What do Nigerian households buy?

Obodo Ejiro

In whatever direction you look, this is a mega retail market. Though data from most developing markets will confirm that food often constitutes the bulk of purchases in such markets, Nigeria offers a far more interesting mix. 

Apart from corroborates the pattern of consumption in developing markets, Nigeria exhibits impressive sales number in such commodities as electronics, cars, cosmetics, imported packaged foods, children consumables, etc. 

Data made released by GFK, an international market research company with office in Lagos, shows that as at year end 2013, some 25.6 million units of new mobile and smart phones, 853,124 flat panel TV sets and 363,928 audio home systems were sold across 40 cities in Nigeria (which could proxy 90 percent of total sales). 

More phones were sold in the Northern zones than in the southern zones (excluding Lagos). While 10.5 million phones were sold in Lagos along, 7.9 million were sold in the northern zones; in the southern zones, that is excluding Lagos, 7.1 million were sold.

Based on BusinessDay Research and Intelligence Unit’s (BRIU) calculations, assuming, the average phone costs N7, 000, it will be safe to assume that over N178.9 billion was expended on phones in Nigeria last year.

As for flat panel TV sets sales, an interesting patter is emerging, according to Kenneth Doghudje, Managing Director, GFK Nigeria, of the 853,124 units sold last year, “what is most remarkable is the preference for bigger screen sizes. Nearly 8 out of every 10 TVs sold is 32 inches and above. 

This shows a remarkable shift from the previous cathode ray tube TV models that were mostly 21 inches and below that were in use in most Nigerian homes”. BRIU estimates that TV sets worth about N42.6 billion were bought by Nigerians last year, based on an average price of N50,000 per unit.

The distribution of sales in the TV market pretty much follows that of the mobile phone sales pattern. Some 399,778 units sets were sold in Lagos alone; the south (excluding Lagos) recorded 282,050 sales while the northern states recorded 171,296 units in sales. 

As with smart phones and the TV sets, audio home system sales in Lagos exceeded all the others states. We estimate that at least N60 billion was expended on audio home systems.  

But this is a modicum of what Nigerians households spend money on in retail outlets daily. 

Rebased consumption figures show that final consumption expenditure of households rose from N37.6 trillion in 2010 to N49.8 trillion last year, our estimates is that the figure could hit N52.2trillion by full year 2014.

Recurring household expenditure is majorly classified as food or non-food expenditure. Surveys by the National Bureau of statistics (NBS) have shown that grains and flours, starchy roots, plantain, nuts and seeds, vegetables, meat, fish, milk and milk products, fats and oil make up the bulk of items on the food budget. These account for as much as 80 percent of the food consumed by the average household in the country. 

In Q3 2013, Nigeria’s import bill was N2.084 trillion; buoyed among other things by a food and live animals bill which increased by N51.5 billion or 35.7% compared to Q2 of the same year.  Import of prepared foodstuffs, beverages, spirits and vinegar cost the country N355.6 billion. 

On the other hand, expenditure on energy and fuels, water, personal care products, toiletries, mortgage, transportation, clothing, electronics and more recently, recharge cards, internet service, make up a reasonable chunk of non-food expenditure.

For a medium income country, as the African Development Bank classifies Nigeria, with a population of 171 million (by year end 2013), the huge population means a lot of spending on food items.  

But what is even more interesting is that items which were hitherto thought to be luxuries are increasingly becoming classified as essentials in most households. (A recent NBS publication shows that expenditure on internet bundles and mobile phone recharge cards has assumed a more prominent position in household spending.)

Data based on two nationwide surveys NBS/World Bank Survey show that on average household size in Nigeria is 5.7. Average rural household (6.1) is larger than the urban household (5.2). Families in the North-East are the largest with an average of 7.7 while the smallest families are in South-East and South-West (4.6). 

Generally, rural dependency ration is higher than urban dependency ratio. The NBS data further shows a combination of eye opening facts and opportunities for business, especially as regards consumption. 

It is rather strange that while the national average is 45.6 percent for households who consume milk/milk products, the south-East and south-south have higher percentages of families which consume milk/milk products (63.6 percent and 56.1 percent of households respectively). This spells an opportunity; there are other commodities which follow this pattern. 

