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Retail market outlook in Nigeria

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Nigeria has some of the biggest opportunities for the retail sector in Africa. However lingering concerns over select risk factors, including tariffs imposed on the industry, may affect investment in the near to medium term.

Currently, more than 80m of Nigeria’s 170m citizens live in or close to urban areas, a figure that is set to rise in coming years as the economy moves away from its traditional rural base. This shift to the cities, and the rise of a broader middle class, represents a vast pool of customers for retailers.

According to a report released in July by research firm McKinsey Global Institute, Nigeria’s consumption could rise to $1.4trn a year by 2030, from its present level of $388bn a year, an average annual increase of 8%.

This rise in consumption will be driven by higher income levels, with the report forecasting 35m households to be earning more than $7500 a year by 2030, greatly expanding the middle-income bracket. This increased affluence is expected to result in 7.1% annual growth in sales of food and non-food consumer goods. The rise of non-food goods such as personal care products will record an even sharper rate of growth, with sales rising by 10.6% a year through to 2030, compared to 6.8% for food.

First-mover advantage

Another report prepared by international management consultancy A T Kearney earlier this year tipped Nigeria, along with Gabon, as offering the best retail investment opportunities in Africa. Kearney’s African Retail Development Index ranked Nigeria second overall for retail potential, saying it had rapidly evolving retail dynamics and demographics, with many other global retailers planning to set up shop.

“There is no time to spare entering these markets before these first movers gain an advantage as they establish their brands early and secure loyal customer bases,” said the report.

The opportunities in Africa more broadly have prompted multinational brands such as Walmart and Carrefour to expand their presence on the continent in recent years. Walmart acquired a 51% stake in South African wholesaler Massmart in 2011, which operates two stores in Nigeria under the Game brand.

Last year, French retail giant Carrefour partnered with the French distributor CFAO, which specialises in African sales and distribution, and plans to open stores in eight countries across the continent by 2015, including in Nigeria.

Challenges to growth

Concerns over domestic security could be an issue for local and foreign retail investors in the short to medium term, especially in the north of the country where interest has stalled due to militant activity. Continued unrest may also slow larger retailers moving into smaller cities, in particular those in or close to potential areas of instability.

Nigeria faces other challenges endemic to most emerging markets on the continent. Expansion in Africa can be slowed by a lack of infrastructure and difficulties in securing property, said Massmart’s CEO, Grant Pattison. Those hurdles, as well as problems with corruption, an unreliable legal system and currency stability in some countries have to be assessed when planning stores, he said, quoted by Bloomberg last year.

Another factor which may impact retailers in Nigeria is related to the fees charged on bank deposits of more than $15,000, a move by the state to promote a cashless economy and also rein in money-laundering. With many customers of retail chains spending less than $5 per transaction – purchases that tend to be made in cash – retailers have a high cash turnover that incurs bank fees. While some chains such as supermarket group Shoprite have seen electronic sales rise steadily, with the retailer reporting debit card purchases representing about 32% of total sales, cash remains king for the time being, though at a cost due to mandated fees.

While supporting the cashless economy programme, Haresh Keswani, managing director of the Artee Group – which operates a number of retail brands in Nigeria – says there are still hurdles to be overcome.

“As the retail sector develops, cashless transactions will grow. Cashless is a great idea, however the Central Bank of Nigeria must restrict cash transactions and create incentives for cashless payments,” Keswani told OBG.

Changing shopping patterns

As in most African markets, at present around 70% of all retail sales are conducted at small shops or informal outlets, however this will likely shift increasingly in favour of larger retailers in the years to come. McKinsey estimates the rate of sales expansion by modern format stores at 28% a year, a rate of growth that will gain pace as urbanisation increases.

Nigeria had attracted more than N205.4bn ($1.26bn) worth of investments into the retail sector in 2012 and 2013, the minister of industry, trade and investment, Olusegun Aganga, said at the end of last year. This is a reflection of growing demand for formal shopping options, with further floor space due to come on-line by the end of 2014, both in the form of stand-alone outlets and shopping malls.

This article is re-published with permission from Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia and Latin America.

To receive OBG Economic Updates by email, please register for free here 

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EABDC News

How to Get Your Business Funded

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Banking & Finance

Contrary to popular belief, business plans do not generate business financing. True, there are many kinds of financing options that require a business plan, but nobody invests in a business plan. Investors need a business plan as a document that communicates ideas and information, but they invest in a company, in a product, and in people.

