Our comprehensive assessment of Nigeria's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Nigeria, as well as the latest industry developments that could impact Nigeria's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Nigeria before your competitors.

Nigeria Country Risk

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Core Views

  • Nigeria will endure an economic contraction in 2016 as external and domestic challenges, exacerbated by a series of controversial monetary and fiscal policy developments, have led to a fall in manufacturing activity, declining oil production, a delayed implementation of an expansionary budget and reduced inflows of investment. We believe that the economy bottomed out in the second quarter of the year. However, despite some limited improvement ahead, any positive growth over the next two quarters will not be sufficient to offset the poor H1, and we forecast a 0.8% real contraction this year as a result.

  • In 2016, Nigeria's current account deficit will be the widest recorded since 1998 according to our forecasts, as the country struggles with a slump in global oil prices exacerbated by plunging oil output. Continued pipeline attacks by the Niger Delta...

Nigeria Operational Risk Coverage (9)

Nigeria Operational Risk

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Nigeria offers investors one of the most difficult and dangerous operating environments in Sub-Saharan Africa (SSA). The major risks to businesses stem from the deteriorating domestic security situation, which is characterised by rampant criminal activity and frequent terrorist attacks, along with the country's severe fuel shortages. These risks pose dangers to the safety of foreign workers and business interests, and also cause disruption to the country's utilities infrastructure and transport network, both of which are struggling to meet the needs of an expanding economy and population. Corruption is also endemic across both the public and private sector, complicating government bureaucracy and deterring foreign direct investment (FDI).The government faces huge challenges in addressing these issues in order to maintain strong FDI inflows and economic growth.However, since the 2015...

Nigeria Crime & Security

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BMI View: Crime and security risks in Nigeria are driven by the severe and rising threat of terrorist attacks, high levels of violent crime throughout the country and endemic corruption. Organised criminal groups are highly active in the country, and businesses are exposed to the threat of piracy attacks, financial fraud and cyber crime. Nigeria's military remains the largest in the region, but has only been able to reduce Boko Haram's territorial hold within Nigeria's borders with international assistance. While the recently elected President Buhari is on an anti-corruption drive in terms of fighting state and private sector corruption, these efforts have yet to significantly improve the capability of Nigeria's army and police for fighting terrorism and crime. Therefore, Nigeria receives a score of...

Nigeria Labour Market

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BMI View: Overall, Nigeria has a large pool of skilled and unskilled labour relative to other countries in Sub-Saharan Africa (SSA) owing to its population size, demographics and the sheer number people completing various levels of education. However, poor infrastructure and frequent strike action affects the quality of offerings at the country's educational institutions, especially for the tertiary level, leading businesses to retrain graduate employees or recruit foreign-trained graduates at an extra cost. Nigeria has a total Labour Market Risk score of...

Nigeria Logistics

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BMI View: Nigeria's attractiveness to investors is stymied by the country's poor logistics sector, strained by the country's severe fuel crisis. The transport network suffers from undercapacity with delays prevalent, and the utilities sector is vastly inadequate and unable to keep pace with growing demand. Trade bureaucracy is elevated, further adding to the time and monetary cost of importing and exporting goods. Nigeria therefore receives a low overall score in BMI's Logistics Risk Index, at 34.4 out of 100 ranking it 22nd out of 48 Sub-Saharan African (SSA) countries.


Nigeria Trade & Investment

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BMI View: Nigeria's business environment faces a number of risks, ranging from corruption and a burdensome state bureaucracy to a weak legal framework that provides poor protection against intellectual property infringement. Nigeria's oil and gas wealth has facilitated strong trade volumes by regional standards, while a large domestic market and key government incentives boost the country's attractiveness as an investment hub in the region. However, the global fall in oil prices is straining the government's budget which relies heavily on oil and gas exports, slowing economic growth and public investment. Taking these factors into account, Nigeria sits in 17th place out of 48 countries...

Nigeria Industry Coverage (17)

Nigeria Agribusiness

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BMI View: Our view on the Nigerian agribusiness sector is mixed. The cocoa industry assumes a greater importance in the country's medium-term economic future now that oil revenues can no longer be relied upon as an easy source of foreign exchange. We remain cautiously optimistic that cocoa plantations and processing facilities will continue to receive the public and private sector support needed to move forward. Poultry, dairy, sugar, rice and wheat consumption are expected to continue to depend very largely on imports to meet demand, although a much greater percentage of demand for each of these commodities (apart from wheat) could potentially be met by local production. In each case, consumption growth is expected to be weakened by the country's macroeconomic situation, particularly in the earlier years of our forecast period. Poor infrastructure, lack of...