We believe that it is gratifying that the consumption landscape is expanding, but, we hold that it will be more gratifying if the outputs of locals constitute the bulk of what is consumed, especially as it pertains to agricultural products. 

Our visits to several parts of Nigeria have shown that much of the agric output does not make its way safely into supermarkets because of the constraints involved with packaging, storage and distribution. 

In a response to one of our articles, a respondent posted the following comment “…. Furthermore policy direction must lay emphasis on high level of local contents on retailers’ shelves and shop floors. This way, local producers and farmers will benefit from the influx [of] world class retailers into the country”.

We believe that improvement in the distribution infrastructure, storage (like the Gombe government is planning to do), standardisation and measurement (like the State of Osun’s  government is doing) will improve the distribution and pricing of agric output and further improve the livelihood of farmers and local manufacturers who use farm outputs as inputs. 

But food and household consumables are just part of what Nigerians consume daily. In this economy, there are households that are expending huge sums on an assortment of sophisticated machines, cars, and luxury goods.

More Household Spending plus Increased Investments in Natural Resources and Infrastructure Mean Higher Growth for Africa

For the past 19 years Sub-Saharan Africa has continued to make impressive strides in sustaining economic growth. After five years of prolonged weakness in the global economy, most countries in the region have continued to register relatively vigorous growth.

Despite emerging challenges, economic activity throughout the region continues to expand: GDP growth is projected to reach 5.2% in 2014, compared with 4.7% in 2013, and will rise to 5.4% in 2015, according to the World Bank’s new Africa’s Pulse, the twice-yearly analysis of the economic trends and latest data on the continent.

According to Africa’s Pulse, the growth in the region is broad based and the prosperous economic activity is supported by strong public and private investment demand and robust household consumption. The rise in commodity prices, and the surge of foreign capital spurred by accommodative monetary policies in high-income economies, is key to the region’s sustained growth since the mid-1990s, the report notes.

“Although Sub-Saharan Africa’s exports remain concentrated in a few strategic commodities, the region’s countries have made substantial progress in diversifying their trading partners,” says Francisco Ferreira, Chief Economist for the World Bank’s Africa Region. “Over the last decade, exports to emerging markets such as the BRICs—Brazil, Russia, India, China—have grown robustly, primarily due to the prolonged boom in commodities demand. The BRICs received only 9%of Sub-Saharan Africa’s exports in 2000 but accounted for 34% of total exports a decade later.”

Across the region there has been a rapid growth in foreign direct investment (FDI). Two investment trends are central to driving this expansion—the extended commodities boom brought about by the unprecedented scale of development in Asia, and the massive expansion of moving international trade activities offshore. The new wave of FDI not only delivers investment and employment but also opens up new opportunities through deeper global trade integration.

Patterns of growth in Sub-Saharan Africa show considerable variation across countries, with resource-rich countries growing at a faster pace than non-resource-rich countries. In fact, the best growth performers in the region (in terms of median annual rates) grew nearly four times as fast as the slow-growing nations in Africa (3.3 and 0.9 percent per annum, respectively, during 1995-2012). Among best performers, resource-rich and non-resource-rich countries such as Rwanda and Ethiopia had comparable growth rates (that exceed 4 percent per annum).

Natural Resources and the Services Sector

Africa’s Pulse shows that the resources and services sectors are Sub-Saharan Africa’s best performers: The share of the resources sector rose from 9%during 1995-99 to 12.5%during 2007-11 while that of services grew from 40% to 47%.

Sub-Saharan Africa’s exports grew at a robust pace, driven by the region’s natural resources. During 1995-2012, the region’s total exports increased from $68 billion to over $400 billion. Most of this increase came from natural resources export. For example, petroleum, minerals, and metal exports ballooned from $38 billion to $300 billion during this period.

While high commodity prices have helped the region in recent years, the heavy reliance on resource-based exports also makes the region highly vulnerable to the shocks in commodity prices.

Growth and Trade Patterns

Export diversification has been limited, mirroring sectoral shifts in the region’s economies, but there has been substantial progress in diversifying trading partners. Strong growth in countries in the region have characteristics that are associated to the structure of production, advances in structural reforms, the influence of the country to the world economy, or sound macroeconomic frameworks.

