Last reviewed 7 June 2019

One of the fastest growing markets in the world for UK exports, Nigeria is a destination British firms can no longer afford to ignore. Martin Clark reports.

Nigeria on the move

Africa’s most populous state with around 200 million people, Nigeria is a market UK exporters can’t afford to ignore.

Moreover, it is a country that is expected to grow rapidly, both in terms of people and economic output, reflecting a dynamism that cannot be matched in traditional European or other developed markets.

Nigeria already ranks about seventh in terms of the world’s most populous countries.

But that is set to grow massively, experts predict, with population numbers rising fast.

The US Census Bureau reckons there will be an estimated 402 million people in Nigeria by 2050.

While Nigeria remains a poor country, there are signs of change practically everywhere, from the take-up in mobile phones over recent decades to the rise of the Nigerian millionaire — and billionaire — class.

Aliko Dangote, founder of the Dangote Group, a diversified business with interests spanning everything from food to construction, is widely considered Africa’s richest man, worth a reported US$10 billion.

Hopes & aspirations

Again, while poverty remains widespread nationwide, it is evident that aspirations are rising, especially in the cities, where demand for material goods and services is growing with the advent of online travel agencies, shopping sites and other sophisticated services.

What’s more, it is a market that is very accessible to UK companies, with a long, shared history between the two nations and a common language.

English is an official language in Nigeria, and is spoken widely alongside various local languages, such as Yoruba, Ibo and Hausa, reflecting the country’s immense ethnic and religious diversity that spans Islam, Christianity and indigenous beliefs.

More than half the population is also concentrated in the main urban centres, from the sprawling commercial hub of Lagos and the oil capital of Port Harcourt, both in the south, to the political seat of power of Abuja in the country’s middle.

Yes, many deep-rooted problems remain, from crime to corruption, but Nigeria is a country waiting to happen, its energy and vibrancy palpable to all those that visit.

Oil and gas industry

For the most part, Nigeria is renowned for its vast oil and gas industry, which has attracted many billions of dollars of inward investment since the 1950s when production first commenced.

Royal Dutch Shell is the country’s lead foreign investor with a huge portfolio of projects, from upstream oil and gas production to downstream assets, plus a vast network of pipelines and associated facilities.

This includes a stake in the mighty Nigeria Liquefied Natural Gas (NLNG) export complex on Bonny Island in Rivers State, which launched in 1999.

The project has been an important stream of work for many British and international engineers and contractors through the years.

And that looks set to continue with the proposed US$5 billion build-out of a seventh LNG production unit at the site.

The six existing trains currently producing 22 million tonnes per annum (mtpa) of LNG, as well as about 5 mtpa of natural gas liquids (LPG and condensate).

The proposed seventh train expansion would boost total production capacity to 30 mtpa of LNG, making it one of the largest single site LNG plants in the world.

A final investment decision on the project is expected to be taken this year by Shell and its co-investors, Total of France, Eni of Italy, and the state-owned Nigeria National Petroleum Corporation (NNPC).

It reflects continued strong interest in Nigeria’s oil and gas industry, despite ongoing problems in security, notably in the restive Niger Delta area where much of the nation’s hydrocarbons are located.

For years, this region has been prone to all kinds of violence, from kidnappings of foreign oil workers to pipeline sabotage.

Beyond the energy sector

The government in Abuja has made efforts to counter such problems by creating more local jobs and opportunities for Nigerians, in a bid to share some of the Delta’s wealth with the area’s residents.

There has long been a grievance that foreign oil companies were profiting from siphoning the area’s wealth, with little being put back into the local community.

This remains a priority for officials, and has resulted in an industry shake-up, with the oil majors (the likes of Shell and Total) relinquishing some acreage and opening the door to small, home-grown independent firms.

This, in turn, has resulted in a nascent industry of domestic producers and suppliers, underpinned by service and support companies, from engineers through to transport and logistics firms.

For foreign investors, working alongside local partners is now a key ingredient to success.

That extends far and above the oil and gas sector into all areas, as the country seeks to boost local, jobs, skills, manufacturing and other home-grown services.

Earlier this year, the government announced a target to double Nigeria’s manufacturing output to about 20 per cent of gross domestic product (GDP) within six years under its so-called Project MINE (Made in Nigeria for Export) blueprint.

It aims to boost the manufacturing sector to generate over US$30 billion to the economy annually by 2025, according to the Ministry of Industry, Trade and Investment.

Abuja intends to set up production hubs across the country in partnership with regional banks like the African Development Bank as part of the initiative.

While the energy sector has provided a rich source of income for the state in the past, it has meant that other industries, such as manufacturing, have been neglected.

The agricultural sector too has come into focus, alongside a renewed emphasis on bolstering transport and infrastructure.

Nigerian President Muhammadu Buhari is keen to modernise roads and railways in order to lower production costs and further nurture investment.

Poor infrastructure, including a woefully inadequate power supply network, has long been a feature of Nigeria, both past and present.

UK trade and investment

With direct flights from London to Lagos and Abuja, a journey of under seven hours, the UK is well connected to this large and growing emerging market by British Airways, among other airlines.

There is a thriving Nigeria British Chamber of Commerce, which boasts 300 active members from all sectors of the economy.

There is also plenty of UK government support for would-be British exporters tackling what can be a challenging market, plus UK Export Finance provides a series of guarantee services for investors.

And it is not hard to find examples of British success, beyond Shell and the many companies now operating across the country’s oil industry — which boasts the world’s 10th largest proven reserves.

Bilateral trade between the UK and Nigeria is now worth in excess of £3.5 billion.

UK imports are dominated by petroleum and related products, whereas UK exports to Nigeria are diverse and include machinery and vehicles, crude materials and fuel, chemicals and manufactured goods.

One of the great ironies of Nigeria’s oil wealth is that the country still depends on imported refined fuels to meet domestic demand — a reflection of the inefficiencies that have long plagued the nation.

Indeed, the Dangote Group is currently building what will become Nigeria’s biggest new refinery — worth US$15 billion and with a capacity of 650,000 barrels per day — in a bid to reverse that situation.

The giant complex will also include a fertiliser factory and a petrochemical plant.

Beyond the energy sector

The scope for further business is huge, above and beyond oil and gas, given Nigeria’s vast and under-utilised agricultural land, its large and fast-rising population and a growing middle class.

The country likewise boasts large sea ports connected to global trade routes and a dominant position in the growing West African region, which includes Ghana, another vibrant market with strong British links and its own burgeoning energy industry.

British firms active in Nigeria span an ever-diverse range of industries, tapping into this awakening giant of a market.

UK company Bekoz, in collaboration with pan-African firm Interswitch, will be providing the contactless card technology that allows people to travel around Nigeria’s travel infrastructure, similar to London’s Oyster system.

This deal was recently announced by the Foreign Secretary Jeremy Hunt, during a visit to Nigeria.

Much of the manufacturing will be done in Wales, with the deal expected to create jobs in the UK.

On a completely different note, Milton Keynes skincare brand, Naturally Tribal Skincare, recently secured its first deal with one of Nigeria’s largest beauty distributors, Perfect Trust Cosmetics.

The UK company is an award-winning, vegan and cruelty-free brand that specialises in body care products for sensitive skin.

It reflects a very positive trend for UK exporters targeting the Nigeria market.

According to the UK’s Institute of Export and International Trade, Nigeria now represents one of the fastest growing markets in the world for British exporters.

It says the value of the Nigerian market for UK exports was up 18.3 per cent, to £2.7 billion, in the past year — that is significantly above the overall UK export growth rate for 2018 at 2.7 per cent.