Market of the Month – Sub-Saharan Africa
Nigeria is Africa’s most populous country and arguably the most culturally diverse society in the world, with approximately 250 ethnic groups among its 140 million people. The country is essentially a mono-sector economy that is highly dependent on oil. The oil and gas sector accounts for over 90% of the country’s foreign exchange earnings.
U.S. companies should be assured that many genuine business opportunities exist in Nigeria, even if the business climate seems difficult and certain extra screening steps must be taken with potential business partners
In March 2007, Fitch Ratings affirmed the BB minus rating it had earlier given Nigeria in February 2006. It acknowledged the stability of the Nigerian currency (the Naira), the Nigerian government’s commitment to economic and social reforms, and improvement in external reserves and public governance. According to local media reports, the rating, released in March 2007, confirms Nigeria’s newly established status as a net creditor country with foreign reserves valued at approximately US$42 billion as of December 31, 2007. Most Nigerians are positively disposed toward the United States and have a strong affinity for U.S. products.
Fraud is a problem in Nigeria, but the country has many honest businesspeople eager to form quality partnerships with U.S. counterparts. And Nigerian and U.S. authorities are working together to combat the fraud industry. For example, in 2005, a National Cybercrime Coordinating Committee was established under the office of the national security advisor. Its mission is to coordinate the activities of several local agencies that are responsible for eliminating or at least helping to minimize cybercrime.
If U.S. business travelers prepare prudently, a business trip to Nigeria can be an enjoyable and rewarding experience. Unfortunately, some U.S. companies are excluding Nigeria from their African commercial strategy based on alarmist, misleading and often incorrect information, and may miss out on excellent commercial opportunities as a consequence.
Population: 135,031,164 (July 2007 estimate)
Government Type: federal republic
GDP—Purchasing Power Parity: 294.8 billion (2007 estimate)
GDP—Official Exchange Rate: $90.52 billion (2007 estimate)
GDP—Real Growth Rate: 6.1% (2007 estimate)
GDP—Per Capita (PPP): $2,200 (2007 estimate)
GDP—Composition by Sector: agriculture 17.6%, industry 53.1%, services 29.3% (2007 estimate)
Industries: crude oil, coal, tin, palm oil, peanuts, cotton, rubber, wood, hides and skins, textiles, cement and other construction materials, food products, footwear, chemicals, fertilizer, printing, ceramics, steel, small commercial ship construction and repair
Export Commodities: petroleum and petroleum products (95%), cocoa, rubber
Import Commodities: machinery, chemicals, transport equipment, manufactured goods, food, live animals
Languages: English (official), Hausa, Yoruba, Igbo (Ibo), Fulani
Ethnic Groups: Nigeria, Africa's most populous country, is composed of more than 250 ethnic groups; the following are the most populous and politically influential: Hausa and Fulani 29%, Yoruba 21%, Igbo (Ibo) 18%, Ijaw 10%, Kanuri 4%, Ibibio 3.5%, Tiv 2.5%
The best way for U.S. manufacturers and suppliers to penetrate the Nigerian market is to first access the network of services and programs through the U.S. Department of Commerce, U.S. Commercial Service and U.S. Export Assistance Centers (USEACs) at http://www.export.gov/comm_svc/eac.html. Then businesses can leverage this information using the extensive knowledge, industry contacts and services of the U.S. Commercial Service at the U.S. Consulate General in Lagos, Nigeria: http://www.buyusa.gov/nigeria). Seeking the assistance of a USEAC before exploring an opportunity in this market is encouraged.
For establishing a presence in Nigeria, we recommend that U.S. firms use an
agent/distributor relationship with a locally registered company. Many foreign manufacturers and suppliers appoint one or more agents/distributors to accommodate Nigeria’s geographical size and ethnic complexities. In Nigeria’s complicated environment, all relevant terms and conditions of such arrangements must be carefully negotiated.
Oil and Gas Field Machinery
Computers, Software and Peripherals
For more information, visit http://www.buyusa.gov/nigeria/en/.