The challenge for many African countries, particularly oil exporters, is to diversify their exports. Oil-exporting countries rely heavily on a single commodity as their revenue source. For example, Angola, Chad, Equatorial Guinea, Gabon and Nigeria received, on average, more than 92% of their export earnings from oil during 2010-13.

Although, the export revenue share from minerals and metals may not be as high as that from oil, it is still high for some nonoil resource-rich countries—Botswana, Guinea, Mauritania, and Sierra Leone—with earnings more than 50%of their revenue from natural resources.

Some countries have had success in diversifying exports. An example is Tanzania. The country saw major increases in and diversification of output and exports. The production and export of traditional agricultural cash crops (such as cashew nuts, coffee, cotton, tea, sisal, and tobacco) declined considerably in importance. The geographic distribution of Tanzania’s exports also changed considerably over the last decade. Exports to the EU fell, while regional trade, especially with the East African Community (EAC) and South Africa, increased.

Looking Into the Future

There are broad areas in which Sub-Saharan Africa governments need to invest to ensure that growth continues and is shared among entire populations. The report suggests that good governance and institutions; investing in the people of Africa—especially the youth; promoting infrastructure across the region; reducing barriers to trade and investment; and making sure there are adequate services and infrastructure for the rapidly expanding urbanization of African cities and secondary cities are key to maintaining and sharing growth within the region.

Globalization of services is a potentially important source of growth for the Africa region. Several favorable trends that support this view include: services trade is the fastest-growing sector within global trade; the share of modern services is rising; and the share of developing countries in world service exports has been rising. Technology and outsourcing are enabling traditional services to overcome their old constraints such as physical and geographic proximity. Modern services, such as software development, call centers, and outsourced business processes, can be traded like value-added, manufactured products, enabling developing countries that focus on such services, innovation, and technology to leverage services as an important driver of growth.

The question that the region faces is, “Has Sub-Saharan Africa tapped this potential?” The region’s services exports, which total $50 billion, trail all other developing regions; however, these exports are expanding annually at about 12%, on average. Traditional services such as transportation and travel have declined from 73% of total services in 2005 to less than 64%in 2012, while modern services exports in the region have increased their share by over 10 percentage points from just over 26%of total services to about 36% over the same period.

In some countries such as Mauritius, Rwanda, and Tanzania, modern services recorded annual growth rates of over 10%between 2005 and 2012, with Rwanda starting from a low base of less than $40 million in modern services exported in 2005 to over twice that amount at almost $85 million by 2012. In both Mauritius and Rwanda, rapid expansion in modern services is a result of increased activity in tradable business and financial services. Over 60% of those employed in large companies in Mauritius work in the service sector, which offers more employment opportunities than either agriculture or manufacturing. While these countries have experienced the fastest increase in modern services, others like Kenya are also emerging as places where modern services are becoming drivers of growth and development.

“This,” says Punam Chuhan-Pole, Lead Economist in the World Bank’s Africa Region, and author of Africa’s Pulse, “is exciting news for other African countries looking to expand into the globalized services business.”

culled from the world bank website

Breaking down Nigeria rebased $510 billion GDP

Nigeria revealed rebased gross domestic product (GDP) figures for 2013 that showed an 89 percent jump in the estimated size of its economy.

The new rebased data show that the size of the Nigerian economy is now estimated at N80.3 trillion ($510 billion) for 2013, Yemi Kale, head of the National Bureau of Statistics (NBS), said at a press conference to announce the results in Abuja.

The new figures show that Nigeria has surpassed South Africa as the largest economy in Africa after overhauling its GDP data for the first time in two decades.

Rebasing/re-benchmarking of the national account series (GDP) is the process of replacing an old base year to compile volume measures of GDP with a new and more recent base year or price structure.

Economies are dynamic in nature: they grow, they shrink, add new sectors, new products and new technologies, and consumer behaviour and tastes change over time.
Until now, the GDP estimates for Nigeria have been based on a base year of 1990, which means that current GDP (say for example 2013 GDP) are expressed in terms of prices of goods and services in 1990.

The rebased figures showed a remarkable change in sector by sector contribution to the country’s GDP.

Hitherto, the agric sector used to be the dominant contributor to the Nigeria GDP but that has been diluted as other sectors such as finance services, construction, entertainment etc. have braced up their contribution to the economy.

