Sunday 25 February 2018

Lure of big business makes Nigeria a land of opportunity

Nigerians celebrate in the city of Kaduna the victory of the main opposition. Photo: Getty Images
Nigerians celebrate in the city of Kaduna the victory of the main opposition. Photo: Getty Images
All Progressives Congress (APC) presidential candidate Mohammadu Buhari (left) earlier this year. Mr Buhari has sworn to stamp out corruption. Photos: Nichole Sobecki. Photo: AFP/Getty Images
Darragh McCullough

Darragh McCullough

Last week, Kilkenny man Nick McGrath signed a €45m deal to supply power to mobile phone masts in Nigeria. The deal is indicative not only of the ever-growing global footprint of Irish entrepreneurs, but also of the scale of opportunity in west Africa.

Despite the region containing some of the poorest countries on the planet, the exponential population growth, coupled with vast natural resources has turned it into Africa's powerhouse.

Nigeria still suffers from chronic levels of graft and corruption, but the latest numbers show why savvy businessmen are starting to home in on Africa's fastest-growing economy.

The former British colony overtook South Africa last year as the continent's largest economy. Much of the 4pc annual growth is driven by the mushrooming population. Current estimates peg it at 185 million, but with an additional five million expected to be added every year for the coming decades, Nigeria's population is projected to hit a staggering 400 million by 2050. At that level, the country will be one of the five biggest on the planet by population.

It is also ranked as Africa's top oil producer, but this is where the bizarre ironies of places like Nigeria begin to emerge.

The legacy of terrible mismanagement of Nigeria's oil fields means that none currently work at more than 50pc of their capacity, and due to the complete absence of oil refineries, the country still imports 85pc of its fuel requirements.

Couple that with the collapse in oil prices and the resultant depletion of the country's foreign currency reserves, and the results are long queues at empty petrol stations.

It's also a large part of the reason why such a resource-rich country like Nigeria still only has a nominal GDP that is one-tenth of the average Irish citizen.

Successive governments have simply lined their own pockets and those of their families and friends with billions in bribes from the oil industry. With such a poor example from the top, it is perhaps not so surprising that corruption is "part and parcel of the DNA" in Nigeria, as one local businessman told me.

"If you go to the police to report a shoplifter, the police will say 'what's in it for me?'" he said.

Against what seems like a hopeless situation, Nigeria's new president Mohammadu Buhari has sworn to stamp out the scourge of corruption, and many Nigerians and ex-pats are hopeful, despite the dismal track record.

Combating terror groups such as Boko Haram is another major issue, with whites generally employing the services of a 'driver' whenever they travel around the country.

These drivers often double up as body guards, and even the Irish ambassador travels around in an armour-plated SUV, complete with bullet-proof windows and anti-ramming steel plates in the back. You would think all of the above would make any sane person avoid the region like the plague. But the lure of big business has already encouraged some Irish heavy-hitters to invest.

Ornua, which markets more than €2bn of Ireland's dairy exports, opened a packing facility in Lagos last week. A €2m plant will churn out 75 million sachets of powdered milk over the coming year, catering for Nigerians' love of a full-fat powder on their cereal.

Management predict sales volumes will quadruple in the next five years, providing at least one promising outlet for the huge volumes of extra milk coming off Irish farms since EU milk quotas were abolished in April.

Other Irish agri-businesses are shipping container-loads of fish and meat products into Nigeria and its neighbours.

Irish meat processor Kepak has doubled the amount of cows' feet, pigs' ears, sheep's heads and fish to 8,000 tonnes a year into neighbouring Ghana over the last two years. Irish consultants are being recruited to advise on corporate farms stretching to tens of thousands of acres.

No wonder Agriculture Minister Simon Coveney enthused during his trade mission to Nigeria last week that the region had as much potential as other much-trumpeted markets such as China.

"It's half the distance away, it's English-speaking, and with the rate of development here, people should not under-estimate the opportunities that exist in this region," he said.

This potential stretches way beyond food. With no less than 50,000 Nigerian students seeking third-level education opportunities abroad, no less than six Irish third level institutions were on the trade mission, touting courses costing up to €30,000 a year.

Irish financial service providers are also active, along with energy companies like Nick McGrath's Hybrid Energy.

"We've done a deal to supply hybrid generators to a company that owns about 9,000 mobile phone masts in Nigeria. The generators will reduce their diesel requirement by 80pc, and phase one [for €45m] will see us service just 2,000 towers. But this is just the start of it. There are 150,000 masts across Africa that rely on generators for power. There are also thousands more units required in mines. It's going to be a busy few years," said McGrath, when he finally got home this week.

The scramble for Africa - part two - is on.

Irish Independent

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