Identifying Opportunities for Investing in Nigeria’s Business Sector

by Biztraction Research
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World bank report on nigeria economy

In two decades, Nigeria experienced its deepest recession in 2020, but in 2021 growth resumed as the pandemic restrictions were eased, oil prices recovered, to counter economic shock the authorities’ implemented policies. Due to the global economic disruption caused by COVID-19, Nigeria was highly vulnerable particularly due to fall in oil prices. Over 80 percent of exports, oil accounts for it which is half of government revenues and a third of banking sector credit. 83 million Nigerians lived below the poverty line while another 53 million Nigerians were vulnerable in 2018. Between the years 2019-2023, the number of Nigerians living below the international poverty line is expected to skyrocket to 12 million people. In 2020 as part of its COVID-19 response, a long delayed policy reforms were carried out by the government which notably includes, harmonising of the exchange rate, elimination of gasoline subsidies, adjusted electricity tariffs, cut non-essential spending and increased public sector transparency and enhanced debt management.

Nigeria’s labour market continues to be disrupted by COVID-19 crisis while it exceeds the pre-pandemic levels, notable improvements have been recorded due to workers turning up in small scale, in retail and trade are non-farmers activities and the revenues of which remain in uncertainty. The outlook of Nigeria’s economy remains uncertain. The pace of vaccination and the duration of COVID-19 have remained uncertain. Due to the volatility of the oil sector, the projected recovery can be threatened which includes unexpected shock in oil prices, financial sector weaknesses and in-order to lay the foundation for robust recovery, then the policies of Nigerian authorities is crucial.

In the World Bank’s Human Capital Index, Nigeria’s human capital development is ranked 150 of 157 countries. There has been a massive developmental challenge which includes reducing dependency on oil and the diversification of the economy, addressing infrastructure insufficient, building of strong and effective institutions, and also addressing public finance management systems and issues relating to bad governance. High prices in 2020 are likely to push further 7 million Nigerians into poverty. Political and social unrest, regional inequality and lack of job opportunities are the major problems surrounding high poverty levels. Poverty reduction has been affected greatly by inequality due to incomes and opportunities.  

Current economic issues in Nigeria

Regarded as a middle income country with a mixed economy and emerging market, Nigeria has manufacturing, service, financial, technology, entertainment and communication departments that are still expanding and yet, the country is challenged with economic problems every day. In schools, social platforms and even in the national assembly, the economic problem in Nigeria is always a hot topic for discussion. In both rules of governance and law, the citizens and leaders have always failed woefully in doing the right things right. The economic situation in Nigeria will be a mirage if the country continues in the same trend of doing things. The current economic issues facing Nigeria includes, lack of interaction between the government and society, corruption, poor human development, lack of authentic competition in the market, crime and terrorism, unemployment, education and university system, environmental and health issues, lack of infrastructure and lack of consistency and political greed.

What is the fastest growing sectors in Nigeria?

In the third quarter of 2021, rail transportation, mining and quarrying, aviation and the financial sector led the list of fastest growing sectors in Nigeria and this is according to the GDP numbers that the National Bureau of Statistics (NBS) presented.

 In Q3 2021, the Nigerian rail transportation grew by 59.93% year on year in real terms, which represents the fastest growing sector in the review period, while closely followed by the mining and quarrying sector with 54.92% growth rate. Largely driven by the non-oil sector which has contributed about 92.51 percent to the aggregate GDP for the period leaving the remaining 7.49 to the oil sector.

The trade sector, transportation, agriculture, financial, manufacturing and ICT drove the growth recorded in the non-oil sector. The aviation sector grew by 33.31in 2021 Q3 which is largely driven by increased travelling activities in the country amidst post covid lockdown. In 2021, the financial sector grew by 25.5% year on year in real terms in Q3. The various sectors captured are the banks, investment houses and other financial services apart from insurance recovered from the downturn in the previous quarter. Other sectors like road transportation are not left out, as the sector recorded a growth of 21.11% year on year increase in real terms. It’s no surprise that the sector grew significantly, as movement has been refurbished across the whole country.

