To Succeed in Africa, a Business Must Succeed in Nigeria (Economist)
A recent Economist article noted how Nigeria’s promise has made it a test-bed for the Africa strategies of consumer-goods firms. This is not only because of its size but also because of the spread of Nigerian culture — its music and movies — around Africa.
Hence, Unilever plc (NYSE: UL), which has been trading in Nigeria for nearly a century, is expanding its operations while Nestle SA (OTCMKTS: NSRGY) plans to triple sales over the next decade. Procter & Gamble Company (NYSE: PG) has just completed a factory near Lagos, its second in Nigeria while SABMiller plc (OTCMKTS: SBMRY), the world’s second-largest beermaker, built a state-of-the-art brewery in Onitsha, in the Niger Delta.
The Economist also pointed out three lessons emerge for outsiders doing business in Nigeria:
- Be even more careful than usual about your choice of partner as the biggest error a business can make is to pick an incompetent or dishonest distributor while growing through acquisitions needs to be treated with considerable caution.
- Don’t assume that a model that works elsewhere will be successful in Nigeria. Woolworths Holdings Limited (JSE: WHL), a South African clothing and food retailer, closed its three shops in Nigeria after less than two years, citing high rents and complex supply-chains as reasons. However, they also relied on the changing seasons to boost turnover for clothes but Nigeria’s clothing market had no such natural churn as its hot there all year round.
- Don’t run a Nigerian business by remote control as companies do well by becoming Nigerian. In fact, Guinness, brewed in Lagos since the 1960s, has been adopted as a Nigerian brand with only Britain drinking more of the stuff while Nestlé, Unilever and PZ Cussons plc (LON: PZC) have been in the country for so long they have strong local identities. These businesses also give power to local managers so they can adapt to shifting conditions.
To read the whole article, Africa’s testing ground, go to the website of the Economist.
- Life of Nigeria’s 1%: $50M Jets; $250K Parties in London; Ermenegildo Zegna, Hugo Boss & Porsche Boutiques (NT)
- Nigeria’s Forte Oil Plc and EcoBank Transnational Inc (ETI) Added to MSCI’s Frontier Market Index (AllAfrica.com)
- Mark Mobius: Nigeria is a Positive Emerging Markets Play (WSJ)
- Moody’s Downgrades Four African Nations
- Coronation Africa Frontiers Fund Manager: Stick With MNC Subsidiaries (Citywire)
- Countdown Begins to Nigeria’s Crucial 2023 Elections (Crisis Group)
- Africa Rising: The Hopeful Continent (Wellington Management)
- YPO CEO Survey: Africa CEO Confidence at 5-year Low (YPO)
- Nigeria, Argentina and Vietnam Top the Frontier Markets Sentiment Index (WSJ)
- Opportunities in the Next “Emerging” Emerging Market of Africa (Franklin Templeton)
- How Big is Africa’s Car Market? (African Executive)
- ETFs Add to African Access (S&P Global)
- Investors Exit Africa for Other Frontier Markets (WSJ)
- Five Emerging Markets Squeezed by Currency Pegs (Bloomberg)
- Africa’s Smaller Stock Markets Plan to Join Forces (Yahoo! Finance)
Leave a Reply