The 2013 rebased figures showed the agric sector contributing 21.97 percent or N17.625 trillion ($112.26 billion) of the total N80.22 trillion ($510 billion). This compares with N14.71 trillion ($93.7 billion) in the old non-rebased estimates for 2013.

Nigeria’s agricultural output while seemingly impressive is actually underperforming its peers such as Argentina with its mostly subsistence method of cultivation and low productivity.

Almost half of the available arable land is uncultivated, while there is very little irrigation of fields or farmlands. The government has come out with a plan, however, to change all that.
Nigeria plans to double agriculture’s share of banks’ credit to 10 percent in two years as it seeks to cut food imports, agriculture minister Akinwunmi Adesina said recently at the World Economic Forum in Davos, Switzerland.

Loans to agriculture as a share of total credit rose to N320 billion ($2 billion) or 5 percent at the end of last year from less than 1 percent in 2011, Adesina said.

The Agriculture Ministry is partnering with the Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending, a unit of the Central Bank of Nigeria (CBN), to provide credit guarantees to enable banks lend to farmers.
The government’s efforts to boost food supply by 20 million metric tons from 2011 to 2015 has seen the country’s food import bill drop by more than half to $5 billion from $11 billion two years ago.

Manufacturing

The manufacturing sector of the economy contributed 6.81 percent to the new GDP data equivalent to N5.47 trillion ($34.8 billion) out of the total 2013 GDP rebased estimate of N80.22 trillion ($510 billion).This compares with N4.74 trillion ($30.2 billion) in the 2012 GDP figures.

The manufacturing sector has been receiving tremendous boost through Federal Government proactive policy formulations.
To boost local production of cement product, and increase its contribution to the GDP, the Ministry for Trade and Investment did not issue a single licence for the importation of cement in 2013, which has traditionally been a huge drain on Nigeria’s foreign exchange.

In addition, the ministry has also designed the Nigerian Automobile Industry Development Plan to provide the environment for the orderly development of the sector.
In 2013, the Trade and Investment Ministry entered into agreement with foreign investors to assemble automobiles in Nigeria with a view to boosting the contribution of manufacturing to the Nigeria’s GDP.

Other backwards integration policies have been formulated in the sugar, rice milling, wheat and tomato manufacturing sectors.
In spite of the rise in manufacturing’s contribution to GDP from about 4 percent in the non-rebased time series to 6.81 percent in the rebased data, Nigeria still underperforms its peer countries in manufacturing.

World Bank data show contribution of manufacturing sector to the GDP in Austria is 19 percent, while that of Thailand remains 34 percent. For South Africa, it is 12 percent, while it is 13 percent for Iran.

In Nigeria, manufacturers often groan under high inter-bank interest rate, which hovers between 18 and 30 percent. Lending is cheaper in microfinance banks but there is often a ceiling to the amount to be lent. Though the Bank of Industry (BoI) lends to critical players at an interest rate of between 6 and 10 percent, access is still cumbersome, say manufacturers.

The manufacturing sector has the capacity to create direct and indirect jobs. NBS data show that many of the jobs created in 2013 were from manufacturing, construction and financial intermediation. Increase in job generation from the manufacturing sector in 2013 was 63.20 percent. Analysts attribute this to waivers and incentives given to cement, sugar and manufacturing exporters within the period and say development of the sector will increase foreign exchange earnings, create wealth and develop subsidiary sectors.

Real Estate

The real estate sector contributed 8.01 percent to the Nigerian economy equivalent to N6.43 trillion ($40.9 billion) of the total rebased GDP estimate of N80.22 trillion ($510 billion).
The sector’s contribution to GDP while impressive has, however, happened without a comprehensive plan by government – until recently – to boost its growth.
Constraints to the sector’s growth include the notoriously problematic Land Use Act as well as difficulty in getting building permits and certificate of occupancy in many states.
The lack of easy transferability of titles and non-securitisation of mortgage loans where available and lack of mortgages in general are also a factor stunting the sector’s growth, in spite of Nigeria’s huge unmet demand for housing.
Nigeria’s Mortgage Refinance Company which will imitate the U.S.’s mortgage giant Fannie Mae hopes to plug some of these gaps.

It plans to sell bonds in the capital markets in a bid to curb the estimated 17 million- unit housing deficit.

