By Efosa Aiyevbomwan
The Nigerian economy is growing, and this is leading to a demand for quality housing and other related real estate infrastructure, including adequate shopping centres, which form the basis for retail businesses to thrive. Retailers are critical economic agents who help to create demand because of their affinity with both the consumers and producers and retail sales are an important economic indicator because consumer spending drives much of the economy. In Nigeria, however, there has always been a gap in demand and supply, and the market is open to local and foreign developers to fill the gap.
It would seem that developers and retailers have realised the potential inherent in the said gap, as shopping in the country has witnessed a tremendous boom in recent years with the emergence of world class shopping malls. This is due to a number of factors including, but not limited to, the country’s rapid economic growth rate- an annual average of 7% in the last ten years- and the deregulation of key sectors like the banking and telecommunications sectors.
These factors, amongst others, have led to the emergence of a thriving Nigerian middle class population; one eager to explore world class standards and services in the country. Given that the gross Nigerian population stands at an estimated 150 million people, there’s no gainsaying the fact that foreign investors and retailers are aware of the mammoth potential of doing business in the country. Investors understand the fact that with its present economic growth, Nigeria offers an excellent opportunity for investors to cash in on further rapid growth expected to occur in the next decade or two.
Furthermore, the 2003 ban on a wide array of imported goods that included clothes, shoes, selected foodstuff, among others, by the administration of former President Olusegun Obasanjo intended to stimulate local production saw a number of Nigerians flying to Dubai and other regional commercial centres to do their shopping. But all that has dwindled, in favour of Nigerian-based retail shops that have gained in diversity and in sophistication and have also benefited from increasing public affluence.
This fact has inadvertently led to the boom in shopping malls in Nigeria as major shopping centres like Shoprite, widely renowned as Africa’s leading retailer, have made significant inroads into the Nigerian economy. Shoprite first entered Nigeria in December 2005, when they opened a store in The Palms shopping centre in Victoria Island, Lagos. The retailer has since opened stores in Surulere and Ikeja in Lagos, and another store in Enugu. Also, the recent opening of the Grand Towers Mall in Abuja, the Federal Capital Territory, has further established Nigeria as a haven for retail shopping.
While this could be attributed to rapid economic development and to an extent, favourable economic policies, it must be argued that for the country to maintain or even surpass the present rate, the relevant authorities must not rest on their oars as poverty is still on the rise despite economic growth. Nearly 60% of the population- or about 100 million people- still live on less than $2 a day. It’s pertinent to note the vast opportunities inherent in empowering those below the poverty line. Creating the right, enabling environment leads to increased participation from foreign investors and increased Direct Investment. This, in the long term, results in a wealthier population with enough income to spend, thus creating a thriving business community.
There are many benefits of a viable retail industry in Nigeria: The country will ultimately evolve into a proper modern economy; attract more Foreign Direct Investment; expand the manufacturing sector; increase supplies of goods and services in order to meet the induced increase in demand; create new and quality jobs; improve living standards and influence further development of the capital market.
As the country’s growing population, increasing purchasing power of the elite and limitless investment opportunities continue to lure potential investors, foreign and local investors are falling over themselves to set up new ultra-modern shopping malls. More globally renowned retail companies, like Walmart, Tesco and Carrefour, are poised for entry into the Nigerian market.
There are however challenges which, if not curtailed, could severely hinder the development of Nigeria’s retail potential. Problems like a dearth of adequate infrastructure, effective transportation networks and pliable roads and epileptic power supply, all collude to hinder the success of retail businesses as much as they impede other Nigerian business sectors.
The rise of the retail shopping class in Nigeria is symbolic of many things. It represents the burgeoning spending power of the average Nigerian, and to a greater extent the significance of Nigeria as an emerging, major hub for industrial or retail business.