Small business financing myths:

  • Venture capital is a growing opportunity for funding businesses. Actually, venture capital financing is very rare. I’ll explain more later, but assume that only a very few high-growth plans with high-power management teams are venture opportunities.
  • Bank loans are the most likely option for funding a new business. Actually, banks don’t finance business start-ups. I’ll have more on that later, too. Banks aren’t supposed to invest depositors’ money in new businesses.
  • Business plans sell investors. Actually, they don’t—a well-written and convincing business plan (and pitch) can sell investors on your business idea, but you’re also going to have convince those investors that you are worth investing in. When it comes to investment, it’s as much about whether you’re the right person to run your business as it is about the viability of your business idea.

I’m not saying you shouldn’t have a business plan. You should. Your business plan is an essential piece of the funding puzzle, explaining exactly how much money you need, and where it’s going to go, and how long it will take you to earn it back. Everyone you talk to is going to expect to see your business plan.

But, depending on what kind of business you have and what your market opportunitiesare, you should tailor your funding search and your approach. Don’t waste your time looking for the wrong kind of financing.

Where to look for money

The process of looking for money must match the needs of the company. Where you look for money, and how you look for money, depends on your company and the kind of money you need. There is an enormous difference, for example, between a high-growth Internet-related company looking for second-round venture funding and a local retail store looking to finance a second location. In the following sections of this article, I’ll talk more specifically about the types of investment and lending available.

Venture capital

Continue reading

EABDC News

Gambia Women Farmers Urged to Maintain Lead Role in Agriculture

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Women farmers in rural Gambia have again been urged by the national women mobiliser of the ruling Alliance for Patriotic Reorientation and Construction (APRC) to take a lead role in the country’s food security drive and support the ‘Vision 2016 food self-sufficiency agenda’ of President Jammeh and his government.

The call was reiterated by Isatou Jiffanga Jarju, who, accompanied by a high-powered delegation has begun an eight-day nationwide tour meant to reinforce President Jammeh’s food security call and to engage women farmers to ensure their successful participation in this anti-hunger drive.

The initiative, which was sold out to Gambians during the 2014 presidential tour, seeks to stop the country’s decades-long dependency on imported food, with a first priority on rice.

President Jammeh, it would be recalled, first made the pronouncement in his 2013 ‘Dialogue with the people tour’ and used the initiative as his agenda for the 2014 tour.

Speaking at a meeting in Kerewan, the administrative town of the North Bank Region (NBR), Women Mobiliser Jarju expressed hope that the V-2016 targets will be met, but hastened to enjoin women to take the lead in its implementation.

“Since 1994, the Gambian leader has been calling on Gambians to consume what is grown locally, but many people did not understand at that time. Many of the skeptics who thought that President Jammeh’s targets will not be attained are now convinced that if people go back to the land, the country can feed itself. What we have never thought of since 1994 is what we are about to see in The Gambia’s development,” she told the women. Mobiliser Jarju also challenged the party women mobilisers at all levels to always be the first to respond to President Jammeh’s calls, urging them to engage their colleagues at the grassroots so that they can effectively participate in the food security drive.

“President Jammeh has sympathy for Gambian women and now it is our turn to reciprocate that gesture by working with him to achieve the Vision 2016. Let us work to be food independent,” she challenged.

She called on the women folk to continue being proactive in whatever they are doing, saying they have earned the respect and admiration of the head of state.

The deputy national women mobiliser, Fatou Njie-Fofana, said the country is blessed with arable lands that can be cultivated to feed the entire population. She pledged women’s total support to all endeavours of the head of state, noting that they are ready to actualise the Vision 2016 initiative. “Let us all work with Isatou and accomplish President Jammeh’s vision. Let us change our attitudes, the president trusts us and we should also do our part to make sure his targets are attained,” she said.

The president of the West Coast Region chapter of the National Women Federation, Aja Binta Sabally and Ida Faye of Sabach Sanjal, both agreed that President Jammeh has done his part in terms of providing farming equipment, seeds and fertilizer to Gambians, arguing that it is now the turn of the citizens to do their part.

Njambeh Njie and Isatou Jallow, Lower Baddibou women councilor and mobiliser respectively, both commended the national women mobiliser for the visit, saying it will offer women the opportunity to dialogue among themselves. They pledged that women of Lower Baddibou and the entire North Bank Region will always support the president in the successful attainment of his vision 2016 target.

