Consumer Demand, E-commerce Drive Nigeria's N200bn Retail Market

Consumer Demand, E-commerce Drive Nigeria's N200bn Retail Market  by Eromosele Abiodun

Investment in the Nigerian retail market has reached an all time high, attracting over N200 billion in the last two years owing to rising purchasing power and the huge potential of the Nigerian economy.

Experts believe investors are flocking to the sector as a result of Nigeria’s potential–a large population, positive macro-economic growth and a strong appetite for consumer goods.

The recent growth e-commerce is also said to be responsible for the continued expansion of the retail sector. THISDAY checks revealed that there are 300 e-commerce sites running in Nigeria. THISDAY’s investigation also revealed that local and foreign investors have so far invested $15 million into the industry.

Meanwhile, a report by the Oxford Business Group (OBG) indicate that both foreign and local investors are dramatically expanding their domestic retail footprint in the country.

According to OBG, “By the end of June, Shoprite, the continent’s biggest retailer opened its fifth shop in Nigeria, and another two are on the cards for the middle of next year. 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 over the next six months."

They added that the growth in retail space and opportunity has 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 $1656, up from $1541 in 2011 and $390 in 2001, according to Renaissance Capital, a multinational brokerage. The firm also said that the country’s middle-class segment earns about $6000-7000 per year, bringing the purchase of modern household goods within range.
 

“But as development of formal retail 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.”

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.

Inflation, currently at 12.9% and expected to rise to 13.57% by the end of the year as a result of higher prices following the partial removal of the fuel subsidy at the start of 2012, is likely to constrain purchasing power. Furthermore, with more than half of the population living on less than $1 per day, the inequality of income distribution is a potential impediment to the growth of formal retail, limiting the size of the consumer market.

However, scepticism regarding the potential of Nigeria’s modern retail sector has so far been brushed aside. “Even if you have 60% of the population living in poverty, 40% of the Nigerian population is still bigger than the South African population,” Basson said in a statement.

Retailers feel the government has a crucial role to play and have called for incentives for real estate developers, alleviation of land access procedures and a greater regard for retail in the country’s economic policies. “The government should encourage retail as an industry. It is labour intensive and accessible to workers with basic levels of education; it is the world’s biggest employer,” Keswani said in a recent interview with local media.

culled from THISDAY, written by Eromosele Abiodun

Read, download, share

The World Bank has opened its database for public use, the benefits are unquantifiable

Seated on his magnificent chair at the University of Benin, Professor Izua Obaze logs on to a website and delightfully smiles as the figures which he would have had to comb several sources to assemble are displayed in beautiful graphs and downloadable spreadsheets.

The ease with which the professor navigates the site gives the impression that he is not a first timer. On it, he is able to access data and content that helps him compare countries’ performances along indicators, analyze the effect of specific policies, and teach his students. This kind of access is what the World Bank’s data base website is giving researchers, academics and policy maker around the world.

Last year, the Bank announced that it is adopting an open access policy that requires its research and knowledge products and the associated datasets that underpin them to be deposited in an open access repository and that these works be released under a Creative Commons license. A Creative Commons license allows the distribution and free use of copyrighted works as long as the Bank is acknowledged.

Within the same period, the Bank launched a new version of its data query system, DataBank, thereby offering users a platform to create custom reports with tables, charts, or maps. These live reports can then be saved, shared between users, and embedded as widgets on websites or blogs. As a stup to further its openness, there were steps to make data base multilingual. It now offers a multilingual interface across the different databases and fully-translated data from the World Development Indicators.

The journey to really open up its content really began in the fall of 2009, when Robert Zoellick, former World Bank President gave a speech at Georgetown University in which he advocated for an environment of more openness at the World Bank.

According to Zoellick, “Knowledge is power…making our knowledge widely and readily available will empower others to come up with solutions to the world’s toughest problems. Our new Open Access policy is the natural evolution for a World Bank that is opening up more and more.” Indeed, this level of openness has made a huge impact already.

“It’s a miracle” Professor Izua says, a few years ago; it was a herculean task to get updated data for even countries as popular as Nigeria, not to talk of less popular countries”. We had to wait till the end of each year before getting new data” he added.

But the professor is not alone. In the past two years, the site has attracted some 19 million visits, with an average of 740,000 visits monthly. About 1.7 million file downloads have been recorded while the number of abstracts viewed is 1.5 million in the past year.

In July 2013 alone, there were 187,821 file downloads while 102,805 abstracts were viewed. In the first two weeks of this month, 66,722 data files have been downloaded while 45,251 abstracts have already been seen. But the beauty of what has happened does not only lies in the number of those that have used the site but on their locations.

Though the United States, dominates usage, countries like Vietnam, Rwanda, Afghanistan and Somalia have recorded a fair share of downloads. The United States accounts for 39% of all views and downloads over time, while Vietnam accounts for 6%, the second highest for any country in the world.

In Africa, Nigeria and South-Africa have the highest number of views and downloads; accounting for 1% of views and downloads respectively. Both countries are ahead of The Netherlands, Japan, Switzerland and a number of other countries in European.

The picture is clearer when the absolute numbers are considered. South Africa has recorded 32,150 views and downloads while Nigeria recorded 30,911 download. Other African countries recorded interesting number of views and downloads as well. Ethiopia, Egypt and Ghana have had 27 thousand, 14 thousand and 15 thousand downloads or abstract views respectively.  Rwanda recorded four thousand.

Whether in Europe, Africa or America, the primary driver of visits to the site has always been what it offers says Gloria Valencia, a reporter with SEMANA Magazine, Colombia. According to Gloria, “the World Bank provides good amount of information and updates; I frequently use their information for my job”.