The bonds when sold on the market by the new company (Nigeria Mortgage Refinance Co.) will provide long term financing to lenders that will help them extend more home loans.
It is expected that the new mortgage company will help put the economy on a higher trajectory of growth as home buyers are extended as much as 20 years maturities on mortgage loans; and as a result, 75000 new homes a year will be built, culminating in the creation of at least 300,000 jobs.
To finance the transaction, the Federal Mortgage Bank of Nigeria (FMBN) last year negotiated with two Chinese lenders for credit of as much as $6 billion.

With the establishment of the new company, a long term yield curve for pricing financial assets will finally be established with the potential of the creation of sophisticated financial instruments, such as mortgage backed securities (MBS) so that much more efficient capital deployment will be achieved.

The country’s rapid rate of urbanisation which the World Bank put at 51 percent in 2012, and the estimated 80 million living in the cities will spur the demand for housing and building materials, and, therefore, making the new refinancing scheme the right trajectory to providing shelter for the people.

The MRC model has been used in a number of countries to help stimulate the housing market, deepen home ownership and stimulate gross domestic product (GDP) growth.

In the United States the two housing-finance giants Fannie Mae and Freddie Mac have helped to expand home ownership in the US to historical highs, as well as engender wealth creation and jobs. Fannie Mae and Freddie Mac are estimated to own or have guaranteed about 60 percent of the U.S.’s $12 trillion mortgage market as at 2010.

Crude Petroleum and Natural Gas

Crude petroleum and natural gas which comes under the mining and quarrying s ector contributed 14.4 percent or N11.55 trillion ($73.56 billion) to the total 2013 rebased GDP.

This paints both a positive and negative picture for the Nigerian economy as while it shows that the economy is gradually weaning itself off its oil and gas dependence, there still remains a huge untapped potential in Nigerian oil and gas output that has remained stagnant for the past 5 years.

Nigeria’s oil output is stuck at around 2 million barrels a day, while gas production for NLNG export and domestic use has also been affected by a lack of investments in new NLNG trains and gas processing infrastructure.

The passage of the long delayed Petroleum Industry Bill (PIB) may help boost investments into the sector, even as Nigerian oil and gas firms are becoming increasingly active in the sector.
Domestic Nigerian firms such as Seplat, Oando, Seven Energy, Sahara oil, Brittani-U and Dangote Industries Limited are priming to invest in the oil and gas sector, buoyed by divestments from international oil companies (IOCs).

Stakeholders estimate that Shell, Total and Agip divested from Nigerian assets worth $6.5 billion in 2013.

Nigeria has the world’s ninth-largest proven gas reserves at 188 trillion cubic feet and potential gas reserves of 600 trillion cubic feet (TCF), however, much of it is flared.

At least $3 billion in revenue is lost annually due to flaring, according to the Petroleum Ministry, while a lack of gas for power plants stunted Nigeria’s double digit growth potential.

Telecommunications and Information Services

The telecommunications and information services sector contributed 8.68 percent to the Nigerian economy equivalent to N6.97 trillion ($44.3 billion) out of the total rebased GDP estimate of N80.22 trillion ($510 billion). This compares with N364.4 billion ($2.3 billion) in the 2012 non-rebased GDP time series.
Telecommunications is the star performer in Nigeria’s rebased GDP figures.

The licensing of GSM companies earlier last decade has led to an unleashing of economic activity from e-commerce to mobile payments.

Nigeria currently has about 120 million mobile phone subscribers, with four major mobile service providers including MTN, Airtel, Globacom and Etisalat. The potential in the sector can be seen in MTN which reported 2013 full year revenues of N793.6 billion for its Nigerian operations.

Nigeria had 56 million internet subscribers as at September 2013, according to data from the NCC, while international bandwidth brought by undersea cables, has increased about 26 times to more than 9,000 gigabits per second (9 terabits) over the past four years.
One market research firm suggests that Nigeria, which is Africa’s most populous country, will have almost tripled its online purchases in just three years to more than $1 billion by 2014.

This compares with South Africa, whose e-commerce sales were just 4 billion rand ($409 million) last year, according to research firm, World Wide Worx, estimates.

The number of payments in Nigeria made by mobile phone’s more than doubled to 2.4 million in the first half of 2012 from the same period a year earlier, while Internet payments rose 9.3 percent, according to data from the Central Bank of Nigeria (CBN).
The improving connectivity and increase in businesses done online is also spurring the need for data centers.

