t have a job.”

She wanted to reject this guilt-driven purchase angle. “I wanted to show that we are talented, we just need to invest in our own people and we can produce something beautiful,” said Schulze. “You are buying the product because you like the product, not because you are feeling guilty.”

“Otherwise you are not going to have loyal customers who come back,” she added. “If they feel like they have done their good deed of the day, then they will move on to the next company.”

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Schulze and her team were careful and deliberate about the language that they used in branding the company. Its products are made by talented Ethiopian artisans who went to school to sharpen their craft.

“They are not people who you just tell to piece two items together,” she said. Working with skilled artisans also ensures that the products are high quality. “We are trying to compete with international brands,” she said. “We want people to buy based on that.” The language they use to talk about the brand reflects all this.

“Our products stand out,” said Schulze. “When we produce them, we really want our customers to feel a sense of where the products are made.” ZAAF integrates ageless geometric patterns created on traditional looms with leather.

“Talented weavers meticulously count knots to produce patterns of fantastic combination of color and style,” she said. The unique aspects of the handbags and accessories has attracted media attention. “That organic attraction has helped us grow,” she added.

Abai Schulze - ZAAF CollectionCustomer engagement is critical to the brand. They engage with customers primarily through social media. They are committed to providing excellent customer service. “If a customer is not happy with a product then we will redo it,” Schulze said. They also work to ensure that products are delivered in a timely fashion.

Another way that Schulze keeps her customers happy is by investing in her team. She creates incentives for them based on their desires and needs. “That way they are loyal and create high quality products,” she said. “When you have a high turnover of employees, you can’t be consistent and your customers won’t be happy.”

Her advice to aspiring entrepreneurs:

Your initial purpose has to be strong. You have to be passionate about what you are creating because you will face a lot of challenges over time. This passion will help you find a way to solve them. Surround yourself with people who challenge you because sometimes you will be in your own bubble and you won’t know how far you are going.