Five lessons from doing business in Nigeria

August 22, 2018

By Jonas Michanek, entrepreneur and writer, and working for Ideon Science Park on an assignment as acting Incubator Manager at the Roar Nigeria Hub.

Did you know that Nigeria has around 200 million people? Did you know that it will be the world’s third most populated country in around 30 years? Did you know that Facebook and Google are starting to invest heavily in Nigeria? I did not. But now I do. And here are some other things I learned about when working in Nigeria.

Since November 2017, I have had the privilege to work for Ideon Science Park in Lund on an assignment in Nigeria. The assignment was to start the first university-based startup Incubator and Science Park at The University of Nigeria (UNN), in Nsukka. If you have read Chimamanda Ngozi Adichie’s Half of a Yellow Sun, then you know the setting. UNN is set on the Nigerian countryside with red soil, banana and mango trees, cassava plantations and great views of trees and jungle. And in the middle of that a lively campus with around 40.000 students where all the students, the faculty and their families are part of the campus. The whole city of Nsukka is basically the campus with the staff and services needed to run this academic microcosmos. The concept is very similar to another school I have attended, Duke University in the USA.

I have been to Africa many times before but never to Nigeria. Here are some of the most important things I learned.

Seventh most populated country in the world

When I ask people in Sweden to guess on how many people live in Nigeria – they often say about around 40-60 million. So did I. There are various numbers circulating – everything from around 180 million to some people arguing that it is even 250 million people. It is now the 7^th most populated land in the world – the most populated in Africa – and is estimated to pretty soon being the third most populated country in the world. As population growth is one other big driver of economic growth, the middle class is growing steadily in Nigeria. As Hans Rosling writes in his fantastic book Factfulness, that this is a huge potential for global companies, with much greater potential than many western countries. If you are willing to take the risk…

And for example, Hanna Einarsson is. She is a Swede who started Oriflame in Nigeria and made a big impact, but wanted to do her own thing. So, she started Tribute – a perfume company for the Nigerian population. She saw that the creams and perfumes from Europe did not work so well in the warm weather and did not fit perfectly into the tastes of the Nigerian woman (who wanted stronger and more colorful scents). She is now enjoying tremendous growth with her lifestyle brand in Lagos, maybe (in my opinion) the coolest city in Africa besides Johannesburg, Cape Town or Nairobi.

Small economy – ready for the next step

Even though Nigeria has a great population, the economy in monetary terms is still small. For example, the GDP of Nigeria is only a little more than half of that in Sweden, with it’s 10 million population. And this makes it a market for cheap mass market products. As one of the directors of the leading Nigerian incubator CC Hub in Lagos, Tunji Eleso, told me: “There is a huge market, but still people have very little money. So, the startups we work with have to have “must-have”-solutions at a very, very low price. And go mass market. In 5-10 years, we might have a middle class of size – that can pay more”. So, Nigeria is still a small economy mostly based on the oil industry. But an economy that can be boosted with the right investments in infrastructure.

Infrastructure is still key

It is basic growth economics, but what is the key to economic development in Nigeria? It is infrastructure. As water, electricity and internet (mobile or land-based) is functioning only on and off – it really matters. It is hard to do business today without these services in place. Do you know you know what I experienced as being the biggest problem? Lack of internet. You can have electricity going on and off, because there are batteries and generators. But if the internet is not working (or is really slow or you cannot afford to pay for more mobile connection) – you cannot work in the startup world of today. And most of the incubator attendees have ideas involving internet, mobile and/or software. So, my advice to both the government of Nigeria and companies who want to locate in Nigeria – make sure that the internet works!

Mobile and drones will help Nigeria take a big leap

Even though Nigeria is not yet a booming economy, everybody pretty much has a phone. And it is mostly not phones like iPhones or Samsungs – it is Tecnos and Infinixs. The most used communication tool is WhatsApp. So, make sure you have it installed if you are entering Nigeria.

Facebook also have a huge user base and is a good tool for marketing. So mobile is big. And so are drones! As the roads are very bad in many areas, drone delivery is not a nice to have as when you see the Amazon commercials. Here it is for real. And a big business opportunity for companies. As well as a serious help for emergency situations and for the military. Because of the situation when it comes to infrastructure, Nigeria will skip some development steps and probably take the lead in areas like drones, mobile services for farming, solar panel solutions for rural areas etc.

The youth – the talent – the treasures

The Trillz App team at Roar Nigeria Hub

Nigerians are a young population, the median age is 17.9 years. And they are well educated, the country is bound to boom financially. Mark Zuckerberg has for example invested in Nigeria’s most prominent startup, Andela, which is mainly a software outsourcing company. I think that Nigeria is where India was maybe 15 years ago in this area. And think about what happened to for example Wipro and Infosys – these Indian companies are global star players today. Nigeria has the same potential. And this time, Nigeria has a great opportunity to learn from the ideas and shortfalls of others. Because of the internet, students can get the latest knowledge online, as well as the latest software code for free. President Muhammadu Buhari has called the Nigerian youth lazy. I think that Nigeria’s future lies in the hands of the youth, they are Nigeria’s treasure chest, not the old political and/or company structures. To get a taste of the talent, please look at the startups at the Roar Nigeria incubator that I have been part of.

So, would I invest in Nigeria? Yes, but I would use local help to get settled. As in all countries you have to get to know the local business culture. How to communicate in the best way. How to manage the work-place. And I would go for the new tech communities with young people having a global outlook. Nigeria is not only a huge market – it is also competing with South Africa of being the African leader and the door to Africa. So, if you make it here, you can make it everywhere in Africa.

/Jonas Michanek, entrepreneur and innovation writer from NEW working for Ideon Science Park

Jonas Michanek and the entrepreneurs at Roar Nigeria Incubator

Interested in doing business in Nigeria?

If you are planning to invest, locate your business or just want to do some research into the Nigerian market, please join Ideon for the Swedish Innovation Delegation in October. A handful Swedish companies will go together to meet companies, universities, government agencies and lots of talented students. The goal is to start closer business relation and partnership with the Nigerian market.

If you are interested – please contact Mia Rolf, CEO of Ideon: mia.rolf@ideon.se