MainOne Cable Co Ltd., which operates an undersea cable connecting West Africa to Europe, plans to open a $25 million data center in Nigeria by June 2014.

The center will provide reliable Internet access and host information for clients such as banks, phone companies, government bodies, and a growing number of dot-com businesses, MainOne chief executive officer, Funke Opeke, said recently at the center’s construction site in Lagos.

Nigeria also plans to grow its mobile broadband access to 80 percent of the population and fixed broadband access to roughly 20 percent by the year 2017 from 4 percent now, according to the National Broadband Plan 2013-2018.

PATRICK ATUANYA & BALA AUGIE, BusinessDay

Nigeria is 26th largest economy globally with $510 billion GDP

The Nigerian economy now ranks as the 26th largest in the world, figures released from the recently rebased or recalculated Gross Domestic Product (GDP) reveal.

The statistician-general of the federation Yemi Kale, says the country’s GDP now stands at $510 billion, making it the largest economy in Africa.

“The economy’s structure has changed significantly,” said Kale while releasing the 2013 rebasing figures in Abuja the country’s Capital, Sunday. “We are witnessing a historic rebasing of our GDP which was not done for more than two decades,” Kale said.

He further said the exercise was able to capture more sectors of the economy.

Analysis by the statistician-general reveals that rebased Nominal GDP figures in 2010 increased by 59.5 to N 54.2 trillion ($345 billion) from N33.9 trillion ($218 billion), while in 2011 it spiked by 69.1 percent to N63.2 trillion ($402 billion) from 34.11 trillion ($217 billion).

In 2012, the GDP expanded by 75.58 percent to N71.4 trillion ($453 billion) from N40.5 trillion ($258 billion), while in 2013 it surged by 59.22 percent to N80.3 trillion ($510 billion).

“The next rebasing will be in 2015 and the results will be out in 2016, we also intend to measure the economy every five years,” the statistician said.


 Author: BALA AUGIE, BuisnessDay

Nigeria soon to be the largest economy in Africa

LAGOS, April 4 (Reuters) - Nigeria will rebase its GDP on Sunday, the statistics office said, in a move that will boost its estimated size by anything from around 40 to 70 percent and is almost certain to push it ahead of South Africa to become Africa's biggest economy.

The National Bureau of Statistics (NBS) will change the base year for calculating Nigeria's GDP to 2010 from 1990 to reflect changes in the economy of Africa's most populous nation, and more accurately assess the size of its current output.

Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, but Nigeria has not done so since 1990, meaning sectors such as the Internet, telephones and even the "Nollywood" film industry have had to be newly factored in to give a truer picture, sources say.

When Ghana rebased in 2010, output jumped 60 percent. For Nigeria being the continent's number one economy could prove an irresistible magnet for investors.

Nigeria's GDP only needs to go up by a quarter from a current IMF 2013 estimate of $292 billion to hit $365 billion, which would enable it to overtake South Africa, currently estimated by the fund at $353 billion.

"The impact of a rebasing would likely have a positive impact on perceptions ... this would come at time when most investors are fairly downbeat on South Africa," because of its high combined fiscal and current account deficit, London-based economist for CSL Stockbrokers, Alan Cameron, said.


"GROWTH STORY"

Nigeria has been growing as a destination for foreign investors owing to the size of its consumer market and increasingly sophisticated capital markets. Analysts say higher GDP means more consumption per capita, boosting its allure.

"The globe is still looking at the next strong growth story outside China and India, and Africa is on their minds," said Abri Du Plessis, chief investment officer at Gryphon Asset Management, which has investments in Nigeria.

"We are seeing good growth in the ... Nigeria story."

It is already a growing market for consumer goods firms like Nestle, Heineken, Cadbury and Unilever, as well as construction material firms like Lafarge and Dangote Cement, owned by Africa's richest man Aliko Dangote.

Much increased interest would be in manufacturing and service companies, which could further help Africa's top oil producer move away from its over-reliance on the black stuff.

It certainly won't be the wonder cure for Nigeria's economic ills. For one thing, being bigger means expansion will slow.

"The rebasing exercise will result in an increase in the country's market size, but it is likely to lead to a slower rate of real GDP growth," said Ecobank economist Gaimin Nonyane, from its current rate of 7 percent for the past five years.

