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Nigeria aside fintech [III] . Article by Victor Obioma

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Nigeria aside fintech

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7. Agriculture and Livestock Production:

Agriculture remains the base of the Nigerian economy, providing the main source of livelihood for most Nigerians.

The sector faces many challenges, notably an outdated land tenure system that constrains access to land (1.8 ha/farming household), a very low level of irrigation development (less than 1 percent of cropped land under irrigation), limited adoption of research findings and technologies, high cost of farm inputs, poor access to credit, inefficient fertilizer procurement and distribution, inadequate storage facilities and poor access to markets have all combined to keep agricultural productivity low (average of 1.2 metric tons of cereals/ha) with high postharvest losses and waste.

Agriculture still remains the largest sector of the Nigerian economy and employs two-thirds of the entire labor force, the production hurdles have significantly stifled the performance of the sector.

Over the past 20 years, value-added per capita in agriculture has risen by less than 1 percent annually.

It is estimated that Nigeria has lost $10 billion USD in annual export opportunity from groundnut, palm oil, cocoa and cotton due to continuous decline in the production of these commodities.

Livestock on the other hand is an important component of Nigeria’s agriculture with abundant social and economic potentials. About 60 percent of the ruminant livestock population is found in the country’s semi-arid zone and mostly managed by pastoralists. Domestic production of livestock products is far below the national demand, resulting in large imports of livestock and livestock products.

However upward stakeholder engagements for more active youth involvement in Agriculture by The Government of Nigeria is yielding positive results especially with recent developments like the establishment of the first African Agriculture Electronic Extension Service Centre in Ibadan, Oyo State, Nigeria by leading agribusiness expert, Azeez Oluwole of FarmKonnect Agribusiness Nigeria Plc. in April 2021.

The Agriculture Electronic Extension Service Centre is to accelerate controlled environment farming practices in Africa; Leveraging modern technologies such as satellite imagery, drones, electro-optic systems, global positioning system, geographic information system, on-site sensors, etc. to monitor and receive live feeds from all FarmKonnect farms and greenhouses anywhere in Africa. Also certain operations like irrigation and humidification can be remotely controlled from the facility.

This is first of its kind in Africa.

Arla Foods of Denmark- producers of Dano Milk also entered a milk supply deal of $100m USD with Kaduna Cattle ranch to act as a feeder to her Dano Milk factory established in Kaduna State, Nigeria.

The factory is estimated at $29.3 million USD (N12bn Naira) these developments attest to the saying that in challenges lies opportunities also. Interestingly Agriculture and Livestock production are strategic sectors in Nigeria aside FINTECH with promising returns in millions of USD which investors can take advantage of.

8. Leather:

According to the Nigerian Economic Summit Group (NESG)’s 2019 macroeconomic outlook report, domestic leather production accounted for 24 per cent of the total agriculture GDP in Nigeria.

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Tanned skins generated $240 million USD in export revenue for the country in 2015; a distant second to the proceeds from crude oil export. Processed animal skin constitutes a major export product for the country, though the leather industry is perhaps underrated and has hardly been given the policy and financing support it deserves.

Nigeria accounts for 46 per cent of goatskins produced in Africa, the leather industry has been projected to generate over $1 billion USD annually in export revenue by 2025 according to the Nigerian Economic Summit Group- NESG.

Leather from goats and sheep in Nigeria is rated one of the best in the world. The leather processing sector employs over 750,000 workers.

The African Continental Free Trade Area (AfCFTA), which became operational in January 2021 has increased the prospects of the Nigerian leather industry- finished products in particular.

NEXIM Bank showed determination to scale up its intervention in the leather industry; between 2018 and 2020, the bank disbursed over N2 billion Naira to leather industry operators- the highest level of intervention since NEXIM Bank was founded. Loan approvals of additional N3.6 billion Naira were approved and undergoing pre-disbursement processes to operators in the leather manufacturing hub in Aba- Abia State.

According to NEXIM Bank, when the approved projects are fully funded, the current level of intervention can support additional 4,800 direct jobs, thousands of added indirect jobs, and foreign exchange inflows of about $33 million USD annually.

        In today’s world, paradoxically, it is the boldest action that is often the safest. Remaining where you are in a world that is changing so rapidly is in fact the most dangerous of all places to be in.”

– Femi Otedola, founder and former chairman: Zenon Petroleum and Gas Limited and Forte Oil PLC.

Femi Otedola

Femi Otedola

Investors willing to explore other sectors in Nigeria aside FINTECH to invest; will find the Leather clusters in Kano State- North West; Aba, Abia State- South East and Lagos State- South West Nigeria very interesting places to look at.

9. Luxury Vehicle Service Centers:

Nigerians love expensive and luxurious cars. This is true going by the number of exotic and expensive luxury cars like Bentley, Roll Royce, Maserati, Mercedez- Maybach, Bugatti Centodieci etc. seen in the fleet of the Elite class, amongst Politicians, extremely wealthy and successful business men and women.

Success is portrayed by these wealthy class by luxurious lifestyle, luxury and expensive cars on display in their garages, exotic buildings with classy finishing/esthetics, jewelry amongst others.

