In 2001 MTN paid $285m for one of four mobile licences sold at auction by the government of Nigeria. Observers thought its board was mad. MTN went ahead. Within five years MTN had 32m customers. The company now operates across Africa and the Middle East. But Nigeria was its making and remains its biggest single source of profits, the Economist writes.
Tales of rich rewards have many firms scrambling to invest in Nigeria. Africa contains some of the world’s fastest-growing economies. Nigeria is the largest. In April its official GDP figures were revised up by 90% after hopelessly dated numbers were rebased. Roughly one in five of Sub-Saharan Africa’s 930m people lives there. Its population is growing at a rate of 2-3% a year. Its people are young, ambitious and increasingly well educated.
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. It is also because of the spread of Nigerian culture—its music and movies—around Africa, says Yaw Nsarkoh of Unilever. The Anglo-Dutch company has been trading in Nigeria for nearly a century and is expanding its operations. Nestlé, a Swiss rival, plans to triple sales over the next decade. Procter & Gamble, another global consumer giant, has just completed a factory near Lagos, its second in Nigeria. SABMiller, the world’s second-largest beermaker, built a state-of-the-art brewery in Onitsha, in the Niger Delta, in 2012 and is already adding capacity.
Just as Nigeria is used as shorthand for the business opportunity in Africa it is also a summary of the continent’s shortcomings. An outbreak of Ebola in Guinea has spread to Lagos. Attacks by Boko Haram, a fanatical Islamist group, are a chilling reminder that conflict is never far away in Africa. Transport and power infrastructure is poor. The rules of the game for business can change quickly and for the worse. Reaching a mass of consumers is no small task because most shopping is done in open markets or at roadside stalls. Yet a growing band of global firms believes the business opportunity in Nigeria will outweigh the risks.
They feel if it works in Nigeria, you can do it anywhere.
Read the full article here: http://www.economist.com/news/business/21613341-make-it-big-africa-business-must-succeed-nigeria-continents-largest-market-no