1. Nigeria Retail Market Potential...The Future
Ahead
Research work by WORKPLUS CONSULT LTD
Nigeria’s retail and wholesale trade industry has the potential to grow by 7.1% per year,
and by 2030 could be the largest contributor to the country’s GDP, according to recent
report by McKinsey Global Institute. Sales of packaged food and beverages are expected
to grow by 6.8% a year, contributing around 85% of the growth in consumer goods. The
report, Nigeria’s renewal: Delivering inclusive growth in Africa’s largest economy,
estimates that demand for consumer goods could more than triple by 2030.
The largest economy in Africa is seeing a rising consumer class, creating a notable
opportunity for manufacturers and retailers of fast-moving consumer goods such as
food, beverages and personal and health products. Currently consumption is estimated
at US$388bn a year but is expected to rise to $1.4tr in 2030, with 35m households
earning over $7,500 a year. “Basedon data from othereconomiesonhow consumption
changeswithrisingincomes,we see demandinNigeriapoisedtoaccelerate insuch categoriesas
fruitjuices,”illustratesthe report. “Capturingemergingconsumerdemand,however, will require
smart choicesaboutwhere,when, andhow toenterNigerianmarkets.Itwill alsorequire specific
capabilities thatinternational companies especiallymayneedtodevelop.” One strategy for
consumer facing companies in Nigeria is to adopt a city and regional approach, as
opposed to a nationwide approach where distinct differences in culture, demographics
and wealth exist. While Lagos, with an estimate of 15m residents, may be the go-to city
for companies targeting consumers, McKinsey suggests three regional clusters of cities
that together produce sizable populations to rival Lagos. “Companies playing in all three
of these clusters could target 20% more households earning above $7,500 than in
Lagos,” notes the research.
A six city cluster around the Niger Delta in the southeast Port Harcourt, Warri, Benin
City, Aba, Enugu and Onitsha make up the six city southeast cluster. Its proximity to oil
wells has led the region to be a hub of activity for oil companies and foreign investment.
According to the report, total GDP in this cluster alone is $63bn, which is a close rival to
Lagos’s GDP of $68bn, despite having far fewer households. Both Port Harcourt and Aba
have considerably higher consumption per capita than Lagos. Port Harcourt, followed by
Benin City, Onitsha and Aba has the largest populations within the cluster. Companies
looking to target the luxury segment might want to especially consider Port Harcourt, the

2. capital of Rivers State, which has the highest consumption per capita in the country
($6,843 in 2013). The city has one of the largest consuming middle classes in Nigeria
with household incomes between $20,000 and $70,000 a year. It has access to two of
the country’s busier ports and is home to the Port Harcourt Airport.
Ibadan, Ogbomosho and Ilorin, just north of Lagos, these three cities are within close
proximity to Lagos. Ibadan (the capital of Oyo State) is the second largest city after
Lagos, and has a fast growing consumer market. While Lagos has over four times the
number of households as Ibadan, consumption per capita of Ibadan in 2013 was $4,562,
rivalling Lagos’s $4,710. Ibadan also has a large emerging consumer class with annual
household incomes of between $7,500 and $20,000, and one of the larger consuming
middle classes in the country with incomes between $20,000 and $70,000 a year.
According to a recent African Development Bank (AfDB) report, Tracking Africa’s
Progress in Figures, Ibadan is one of the top 10 fastest growing cities in Africa. Northern
corridor cluster of Kano, Zaria and Kaduna, this cluster holds potential for consumer
businesses looking for sizable populations in northern Nigeria. Kano is the fourth largest
city in Nigeria, and
Kaduna the seventh biggest. This year, South African retailer Shoprite launched its first
outlet in Kano, while Massmart opened a Game store just before June. Despite the
potential security risk posed by Islamic militants in the region, Massmart’s Africa director
Mark Turner said at the Reuters Africa Summit in April: “I always want to be bold
enough to say, you can’t be in Nigeria without being in Kano.”