Which state has the most industry in Nigeria?

Standing out as the most economically and industrialised state in Nigeria is Lagos State with literally all top companies having their headquarters there. When it comes to contributing greatly to Nigeria GDP among the various states in Nigeria, Lagos State takes the first position.  Among others, the state is leading in IT innovation and in Nigeria is the richest state. Group of countries has agreed to reduce and eliminate trade barriers, with enhancing foreign exchange earnings, generating employment opportunities for the host country and developing export oriented industries as their major objectives. Some states in Nigeria behind Lagos State in terms of most industries are Ogun State, Rivers State, Anambra State, Abia State, Oyo State, Kano State, Akwa Ibom State, Imo State and Osun State.

List of business sectors in Nigeria

  1. Agriculture 
  2. Aviation 
  3. Commercial/ Retail 
  4. Construction 
  5. Education and Training 
  6. Energy and Power Generation 
  7. FMCG 
  8. Fashion 
  9. Financial Services 
  10. Haulage/ Logistics 
  11. Healthcare
  12. ІСТ 
  13. Manufacturing 
  14. Media & Entertainment
  15. Oil & Gas 
  16. Professional Services
  17. Telecommunication 
  18. Tourism/ Hospitality 
  19. Transportation 
  20. Waste Management

Description of business sectors in Nigeria

  • Agriculture
    • Overview of sector

In Nigeria, Agriculture is divided into four sectors – fishing, livestock, forestry and crop production. The largest segment is the crop production which accounts for about 87.6 of the sector’s total output. It is immediately followed by livestock, fishing and forestry at 8.1, 3.2 and 1.1 respectively.  In Nigeria, Agriculture remains the largest sector contributing an average of 24 to Nigeria GDP over the past seven years (21013 – 2019). When it comes to the labour force, the sector employs more than 36, a feat no other sector has achieved and ranked the sector as the largest employer of labour in Nigeria.

  • Potentials of the agricultural sector

In Nigeria, the potential of the agriculture sector is very huge. The country has mind-blowing natural assets including land (39.6m of arable land and of which about 60 is under cultivation), rainfall and climate. As of today Nigeria falls in the range of world’s largest producers of cassava, tubers, cashew, mango, papaya, millets, sorghum, and sesame. The country’s population has represented a large domestic market in support and sustaining of local production and processing. 

  • Challenges facing the agricultural sector

With every sector having its own unique challenges, the same applies with the agricultural sectors. The unique challenges facing the agricultural sector in Nigeria includes, Resource Shortage, Violent conflict between ethnic groups, outdated system of agriculture, lack of access to finance, insufficient supply to meet population growth and food demands and absence of value addition and supply chain linkage.

  • Example of companies in the sector

There are various companies that fall within the category which includes, Flour Mills of Nigeria, Olam Nigeria, Babban Gona, Stallion Group, SeedCo Nigeria Limited, Dangote Group, BUA Group, Indorama Fertilisers, FarmCrowdy and AgroMall.


  • Aviation
    • Overview of sector

One of the critical elements of Nigeria’s economy is the aviation sector. Nigeria has twenty airports and many regulated airstrips and heliports, 554 licensed pilots, 23 active domestic airlines, 1700 cabin personnel and licensed engineers 913. Over 78 countries currently have bilateral Air Services agreement with Nigeria. Air travellers can fly directly from Nigeria to many of the world’s business centres such as Johannesburg, Jeddah, London, Paris, Atlanta, Amsterdam, Dubai, Frankfurt and New York

  • Potentials of the aviation sector

Over the years, the aviation industry is a catalyst for socioeconomic development in Nigeria. Above all it provides the safest and easiest means of movement of people and cargo internationally and locally, therefore it promotes both the industry and commerce which has added greatly to Nigeria total GDP over the years. The potentials in the aviation sector which are harness-able are on transportation, tourism, air ambulance services, and regular charter on demand, pilot training and air services for humanitarian aid activities.  