“Using data provided by the World Bank has proven pivotal for my journalistic research. The amount of information, the validity and the ease of access have made the World Bank and its services a vital tool in my professional endeavors says Dimitris Pefanis, Financial Journalist, with Ta Nea Newspaper, Greece.

Of all the data available, the full dataset of World Development Indicators, in English and in Excel format, is the most popular download. Most users look for data on China, the United States, India, Mexico, Brazil, Argentina, Colombia, Indonesia and Nigeria.

Basically, the data repository has annual reports and independent evaluations; books; journals; serial publications; working papers and economic; sector work studies and raw data. It has over 8,000 time series indicators, 850 data-sets on government finances, data on over 11,000 Activities in Projects & Operations and 700 Surveys in Microdata. All of which can be accessed easily.

But it is not only professors, data journalists and policy makers that the project has affected. There have been moves to include those who would traditionally not use the material. According to Caroline Anstey, World Bank Managing Director, “Anyone with Internet access will have much greater access to the World Bank’s knowledge. And for those without internet access, there is now unlimited potential for intermediaries to reuse and repurpose content for new languages, platforms and media, further democratizing development by getting information into the hands of all those who may benefit from it.”

In the East Asia Pacific, workshops are being held to encourage more people to use data, research and information, provided by the Bank to tackle development challenges.

For the time being, the most popular indicators are GDP and its derivatives, other macroeconomic statistics such as foreign direct investment (FDI), imports and exports, measures of poverty and inequality (like Gini), and key social indicators such as life expectancy and population estimates.

Greater access to data and information is empowering people around the world. “The World Bank’s data leads policy makers to carry out panel data analysis which informs better national policies. In a nutshell, better informed decisions improves lives says Ikechukwu Kelekume, a lecturer at the Pan African University, Lagos. “But the bank has to do more since some data points are missing for some countries, it helps to have complete information all the time” he added when asked about what the bank can do to improve its offering.

Professor Izua says “ this is an asset which if the World Bank funds a hospital, it benefits mainly those in that locality but with this data initiative everyone around the world benefits while it also gives us the right insights to even determine where particular humanitarian projects should be sited”.

This is confirmed by Iryna Kuchma, Open Access Program Manager for EIFL, “the sharing of new knowledge can be vital – even life saving”. Kuchma pointed out the example of Malawi where promising research results related to AIDS in one hospital were not shared with colleagues in another. “With Open Access, this kind of thing wouldn’t happen,” she says.

By: Obodo Ejiro

60% of CEOs see political environment as threat in 2014 –BRIU Survey

A survey conducted by BusinessDay’s Research and Intelligence Unit (BRIU) shows that business leaders are confident about the prospect of business in 2014, but see the political environment as a threat.

The survey which sampled the opinion of 219 business leaders from banking and finance (34%), construction (25%), manufacturing (9%), IT and telecoms (17%), among others, shows that more than 80% of them are confident about the performance of their businesses in 2014 and are ready to commit more investment to purchase of machines and recruitment.

Asked about their greatest worry for business in 2014, 60% of them pointed to the potential instability of the business environment which could be caused by political upheaval as a threat. 56% identified lack of finance for business expansion as a potential threat to business. While 52% and 48% of the leaders identified poor regulatory environment/corruption in governance and the electric supply challenge as potential threats to business respectively. Other identified threats are worsening infrastructure (48%), Poor performance of the economy (36%) and unclear tax system (36%).CEOs

More than half, 60%, of the business leaders said they are confident about the outcome of the power sector reform, while 20% said they are not sure if the process will yield positive results. Others had no opinion on the subject.

As for the impact of government policies on their businesses, more than half said government policy have no real effect on their operations, while 20% of them said government policies have had positive impact on their operations in the past few years. 20% said government policies have had negative impact on them.

In 2014, business leaders anticipate that most of their costs will center on power generation, personnel, machines and government regulation. Based on historic records for 2013, 64% of respondents said most of their business spending was on power generation, 56% said they spent the most on personnel costs, while government regulatory activities account for most of the spending of 24% of the leaders. Only 12% of respondents said most of their spending center on machines.

From all indications, 2013 was a good year for most of the business leaders, more than three-quarters of all responding business leaders said their businesses performed fairly in 2013 while 14% said performance of business was strong, only 4 percent claimed their businesses performed poorly. For 2014, the optimism is high.

The survey was conducted between January 7 and February 3. Thirty-six percent of the respondents are business veterans who have spent over 12 years in business, 24% of them have spent 8-11 years in business while 20% of them have spent 5-7 years in business. Most of them are either business owners or top managers in corporate institutions.

A similar survey conducted by Gallup Analytics in the United States (US), on the United States did not yield results as positive as that conducted for BRIU on the Nigerian economy, though there were certain similarities.

Specifically, U.S. small-business owners were slightly more negative than positive as they look ahead to 2014. Twenty-eight percent say they are less optimistic about their business’ future going into 2014 than they were going into 2013, while 23% say they are more optimistic. The rest say their optimism is about the same.

In the USA, business owners were asked to name the most important challenge they face today. Their responses fall into two broad categories-those that represent external forces largely out of the owner’s control, and internal business factors that the owner more directly controls.

The most frequently mentioned external challenges include the direction of the economy, the potential effect of healthcare policy and Obamacare, the government in general, government regulation, and taxes. About half of small-business owners see one of these issues as their biggest challenge at this point. This is similar to Nigeria except for the shadow of impeding elections.