The craving for luxury, exotic and expensive cars amongst the Elites in Nigeria will not disappear soon; thereby creating investment opportunities in setting up of World Class, State of the Art Automobile Service Centers and touch points across key cities like Abuja, Lagos, Kano, Port Harcourt, Ebonyi, Delta etc. where these Elites reside to cater to servicing and maintenance of their cars, in return for fees around $3K to $30K USD per service depending on the nature of service or maintenance required.

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Luxury service centers can generate up to $450K to $1 million USD per annum

The Federal Government introduced the Nigerian Automotive Industry Development Plan (NAIDP) in 2013 to revitalize the auto industry. After the policy came into full effect, PwC developed scenarios to capture the potential effects of the policy and identified Nigeria as a future automotive hub driven by its large economy, population and government’s intent to revive the industry.

With the introduction of the NAIDP, there has been increased activity in local vehicle assembly.

The National Automotive Design and Development Council (NADDC) granted thirty five companies licenses to assemble/produce vehicles OEMs like Nissan, VW, Hyundai, MAN Trucks, Ashok- Leyland Buses etc. are now assembled in Nigeria to take advantage of the policy.

With a combined installed capacity of 205,000 vehicles a year though far fewer numbers are produced due to huge funding, infrastructure and capacity gaps. Industry analysts estimate that not more than 10,000 units have been produced each year since the launch of the NAIDP.

The NADDC said the country spends about $8 billion USD each year on imported vehicles; overall there is a niche market in the auto industry ready for investment in Nigeria aside Fintech.

10. Real Estate:

It is estimated that Nigeria has a deficit of 17 million houses as of August 2012 and requires 700,000 houses annually compared to less than 100,000 currently being constructed (NBS) the real estate market in Nigeria is put at USD $143 billion- N59tn Naira potentially six times bigger than the local stock market, which is now valued at N12tn Naira according to the Managing Director/Chief Executive of Federal Mortgage Bank of Nigeria, Mr. Gimba Ya’u Kumo.

The sector is growing at 10% a year though neglected for decades; contributing less than an average of 7 percent to GDP and under 1 percent to employment.

The National Housing Fund (NHF) was established by the NHF Act of 1992 to mobilize funds that will facilitate the provision of affordable housing for Nigerians.

Under the extant NHF law, every Nigerian earning N3, 000 Naira (approx. $6 USD) or more per annum is required to contribute 2.5 percent of their monthly basic salary to the NHF.

The funds mobilized will be made available to contributors at affordable interest rates to build homes.

The Central Bank of Nigeria (CBN) approved N200 billion Naira ($520 million USD) in mortgage finance to fast track construction of 300,000 social housing units for low-income households as part of Economic Sustainability Plan approved in June 2020 by President Muhammadu Buhari.

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Nigeria is currently on a phase of developing key sector Infrastructure like real estate, railway, airports, and sea ports etc. that enable trade, commerce, adds meaningful economic value and stimulate foreign investors’ attention. Indigenous Investors like Sijibomi Ogundele- a.k.a ”The Rolls Royce of Luxury Real Estate” who has built a $400 million USD company in five years is a key sector player and owner of SUJIMOTO- luxury building construction company- Developers of Guiliano & Leonardo fully completed as well as Lucrezia currently ongoing at the Banana Island area of Lagos State.

Real estate no doubt is a viable sector in Nigeria aside FINTECH to invest in.

11. Sports:

Sports cuts across many activities like football, basketball, hand ball, volley ball, badminton, table tennis, sports betting and other sports.

In 2018, the global sports market reached a value of $489 billion USD growing at an annual rate of more than four percent (4%) since 2014, and is expected to grow at an annual rate of about six percent (6%) to almost $614 billion USD by 2022.

Investors, private and public, across the globe are actively seeking opportunities to participate in and reap the rewards of the expanding sports industry.

The Gambling Industry on the hand has a global market worth $443 billion USD.

Revised projections now claim that this number will reach $647 billion USD by 2027, growing at an annual rate of 5.6% according to a July ReportLinker study.

Nigeria is a sports loving country and has produced International figures like Segun Moses Toriola and Atanda Musa in table tennis; Francis Obikwelu and Mary Onyali in track and field; Emmanuel Amuneke, Kanu Nwankwo and Austin Jay Jay Okocha in football; Anthony Joshua, Samuel Peter, Richard “DICK TIGER” Ihetu, Bashiru “BASH” Ali in Boxing; Nduka Odizor in Lawn Tennis; Hakeem Olajuwon and D’ Tigers & D’ Tigress (Nigeria’s national male and female basketball teams) in Basketball amongst many others across key sporting activities.

The Nigerian Government has not paid enough attention to optimally develop critical infrastructure to tap into the huge FOREX generation potential of the sports sector which if fully harnessed is a $200+ billion USD market. Interestingly, sports sector is easy to enter and offers a huge viable market Nigeria aside FINTECH plus a very supportive ecosystem for investors to benefit from.

– End –

About the Author:

Nigeria digital economy

Victor Uche Obioma

Victor Obioma is Chairman, VICFAUS INTEGRATED SOLUTIONS LIMITED (Division of VIEWS GROUP Co.), He is International Partner for Nigeria; World Business Angels Investment Forum-WBAF and Member; Global Start Ups Committee. He is Member, Global Chamber of Business Leaders-GCBL; Global Entrepreneurs Network (GEN) Startup Founders Mentor at Tony Elumelu Foundation (TEF), TAKWEEN Accelerator & Advisor at Prosper Advisors Network, Kenya.

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