Nigeria Autos

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BMI View: Renewed vehicle production under the government's new automotive policy will see high average growth of 39% in vehicle production over our forecast period to 2019. However, vehicle sales growth will be dragged down by high import tariffs over our forecast period.

Vehicle Production Expansion Set To Take Off
Vehicle Production
e/f = BMI estimate/forecast. Source: BMI
Table: Key Views
Source: BMI

Nigeria Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Nigeria Food & Drink

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BMI View: Nigeria's food and drink industry will contract over 2016 due to an acute decline in per capita food spending. Over our forecast period, economically priced products will perform well as consumers trade down price points to mitigate rising food costs. From 2017, growth will return to positive territory and inflation will abate, relieving pressure on consumer purchasing power.

Food and Drink Spending
e/f = BMI estimate/forecast. Source: BMI, national statistics

Key Trends...

Nigeria Freight Transport

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BMI View: We forecast strong growth across all freight modes in Nigeria in 2016 and beyond. Increasing demand for consumer goods by an expanding middle class and manufacturing sector will raise intermodal container volumes. Population growth means growth in demand will continue, driving investment into the freight sector, with substantial interest in developing the country's dilapidated rail network in addition to investment in the road and air freight infrastructure. We forecast a real GDP expansion of 3.8% in 2016 while Nigeria continues to struggle with its readjustment to low oil prices. Some policies being pursued by the president and the Central Bank will further constrain growth in the near term.

Economic growth in Nigeria will be weighed down by foreign exchange controls, an overvalued naira and policy...

Nigeria Information Technology

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BMI View: The IT markets in Ghana, Kenya and Nigeria all contracted sharply in 2014 and 2015 as a depression in the commodities complex hurt economic performance and resulted in steep currency depreciation against the US dollar that eroded already weak purchasing power. This was due to a re-evaluation of previous optimism regarding their economic growth trajectory and IT markets, as a lack of structural and institutional strength was laid bare. The fortunes of the three markets are however not tied that closely, with Ghana and Nigeria being more susceptible to further negative shocks in the short-term if the commodities markets take another turn downwards. However, under our core scenario we envisage improved performance over the medium term...

Nigeria Infrastructure

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BMI View: After an extremely poor first-half of the year, we are now forecasting the Nigerian construction sector will see a recession in 2016. Despite the relaxation of the naira peg, investors are remaining on the sidelines. Furthermore, renewed violence in the Delta region is exacerbating the government's struggle in raising adequate revenue to undertake the major infrastructure it planned in its 2016 budget. Chinese credit will be a key lifeline for growth, although will not benefit the whole industry.

Latest Updates And Structural Trends

  • We forecast -2.6% y-o-y real growth in Nigeria's construction sector over 2016, with growth only marginally set...

Nigeria Insurance

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BMI View: We retain our opinion that the Nigerian insurance market remains small and comparatively underdeveloped at present. With a very low overall premium base, the market is at a nascent stage of development and we believe that it holds significant growth potential going forward. Rising incomes, a growing middle class and an expanding domestic economy are all factors that will boost the uptick in demand for key consumer lines. These factors will render the Nigerian market increasingly attractive to foreign investors, whose presence will likely increase market consolidation and accelerate product innovations.

Headline Insurance Forecasts (Nigeria 2013-2020)

Nigeria Medical Devices

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BMI Industry View: With its large population and underdeveloped healthcare sector, Nigeria offers substantial long-term potential for medical device companies, particularly as virtually all of the market is supplied by imports. In the medium term, inadequate funding will remain a major constraint. Positive factors such as the National Health Bill and World Bank investment in maternal and child health, will be offset by uncertain economic prospects and the slow uptake of...

Nigeria Oil & Gas

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BMI View: The APC administration will partially reduce crude theft and instability in the Niger Delta, marginally improving production consistency. We do not expect the PIB to be passed over the coming one to two years. This will see continued regulatory uncertainty in Nigeria, supporting our view for a stagnation in oil output over the coming years. Nigerian oil production will increase slightly from 2.45mn barrels per day (b/d) in 2016 to 2.51mn b/d by 2020, based on sanctioned projects.

Headline Forecasts (Nigeria 2013-2019)

Nigeria Petrochemicals

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BMI View: Nigeria remains the most significant sub-Saharan African market, in terms of size, growth and future potential. Growth in gas production is set to spur downstream petrochemicals industries, particularly fertiliser and methanol and under the Buhari administration the business environment has improved, even though the decline in oil prices and the depreciation of the naira have had a negative effect.