  • Challenges facing the aviation sector

Some of the challenges facing the aviation sector in Nigeria include Fuel efficiency, Global Economy, Passenger comfort and Experience, Airline Infrastructure, Global Congestion, Technological Advancements, Terrorism and Climate change

  • Example of companies in the sector

Some of the companies in the sector include, Air Peace, Arik Air, Azman Air, Dana Air, Green Africa Airways, Ibom Air, MaxAir and Overland Airways.


  • Commercial/ Retail
    • Overview of sector

The retail sale is already the third largest contributor to Nigeria GDP, about 16 in total. It’s estimated that between 2008 –2020, there is a $40 billion growth opportunity in food and consumer goods in Nigeria.

  • Potentials of the commercial/retail sector

The retail sector in Nigeria possesses a lot of potential. Over the years, the retail sector has provided employment to the youths, added greatly to Nigeria GDP, bringing in investors and opening up a digitalized way of transaction.

  • Challenges facing the agricultural sector

The challenges facing the retail sector in Nigeria include, attracting customers, retaining customers, keeping up with changing customer expectations, encouraging digital and contactless payments and supply chain management.

  • Example of companies in the sector

Companies include Walmart, Shoprites, The Home Depot, Target, SPAR, Konga Online shopping, Tesco, Whole Foods Market and Hubmart.

  • Construction
    • Overview of sector

In 2020, the construction sector in Nigeria struggled with an output declining by 7.7 in real terms. In Q3 2020 according to the National Bureau of Statistics, the sector recovered with a year on year growth of 2.8.

  • Potentials of the construction sector

It’s expected that the sector will rebound in 2021 which is mostly driven by sharp recovery in the output level compared to when works are severed due to COVID-19 lockdown in 2020. By 2021 is expected the sector to grow by 4 and 2.8 at an annual average.

  • Challenges facing the construction sector

Challenges facing the construction sector include, building collapse, material shortage and performance of building materials, unethical practises/kickbacks, insecurity and poor planning/poor management.

  • Example of companies in the sector

Construction companies in Nigeria include Julius Berger, Reynolds Construction company, Setraco Nigeria Limited, Costain West Africa, Monier Construction Company, Brunelli Construction Company Nigeria Limited, Dantata and Sawoe Construction Company Nigeria Limited.


  • Education and Training
    • Overview of sector

Nigeria’s education sector is divided into Kindergarten, Primary, Secondary and Tertiary education and while education in Nigeria is overseen by the Federal Ministry of Education. The education system in the South is different from the North and currently Nigeria has the largest population of out of school learning youths in the world. 

  • Potentials of the agricultural sector

With the sufficient scale and right business model, the education sector in Nigeria is a lucrative business opportunity. With a population of about 200 million people, half of this number is below the age of 18. With the statistics, the educational sector has the capacity to employ a larger number of Nigerians and increase the country’s GDP to a reasonable figure.

  • Challenges facing the education sector

Challenges facing the education sector in Nigeria include, poor funding, poor education infrastructure, inadequate classrooms, lack of teaching aids, lack of quality teachers, polluted learning environments.

  • Example of companies in the sector

Splatt, Roducate and Prepclass.


  • Energy and Power Generation
    • Overview of sector

Various limitations in the power sector have constrained growth with Nigeria having the largest economy in sub-saharan Africa. Nigeria has the potential to deliver 12,522MW of electric power endowed with large oil, solar and hydro resources. However is only able to deliver 4,000MW to over 195 million Nigeria populations. 

  • Potentials of the energy and power sector

As the powerhouse for any economic growth in any country, that can create increased productivity, employment and income. When there is an efficient energy sector in Nigeria, it has the capacity to facilitate economic activities and attract investors.

