Marketing to Nigerians

This article is a section from a report “Investing in Nigeria” and shall be viewed in the context of the title. Please view the report for more information on the subject as well as references for this article.

Nigerians are very fashionable people and highly brand loyal – 70% of Nigerians are brand loyal. International brands are so popular among Nigerians that Debenhams has been known to put up signs in Hausa language in their Oxford Street store. Some Nigerians make shopping trips to London every 6 months.

In the interviews for this report, many interviewees empathized the fact that it’s not just the population that’s a driver for investment returns, it’s the people themselves. Nigerians are very fashionable, they follow trends and bring them to Africa. Everyone wants to have the latest iPhone or other trending smartphone. Nigerians have a tendency to buy popular brands even if it puts a financial burden on them – it’s all just to have the perceived experience.

Nigerians are very emotional people, brands need to have a social face and a giving back outlook to gain empathy from Nigerians. This works as an entry barrier for the multi-nationals – you need to spend a lot to gain that empathy and recognition. A brand has to support everything Nigerian to develop a social face and a place in Nigerian hearts. Once Nigerians find a brand they like they stick with it. The brand can charge premiums and raise its prices significantly – Nigerians will still buy its produce.

There is a huge demand for lifestyle and luxury brands from the middle class. The middle class is quite big in Nigeria – 23% of the 181 million population. This has made the market very attractive for international brands.

International brands are perceived as more prestigious than domestic brands. It’s seen as a sign of status to sit down and drink a Heineken or Guinness instead of a domestic brand. The kind of brands demanded vary across all sectors – from prestigious fashion brands to fast food restaurants. There are 17 KFC restaurants in Nigeria.

Nigeria has the world’s biggest religious rate, with 95% of the population being religious. Even sensitive industries such as gambling can find their way into the markets by good PR campaigns and efforts – it’s all about how something is perceived.

Gaming on mobile phones is not viewed as gambling, but rather as a fancy activity. You go somewhere to gamble, you don’t take your phone out to gamble. It’s perceived different as going to a local house to play a game like bingo. Mobile gaming is successfully marketed as a lifestyle choice.

The instant noodles were first not common at all in Nigeria, they were viewed as alien products. It took 20 years and instant noodles are now considered one of the most popular food in Nigeria.

The highly religious population, the different ethnical and religious groups, are accounted for in marketing strategies and generally at running businesses in Nigeria. Even on a political level – the PDP always had a Muslim president and Christian vice-president, and vice versa.

Cultural, religious and social incongruity remains agents of diversity rather than unity. There have been instances of top level business executive’s religious and ethnical background being matched with that of the region the company operates in. To a lesser extent, the executives must talk the local language. This adds to the problems many businesses in Nigeria face – finding and recruiting operating talent.

The PR activities of an industry are often times also at promoting a favourable view for a regulation to be passed.

There is a lot of demand for advertising, it’s a growing industry with many innovations available. Mobile advertising is especially popular. Many fashion brands are operating by the e-commerce channels, brands such as Calvin Klein, Diesel, River Island, Adidas, Zara, Forever 21, H&M, Topshop, Guess, Bulgari and Gucci are available in the e-commerce sites.

Nigerians have money, it’s available to be spent and they are willing to. Some Nigerians that earn a little over £100 a month are carrying 3 mobile handsets. Anything can sell in Nigeria, it’s a question of harnessing that growth and finding a way into it.

Nigeria’s business culture

This article is a section from a report “Investing in Nigeria” and shall be viewed in the context of the title. Please view the report for more information on the subject as well as references for this article.

The Nigerian business terrain is quite unstructured, laws are not followed, nothing works and people don’t follow through to their duties. For instance, the UK’s structure cannot be compared to the Nigerian structure. Everyone follows specific structures and rules in the UK, Nigeria is the complete opposite – people bend the law to what they want.

Nigerian entrepreneurs are very much oriented towards getting things done, there is no time for bureaucracy or much structuring. This can be argued to be a norm in a quickly expanding and growing frontier economy. It might not appear this way from the outside, but things are being done efficiently and productively in Nigeria.

There are magnificent business culture differences between Nigeria and Europe or the US, but there is a code of business in Nigeria, it’s just that it’s very different from that of the developed world. Nigerian entrepreneurs are not used to structured corporate culture, in their view it holds them back from getting things done. The market is very dynamic, you are required to make decisions quickly and there simply is no room for back and forth paper handling or other bureaucracy. Being able to make decisions quickly is considered a priority.

The business culture varies between regions and same products might have different market approaches across the regions and states.

In small outsourcing operations for exports to other continents, it can be a challenge to explain to the employees that the quality that might be accepted in Africa won’t be accepted in the UK, for instance. It’s also not uncommon for employees to work in multiple jobs, especially the employees of small operations. This increase production times.

Nigerians are very much peoples persons, they sell and buy from friends. A relationship with the locals, in terms of goodwill with the masses and having connections with the local business people, is effectively an entry barrier to doing business in Nigeria. The contacts you have in Nigeria have a huge impact on your business.

Business in Nigeria can be very tough. People that try to enter the market without understanding the operational culture, are likely to be ruined before they even start. A working operational model however, will get one over all the obstacles one might face in Nigeria.

It’s very important to have a partnership before venturing into the Nigerian environment. A partner who knows the law such as land ownership, someone who understands the ethnic, religious and social niceties, is necessary to operate in Nigeria. A successful foreigner business is unthinkable without people on the ground that know the given market and sector, even before the business is launched.

Nigerians are very driven, it’s the first time in history they can see success as achievable and replicable. Some of them have seen the good life abroad and will work very hard to achieve the same lifestyle and living standards for themselves and their family in Nigeria. At all levels of the business world people are hungry for success and will push further at all times.

The new generation of entrepreneurs, who are well educated, see the benefits of structure and are creating structured companies that are appealing to equity investors and the capital markets. The landscape is changing and as most things in Nigeria – the current business culture is a phase the country is going through.

Concerns in operating at Nigeria

This article is a section from a report “Investing in Nigeria” and shall be viewed in the context of the title. Please view the report for more information on the subject as well as references for this article.

The main challenges in Nigeria are infrastructural and institutional inefficiencies. The lack of electricity supply is making business tougher to run, offices and factories are known to run on generators. Ports can take weeks to clean goods and congestions are very common. The roads are of bad quality and there have been instances of produce getting spoiled while in transit.

It’s one thing to attract capital and finance ones business and another to actually find operating talent to run the business. A highly skilled and demanded Nigerian employee will rather go into a bank, telecoms or oil and gas company, than the less attractive industries the economy has.

Experience and connections in a field are highly valued in efficiently operating a Nigerian business. This leads to many businesses being dependent on the senior managers to run them efficiently and make the business vulnerable to the managers leaving to start their own ventures. There have been instances of this happening.

The governments protectionism policies are leading to decreased domestic manufacturing costs, since more of the capacity can be used to achieve economies of scale.  This is helping to tackle one of the biggest obstacles faced by domestic firms – two digit interest rates that are known to increase production costs greatly. It’s hard to compete versus foreigners that have one digit interest rates.

There are little emphasis on asset management in Nigerian companies, this can be very problematic with a shortage of technical skills. Asset breakages can take long time to fix and have impact on the whole of the value chain.

Conclusion

It’s not just that you need partners in Nigeria, but also a partner mentality from both sides. A partner mentality is the key to business in Nigeria. There is a need to guide your businesses and managers, the changes will come slowly. Some employees have been working in a company for years and will turn back to their ways of doing things as soon as you go away.

Strategic flexibility should be prioritized and strong emphasis should be put on creating an operational model.