It will be mixed for Nigeria's fiscal stance as well, improving the debt-to-GDP ratio, currently less than 20 percent, but expose a weaker tax base, so debt investors won't be moved.

"Fixed income investors will probably not pay much attention to the GDP dynamics," said Standard Bank's Samir Gadio.

Despite roaring growth in recent years and a bigger GDP, Nigeria will continue to trail South Africa in terms of basic infrastructure - power and roads - necessary to lift the bulk of its population of 170 million out of absolute poverty.

And its legendary dysfunction - abysmal telephone and Internet quality, clogged roads, ports and airports, obstructive police and reliance on diesel generators for most of its power - mean it won't be replacing South Africa as a hub very soon.

"South Africa is going to stay the entry point for funds into Africa. I don't think (it will move to) Nigeria," Rigaardt Maartens, a portfolio manager at PSG Online Securities, said.

(Additional reporting by Helen Nyambura in Johannesburg; Editing by Tim Cocks and Giles Elgood)

Smart phone sale hit 25.6 million units in 2013

by Obodo Ejiro

Some 25.6 million units of smart phones were sold last year according to data released by GFK, an international market research company with an office in Lagos. The data, which was made available exclusively to BusinessDay, showed the distribution of sales of some electronics. It confirmed that Lagos still commands the highest share of sales across the country.

Interestingly, more phones were sold in the Northern zones than in the south (excluding Lagos). While 10.5 million phones were sold in Lagos along, 7.9 million were sold in the north while 7.1 million were sold in the south (excluding Lagos).

Based on BusinessDay Research and Intelligence Unit (BRIU) calculations, assuming, the average smart phone cost N10, 000, then it will be safe to assume that at least N256billion was expended on smart phones in Nigeria last year!

Also included in the data set released by GFK were records on flat panel TVs sales and audio home systems. Both products recorded significant amounts of patronage as 853,124 flat panel TVs and 363,928 audio home systems were sold across Nigeria last year.

According to GFK, “what is most remarkable is the preference for bigger screen sizes. Nearly 8 out of every 10 TVs being sold is 32 inches and above. This shows a remarkable shift from the previous cathode ray tube TV models that were mostly 21 inches and below that were in most Nigerian homes”.

As with smart phones, more flat panel TV sets and audio home system were sold in Lagos than anywhere else. Some 399,778 units of TV sets were sold in Lagos, in the other states which make up the south, 282,050 were sold while the north recorded 171,296 units in sales of flat panel TV sets.

BRIU estimates that TV sets worth N60 billion were sold last year based on an average price of N70,000 per unit. As with the other products, more audio home systems were sold in Nigeria’s commercial capital, Lagos.

Earlier in the year, information made available from the Ministry of Trade and Investment indicated that retail attracted $1.3 billion in investment in the last two years. The data released by GFK points to growing consumption in Nigeria and its volume.

Nigeria now has 8 cities which have populations above 1 million people and estimates from BRIU show that more cities in the country will have populations above that number in the next six to seven years.

This is occurring in the midst of rising income levels, and urbanization. BRIU’s retail report has indicated at increasing acceptance of western values and lifestyles among Nigerians living in urban areas is one of the factors driving consumption in Nigeria. 

“Though 60% of people living in Nigeria live on less than one dollar daily, it must be underscored that the remaining 40%, is 16.4 million more than the population of South Africa. The largest of Nigeria’s cities are Lagos city with a population of 10.1 million people, Kano city with a population of 4.1 million people and Ibadan city with population of 3.8 million people” a BRIU report indicated earlier this year.

Cities like Kaduna, Port Harcourt and Benin City have population figures estimated at 1.8 million, and 1.3 million respectively. Aba, which is the least of the eight most populated cities in Nigeria, has a population of 1 million people the BRIU report indicates.

According to BRIU, “the most attractive locations for new retail outlets are often the first tier cities of Lagos, Port Harcourt and Abuja, due to the sophistication of the population, the population density, ease of access to retail outlets, and superior infrastructure.

But as those cities become more saturated, Nigeria’s second tier cities become also important.  As at year end 2013, the country had an estimated population of 171 million population.

This number has attracted a lot of interest because of the population’s rising capacity to consume an assortment of goods and services.