  • Challenges facing the energy and power sector

Challenge includes shortage of gas supply, high level of unpaid electricity bills, poorly maintained transmission network, regulatory uncertainty and electricity policy enforcement

  • Example of companies in the sector

Sapele Power Plc, Ughelli Power Plc, Shiroro Power Plc, Afam Power Plc, Niger Delta Power Holding Company, IPP’s, Egbin Power Plc and Kainji Jebba Power Plc


  • FMCG
    • Overview of the FMCG sector

Widely regarded as industries with goods and fast moving products at low cost. The expenditure of the FMCG is the highest in Nigeria (US$41.7bn) in Africa at large. The market size of FMCG spans across the 120 million population of Nigeria. 

  • Potential of the FMCG sector

The FMCG has a lot of potential, over the years they have expanded the domestic market and renewed momentum in the broader economy. They have the capacity to create around 1000 jobs on a monthly basis and to increase the country GDP by 2.1.

  • Challenges facing the FMCG sector

Challenges facing the FMCG sector in Nigeria include, Lack of efficiency in reading the selling scenario, providing relative servicing, reaching right stores at the right time, no visibility into work order management and implying the help of technology.

  • Example of companies in the sector

Nestle Nigeria Plc, VITAL Products, Unilever Nigeria, Dangote Group, Pz Cussons, Chi Limited and Friesland Campina.


  • Fashion

    • Overview of sector

The fashion industry in Nigeria has grown in size and sophistication, thereby attracting global attention within a decade. According to the National Bureau of Statistics (NBU), the textile, apparel and footwear sector recorded an average growth of 17 to the country’s GDP since 2010.

  • Potentials of the fashion sector

There is an incredible chance of growth if the sector is managed strategically and it has the capacity to empower many individuals if invested purposefully into the industry and in the long run will vastly improve the Nigerian economy.

  • Challenges facing the fashion sector

Challenges facing the fashion sector include, lack of infrastructure, scarcity of skilled labour, lack of manufacturing investment and lack of government backing. 

  • Example of companies in the sector

Companies under the sector which include, House of Deola, Tiffany Amber, Ade Bakare, Jewel by Lisa, Virgos Lounge and Mai Atafo.


  • Financial Services
    • Overview of sector

This includes the financial market, financial institutions and other finance institutions, bureau de change and primary mortgage institutions. Over the years the financial institutions in Nigeria have undergone thorough changes that are remarkable, ranging from ownership structure, supervisory framework. The commercial banks are the most relevant financial institution in Nigeria to encourage savings.

  • Potentials of the financial services sector

If adequate attention is giving towards the financial sector in Nigeria, it has the potential to have impact of the economic growth of Nigeria, provide employments

  • Challenges facing the financial services sector

Some of the challenges include poor financial education, lack of confidence in the financial system, corruption, lack of adequate financial technology and lack of adequate cyber security

  • Example of companies in the sector

Examples include, Zenith Bank, Access Bank, First Bank of Nigeria, Union Bank of Nigeria


  • Healthcare
    • Overview of sector

The sector is saddled with the task of saving lives, ensuring that Nigerians healthcare is attended to. Over the years due to government failures in handling and lack of maintenance of the government hospitals, the private sector has taken the bull by the horn in creating well-deserved healthcare services to the Nigerian population. 

  • Potentials of the healthcare sector

The healthcare sector has a lot of potential embedded in it. If adequate funds are made available, infrastructure and proper policy, healthcare in Nigeria will be regarded as one the best in the world in patient care, creating jobs and adding great value to the country’s GDP.

  • Challenges facing the healthcare sector

Poor healthcare infrastructure, inadequate funding, poor policy making and underinvestment 

  • Example of companies in the sector

GE Healthcare, Synlab, International SOS, World Health Organisation and CHRISTUS Health


Final thoughts

Nigeria is blessed with loads of resources and skilled labour, all that is needed is just the right policy and governance and everything falls in place. It’s time for the government to go back to the black-ground and think of the best strategies to increase the country’s GDP by reviving all the dead sectors

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