In 2015, Nigeria had olefins production capacities of 550,000 tonnes per annum (tpa) ethylene and 125,000tpa propylene with thermoplastic resins capacities of 240,000tpa linear low-density polyethylene (LLDPE) and 95,000tpa polypropylene (PP). Nigeria's petrochemicals sector is characterised by low capacity utilisation, frequently disrupted plant operations and a lack of proper resources to operate and maintain facilities.

The government...

Nigeria Pharmaceuticals & Healthcare

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BMI View: As a result of lower-than-expected real GDP growth for H116, we have downgraded our short-term outlook for Nigeria's pharmaceutical market slightly; however, its long-term growth outlook remains largely positive. Despite our downgrade, the market is still growing and we highlight Nigeria as one of the more attractive destinations for pharmaceutical companies in Sub-Saharan Africa. Key drivers of growth will be the government's prioritisation of the healthcare sector and improvements to domestic manufacturing capabilities, although a high abundance of counterfeit drugs and corruption will continue to weigh heavily on the market.

Headline Expenditure Projections

  • Pharmaceuticals: NGN175.89bn (USD889mn) in 2015 to NGN185.71bn (USD735mn) in 2016; +4.4% in local currency...

Nigeria Power

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BMI View: We have maintained our moribund forecast for growth in electricity generation and capacity this quarter, amid a bleak economic outlook, ongoing disruptions to gas supplies from the Niger Delta and naira weakness. Our view is Nigeria is set to undergo a painful multi-year adjustment to lower oil prices has significant implications for investment in the power sector and compounds our negative outlook for capacity expansion - with private players likely to delay or cancel investment in the power sector until the economy stabilises.

Headline Power Forecasts (Nigeria 2014-2020)
2014 2015e...

Nigeria Retail

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BMI View: Nigeria will endure an economic contraction in 2016, driven by external and domestic challenges, exacerbated by a series of controversial monetary and fiscal policy developments. We believe that the economy bottomed out in the second quarter of the year and, therefore, forecast a 0.8% real GDP contraction in 2016 as a result. Furthermore, inflation has risen sharply over the past several months, and averaged 13.3% over the first six months of 2016, rising from 9.6% in January to 16.5% in June. While this may impact negatively on household spending, overall consumer spending patterns are unlikely to change significantly, meaning that any increases in non-essentials spending will be driven primarily by the highest-earning Nigerian households.

Headline Household Spending

Nigeria Shipping

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BMI View: In 2016, we anticipate the outperformer in terms of tonnage throughput growth will be Port Harcourt once more, with the facility set to register double-digit gains. With the African giant very much dependent on oil production as a key export, it is fairly unwelcome news that a decline in proven oil reserves demonstrates the impact of lower levels of exploration activity in the country since 2005. Exploration will remain slow without significant improvements in regulatory certainty and the security situation, which will temper output at Nigerian ports as a result.

Port Harcourt is poised to take the top spot ahead of the port of Sapele (6.24%) and the port of Apapa (5.2%) in 2016. Nigeria's second largest port by tonnage throughput terms, the port of Tincan Island, will, however, see lower y-o-y growth than its domestic peers over the next 12 months, ending the year with y-o-y...

Nigeria Telecommunications

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BMI View: We maintain our positive outlook for the Nigerian telecommunications sector in our Q416 report update, but we have made some minor downwards revisions to account for the slowdown in 2016. The telecoms sector has undergone significant contraction again in Q116 due to the discounting of inactive SIMs. Furthermore, the challenging economic environment in 2016 will lead towards negative GDP growth this year. Looking ahead, subscription growth in the mobile market continues to be driven by factors including operators' promotional activities, multiple SIM ownership and the extension of network coverage to underserved areas. Meanwhile broadband penetration remains very low. There continues to be significant demand for traditional voice and data services, and to a large extent this demand has remained untapped.


Nigeria Water

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BMI View: This quarter, we have maintained our forecasts, and continue to view the Nigerian water sector as extremely underdeveloped, with limited mains water access, extremely poor sanitation, and an incoherent regulatory system. However, over the longer term, we take a more positive view, and expect that the substantial investment into sanitation and mains distribution, as well as new regulations to prevent open defecation, should have a significant impact on the quality and availability of water in Nigeria.

Africa's need for infrastructure is well known, with the African Development Bank (AfDB) stating that the annual financing need for African infrastructure is about USD95bn, of which only USD45billion is...

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