Investment profile: NigeriaNigeria is Africa's foremost business destination second only to South Africa.
Over the past decade Africa has been the second-fastest growing economy in the world, with GDP accelerating more than five percent a year on average, according to the World Bank.
And even as the global economy has slowed in recent months, growth in Africa has largely remained on track, with the World Bank predicting the continent could be on the brink of an economic takeoff much like China 30 years ago.
So what's driving it?
Africa's natural resources are a big factor; so too is the continent's rising consumer class.
According to the McKinsey Institute, household consumption is now higher in Africa than India or Russia, and it is expected to grow – it estimates that the number of African households with discretionary income is expected to jump by more than 50 percent to almost 130 million by 2020.
"Africa is increasingly being taken more seriously as an investment and business destination, but in many sectors, a window of opportunity does still remain open for establishing an early mover advantage," says Ajen Sita, Africa Managing Partner at Ernst & Young. "However, competition is intensifying and that window is closing.
"For companies and investors looking for long-term sustainable growth, we are in no doubt that the time to act on the Africa opportunity is now. Now is the time to invest in understanding markets, identifying partners, developing opportunities, configuring industries, building brands and establishing local credibility."
Investors have taken note. Oil-rich Nigeria has been a preferred destination – it being Africa's most populous country and second-largest economy – where economic growth was around six percent every quarter in 2012 and stocks have surged.
It ticks all the right boxes.
The good news for would-be investors is that Nigeria's economy is expected to grow slightly faster this year than in 2012, driven by progress in the agriculture, banking and oil sectors, while high inflation rates should ease slightly.
Growth in Africa's second biggest economy is forecast at 6.75 percent compared with an estimated 6.61 percent in 2012, according to an outlook from the national bureau of statistics (NBS).
"Energy reforms ... banking sector, agricultural reforms and oil sector reforms are expected to drive higher growth during the period (2013-2016)," the report says.
GDP should expand by an average of 7.2 percent next year, 6.9 percent in 2015 and 6.6 percent in 2016, it said, adding that the projections assumed no change to monetary policy, stable fuel prices in the continent's biggest oil producer and a stable external environment.
The rapid growth of mobile subscribers is another big draw for investors.
South African company, Shanduka Group, recently bought shares in MTN Nigeria - the largest mobile operator in Nigeria with more than 45 million subscribers and an estimated market share of 48 percent - worth R2.96 billion.
A statement by the company said Shanduka Group bought the shares through its subsidiary in Mauritius.
"This is the largest investment the company has made outside South Africa," said Phuti Mahanyele, the CEO of Shanduka Group. "It is most significant investment in another African country. MTN Nigeria is a business that is well established within a market that has great potential for further growth. Shanduka will continue to pursue opportunities in other parts of Africa."
South African banking group FirstRand is, meanwhile, aiming to become a major player in Nigeria after its subsidiary, Rand Merchant Bank, secured an investment banking licence from the Central Bank of Nigeria.
FirstRand CEO Sizwe Nxasana said in a statement on that FirstRand sought to build a presence in high-growth African markets with attractive long-term prospects.
"This move is consistent with our strategy, as we often enter a new market through the appropriate operating franchise, in this case RMB, and the rest of the banking group may then follow," Nxasana said in a statement.
"Nigeria currently offers strong growth prospects, particularly with regards to corporate and investment banking," he added.
RMB has been operating from a representative office in Nigeria since January 2010, and chief executive Alan Pullinger said the licence - which required an initial capital investment of $100 million from the company - would "allow us to significantly scale up our in‐country offering".
"Nigeria as a country and the West African region as a whole are experiencing significant growth," he said.
South African investors are also eyeing Nigeria's power sector, eager to replicate the success story of MTN in Nigeria, especially in the electricity sub-sector.
Nigeria is among the countries that are leading the charge in Africa's economic revolution. The increasing flow of foreign direct investment, and investment by African into other regions of Africa, could launch the continent to greatness over the medium future.
"Nigeria's large market, growing middle class and rapidly transforming economy continues to attract international investors, who find these opportunities irresistible," one expert told Africa Outlook.
Many are predicting that Nigeria may soon join the Brics (Brazil, Russia, India and China and South Africa), nations, with the country's Finance Minister and Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala confirming that Nigeria has what it takes join the Bric nations in an interview with the BBC. She admitted however that even though the fundamentals are right, infrastructural constraints, such as epileptic power supply, hinder growth.
"When we solve those problems, we are going to be in the low double digits and that will parachute Nigeria into the Brics," she said.
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