They however appealed to the mobiliser to ensure that any project that comes for women is handled and implemented by women themselves. “For far too long, projects will come in the name of women and they will be implemented by men and this made us to benefit very little,” they said.

© allAfrica.com (Source)

Africa EABDC News

Opportunities that Africa Presents – A discussion

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How can business tap into the opportunities that Africa presents, while also maximising its contribution to long-term economic growth and broad-based socio-economic impact?

  1. What do you see as the main business opportunities in Sub-Saharan Africa?
  2. Sub-Saharan Africa faces a number of socio-economic challenges – what is the role of business in tackling these?
  3. What role can others – in government, society, academia and business networks – play to maximise the contribution of business?

Can we hear your opinion on this.

© Africa Hub (Source)

News

Empowering Smallholder Farmers Through Business Solutions

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Small Holders Farmers

Most smallholder farmers do not grow enough food to last the year. Once their food runs out, many farm families experience what is referred to as a “hunger season” – typically a six-month period of time of meal skipping and meal substitution. This plays a major role in child deaths: one in 10 children die before their first birthday.

At One Acre Fund, we have developed a business model that helps over 180,000 smallholder farmers in East Africa end their hunger seasons. This model systematically addresses the major barriers that smallholder farmers face.

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Africa News

Zimbabwe’s Emerging Tobacco Queens

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Tobacco-farmer

Harare — Madeline Murambwi sits behind the wheel of her brand new Toyota Land Cruiser, threading her way through the traffic in Zimbabwe’s capital, Harare. She’s on her way back from the tobacco auction floors where she just pocketed thousands of dollars.

“Tobacco farming is a brisk business here. Before joining it, I didn’t realise men were making lots of money out of this leaf. I have made great economic strides in my life,” Murambwi tells IPS, adding that she now also invests in property.

“So far I have made 42,000 dollars through tobacco sales, with more sales to come,” says Murambwi, 47, who has a 32-hectare tobacco farm in Zimbabwe’s Mashonaland East Province.

In 2012, Murambwi ventured into tobacco farming and her business continues to grow each season. Continue reading

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3 Smart Hiring Lessons From Hillary Clinton’s New Book

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You have young stars in your organization, frontline or midlevel employees who are already informal leaders. If they continue on their talented trajectories, they’ll one day join the ranks of your top team. Many businesses train these promising pups by giving them so-called “stretch” goals or assignments: Tasks that are slightly above their current skill levels, based on the idea that they’ll learn by doing.

Nothing wrong with that. But while reading Hillary Clinton’s new memoir, Hard Choices, I was struck by how she’d taken something of the opposite approach with some of her key early hires as Secretary of State. Rather than entrusting young stars with “stretch” assignments, Clinton hired established leaders–people with enough credentials to be Secretary of State themselves–to deliver on high degree-of-difficulty tasks.

In other words, she gave stretch assignments not to promising young stars, but to highly credentialed leaders. Continue reading

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How to Be Way More Productive

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Wake-up

Wake Up With More Energy

Many people feel tired in the morning not because they didn’t sleep enough but because they have low blood sugar. You can minimize this by consuming a tablespoon or two of unsweetened almond butter before you go to sleep. It’s a very simple way to stabilize your blood sugar. (I’ve tested this by having a continuous glucose monitor implanted in my side.) Right away, a lot of people will go from feeling groggy to feeling extremely alert when they wake up. Continue reading

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Things To Do Instead of Innovating

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Invest In Employees

How important are happy employees? More than you might imagine. David Sirota, co-author of The Enthusiastic Employee, found that businesses with high morale outperformed industry counterparts by 20 percent; those with moderate or low morale underperformed peers by about 5 percent.

Encourage Efficiencies

Don’t underestimate the cumulative impact on your bottom line of encouraging employees to make improvements in areas they understand. Continue reading

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The Secret to Building a Startup That Stays Nimble

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The question caught me by surprise. I was working as an IT manager at a large consumer electronics company in Minneapolis at the time. My days were spent looking over budget reports (ho-hum), scanning over project management summaries (blah) and either preparing for or writing performance evaluations (dull as paint). In short, I was really bored.

“Sure,” I told my boss at the time.

Anyone who knows me will find out quickly that I own a Taylor acoustic guitar and a Fender Telecaster. I have (almost) every song by the band Manchester Orchestra memorized. Joining an impromptu team to start a record label? I’m there. Continue reading