Olusegun Aganga, Trade and Investment Minister
Investment in the Nigerian retail market has reached an all-time high of over N200 billion within the the last two years owing to rising purchasing power and the huge potential of the nation’s economy.
The Oxford Business Group (OBG), which revealed this in a report made available to THISDAY, noted both foreign and local investors were dramatically expanding their domestic retail footprint in the country.
OBG believed investors were flocking to the retail sector as a result of Nigeria’s potential, a large population, positive macro-economic growth and a strong appetite for consumer goods.
According to the group, “By the end of June 2012, Shoprite the continent’s biggest retailer opened its fifth shop in Nigeria, and another two in 2013. Shoprite, has outlined plans to open up to 700 stores in the country, and Massmart, South Africa’s second-largest retailer and partly owned by Walmart, has announced that it intends to increase its presence from two to 20 stores.
“Also, Spar, Europe’s largest retail network, has partnered with Nigeria-based Artee Group to tap into the local market, cutting ribbons at a new outlet in Lagos and one in Abuja. Looking ahead, the firms aim to increase their Lagos network and expand into Port Harcourt and Ota in Ogun state.”
OBG added the growth in retail space and opportunity had been accompanied by strong economic indicators released by the International Monetary Fund (IMF).
“Real GDP for the year is forecast to grow at around 7 per cent, according to the IMF. This has had a positive impact on people’s ability to spend, with GDP per capita levels estimated at $1,656 up from $1, 551 in 2012, $1,541 in 2011 and $390 in 2001.
“However, as development of the retail sector gathers momentum, investors are becoming increasingly attuned to factors that could limit growth. Firstly, retailers decry the lack of adequate space. Modern outlets are dependent on the standards of newly built, large shopping malls. However, cumbersome access to land, high costs and the short duration of bank financing is constraining developers’ appetite, “OBG said.
The experts added: “Outside of Nigeria’s commercial centre, the situation is little different. In Abuja, despite the opening of four malls in the past five years, it has taken until June 2012 for the Grand Towers to open with the standards required by international retailers. Other cities, such as Port Harcourt and Calabar, have yet to see the arrival of their first city mall.”