Why Nigeria has become a hub for business investment

Nigeria has always had one of the most vibrant economies in the entirety of Africa, even before colonial rule. Abundant agricultural products and a desire from a variety of groups to trade textiles and crafts set the stage for Nigeria’s inherent drive to succeed.

Overachieving and entrepreneurial, the country kept and nurtured these traits, which could explain why it’s so successful when it comes to various sectors. Nigeria boasts a thriving entertainment industry with Nollywood movies and international artists, an emerging tech sector that earned it the nickname “Silicon Valley of Africa,” and prime opportunities for agribusiness.

As the country is constantly developing and improving its regulatory frameworks, including those relating to legal casinos and financial services, it’ll continue to attract both local and foreign investments. Nigeria is full of business investment possibilities – and we’re about to expand on the reasons why.

Emerging Sectors

Nigeria has many fast-growing sectors that are worth investing in. From telecommunications and IT services to the metal ore mining subsector, the opportunities are vast and varied. One of the biggest prospects is the fintech industry, considering the goals of Nigeria and many other African countries to cater to a largely unbanked population. Nigeria itself had the ambitious goal of reaching fully banked status for 95% of the population by 2024.

While the goal hasn’t been reached just yet, the efforts made toward achieving financial inclusion are unmistakable. According to PwC, there are around 100 companies in the industry alone, tackling everything from investments, payment solutions, online banking, and more.

With Nigeria having some of the worst healthcare indicators on the continent and a clearly underdeveloped healthcare industry, the government of Nigeria and other health authorities have signed agreements to change this. The COVID-19 pandemic helped to accelerate these investments, and in turn, more medical centres and healthcare institutions are being built. Within the healthcare market, there has become a pressing need for better medical training, electronic medical record systems, telemedicine platform offerings, and more.

Economic Growth

Since Nigeria has the 10th largest proven oil reserve in the world, it’s no surprise that oil has been Nigeria’s bread and butter for such a long time. However, its dependence on oil has become its downfall, evidenced by the commodity price crash in 2014, the economic crisis of 2016, and the COVID-19 pandemic. Despite its deep-rooted reliance, federal and state governments have been considering how they can diversify the economy to become independent of oil. As oil prices drop and the green economy becomes more prominent, the country is looking to diversify. With the emerging sectors mentioned in the previous section, there are now many more sources of revenue to tap into.

Favourable Government Policies and Tax Policies

As economic growth is so central to Nigeria’s development, the government has responded by implementing a variety of policies to stimulate that growth. For one, tax incentives reduce the burden on businesses. The Pioneer Status Incentive, for instance, provides a tax holiday for qualifying companies, which grants them tax relief for an initial period of three years and a potential extension of up to two. That means businesses can reinvest their profits into other ventures, like expanding their operations or upgrading technology. There’s also the benefit of capital allowance, which allows companies to gradually reduce their taxable income by using their deductions on certain expenses over a longer period of time.

And it’s not just the financial aspect that the government pays attention to – it’s making the act of doing business a lot easier as well. With the Presidential Enabling Business Environment Council, the country can remove the administrative and regulatory hurdles that once plagued startups and new businesses. The reform initiatives have allowed businesses to start and run in less time and at a lower cost.

Just like other countries, the government also provides sector-specific support, such as through the Anchor Borrowers’ Program. Established in 2015, the program has benefited almost 5 million farmers in the fields of rice, wheat, and maize farming.

Technology Adoption

Technology powers global business, and Nigeria’s widespread and increasing adoption of it is beginning to put it on the map. Expanding digital infrastructure allows Nigerians to become more connected and innovative, taking advantage of tools like e-commerce platforms and social media. Since the country has such a large and youthful population (42% are under 14), there’s prime opportunity for a younger and more tech-savvy population to launch their own businesses and contribute to a new Nigeria. We’re already seeing changes in the marketplace, with local startups aligning their offerings to the population’s unique needs.

The country isn’t just famous for its oil, either – it’s also home to the biggest mobile market in Africa. Nigerians are extremely smartphone-centric, pushing businesses to launch mobile-optimised websites and solutions, provide text-based banking services, invest in mobile marketing strategies, and employ other tactics that allow the population to engage better with businesses.

Natural Resources

All while the Nigerian economy strives to move away from oil reliance, the metal ore sector confidently tops the charts of the most lucrative sectors in the country. At a growth rate of 50.32% in 2023, it significantly outshined the 15.98% rate in 2022. Nigeria is so rich in natural resources that these traditional sectors won’t be forgotten, despite the focus on healthcare and tech, for instance. The abundance of geological assets like gold, iron ore, copper, and more will continue to draw investor attention for years to come.