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Is now the time to look at Nigeria?

When Nigeria overtook South Africa as Africa’s strongest economy two years ago, talk was only of economic boom. Since the fall in oil prices, the word is of economic crisis. We asked businesses about the real scale of the opportunities and risks in the country.

By Claudia Voß, Moritz Hunger und Michael Monnerjahn



“West Africa has the potential to become the next economic centre of the continent. Nigeria’s market provides us the opportunities to further develop skills in the e-business sector and apply them to the entire region”, says Ansophie Strydom, Head of Communications for SAP Africa. SAP has been active in Africa since 1982, and in West Africa since 1997, founding SAP West Africa in Lagos in 2000.


The African market is a special focus of the Walldorf-based software corporation. “In recent years, a robust telecommunications industry has been established there that is also gaining increasing attention from government bodies. More and more mobile service providers are offering their services, and more and more customers are enthusiastically pursuing the new technologies” according to Strydom.


In recent years, Nigeria’s mobile communications sector has indeed developed from a government controlled business to a huge market that is driving economic growth and technological innovation. With over 95 million customers, Nigeria is the largest mobile communications market in Africa. Strydom considers the government’s endeavours noteworthy: “The nation is very highly developed. There have been numerous incentives to encourage foreign direct investment and domestic investment, especially in recent years. As long as the government continues to contribute to the development of growth and infrastructure, the mood will remain positive”.


Innovation is the backbone of every thriving nation, and Nigeria is poised for innovation. “SAP looks forward to working together with the government so that the new technologies are better used and can be further developed”. Strydom would like the German government to “take advantage of present relations and support the region of West Africa in the course of digital transformation”.


Some 190 million people live in Nigeria, but there are still only six vehicles for every 1,000 inhabitants. There is incredible potential waiting to be unlocked”, says Vito Cocina, Area Sales Manager Sub-Sahara for Volkswagen AG. Up to now, sales of new cars in Nigeria have been at a low level. The consulting firm PricewaterhouseCoopers (PwC) estimates sales at only some tens of thousands.





Nigeria is familiar territory for Volkswagen – the company had their own production facilities there as far back as 1975. “Initially, the Volkswagen Beetle was produced, followed later by commercial vehicles as well”, according to Cocina. A large proportion of the “people movers” are Volkswagen Transporters from the prior production. “Today, they are the living proof of successful production in Nigeria”, states Cocina.


Production was, however, stopped at the beginning of the 1990s, due to the unfavourable economic conditions and shortage of foreign currency. The German car manufacturer only returned to Nigeria with its own production facilities in 2015. Since then, a renaissance of Nigeria’s automotive industry has taken place on Volkswagen’s former premises in Lagos. Together with the Stallion Group, vehicles are assembled there, such as the VW Passat, the Passant CC (a coupé version of the Passant), and the VW Amarok (a pickup).


Due to the low oil prices and falling value of the Naira, VW is currently experiencing a situation similar to when it first became involved in Nigeria. However, one knows what to expect this time. “In Nigeria, staying power and a trust-based relationship with local partners are essential”, say Cocina. He hopes that the automotive policy introduced by former President Goodluck Jonathan will be continued, as Volkswagen’s commitment to Nigeria is ultimately mid- to long-term.



“2016 was a challenging year in Nigeria, also for Commerzbank”, says Olaf Schmüser, who heads the Commerzbank representative office in Lagos. “I would consider it positive news if economic development only stagnates in 2017”. Schmüser can understand the Nigerian government’s attempts to counteract the economic trend with currency and import restrictions. However, in his opinion, the state control has catastrophic consequences, especially for companies dependent on imports for production.


Even if the exchange market has now somewhat opened, the necessary currency liquidity is still lacking. According to Schmüser, the government has around 18 months to straighten things out. The election campaign will start in Nigeria as soon as mid-2018. With a focus on agriculture and mining, the government has found the right key themes, and a masterplan has been worked out whose fundamentals are apparent. However, this plan has not been officially announced yet. In addition, the source of the urgently needed knock-on financing has not been defined. Here, the issuance of around a billion dollars’ worth of Eurobonds can help, as can the recently granted loans from the International Monetary Fund and the African Development Bank.


Today, Commerzbank in Nigeria is primarily involved in interbank business. The representative office in Lagos has good relationships with the correspondent banks, the country’s central bank, the state oil companies and Nigeria’s Federal Ministry of Finance. The bank also pursues developmental goals in the development of financial solutions for the government and in sharing its expertise with Nigerian financial institutions. Commerzbank’s objective is to provide a platform for its corporate clients, so that they can develop and expand international trade with Nigeria in the long-term and under difficult conditions. In doing so, Commerzbank’s corporate clients can profit from the enormous market potential the country still presents today.