The Nigerian Industrial Quintet
WHY YOU SHOULD CARE
Because betwixt and between the steady flow of bad news from the continent, bright spots and opportunities exist a’plenty.
By Nathan Siegel
In April, Nigeria’s GDP jumped 86 percent overnight, thanks to a switch-up in calculation methods, and its $510 billion economy is now considered Africa’s largest. Accounting feats aside, the world’s sixth-largest oil producer has diversified somewhat, playing host to a blossoming startup scene and manufacturing revolution. Of course, no balance-sheet revision could remove the massive obstacles faced by the new BRIC — corruption, Boko Haram, Ebola and abysmal power infrastructure top the list — but an array of protectionist reforms will buffer these industry leaders, allowing them crucial space to prosper:
The Pitch: Africa’s Amazon.com
Co-Founders: Tunde Kehinde and Raphael Afaedor
Size: 1,500 employees; 1.4M monthly visits
Recent Moves: Backed by German incubator Rocket Internet, Jumia has successfully fought off local competitor Konga as well as omnipresent Amazon and Alibaba, vaulting to the top of the continent’s fledgling e-commerce sector. In its first year of business, 2012, Jumia served half a million customers. Regional Internet penetration is still relatively low, at about 16 percent, but that only portends growth — to 30 percent by 2025, according to the McKinsey Global Institute — and about $75 billion in e-commerce for the taking. Jumia’s already boxing out hard, positioning itself strategically in Ivory Coast, Egypt, Morocco, Kenya and, as of late last month, Uganda, Ghana and Cameroon — and only occasionally playing dirty.
The Pitch: Netflix in Nollywood
Founder: Jason Njoku
Size: 80 employees; 1M monthly hits
Recent Moves: With 1,500 to 2,000 films a year, Nollywood is second only to Bollywood as the world’s most prolific film industry. The industry is worth $6 billion, accounts for 1.3 percent of GDP and is the country’s second-largest employer. Consider iROKO’s $21 million backing represents the first foreign investment in Nollywood, and tell me the startup’s prospects aren’t mouth-watering. iROKO streams movies like Netflix does, except its main competitor is, uh, piracy, not Blockbuster. Piracy is a serious issue for Nigeria’s entertainment industry, but iROKO has hedged with music streaming and downloads. And with new offices in London, New York and Johannesburg, it’s clear that Nigerians aren’t the only ones with an insatiable appetite for Nollywood flicks.
Oando Energy Resources
The Pitch: Drill, baby, drill
Industry: Oil and gas
CEO: Pade Durotoye
Size: 1,000 employees; $127.2M in revenue
Recent Moves: Oando shook the oil world late last month after seizing control of ConocoPhillips Inc.’s Nigerian assets for a cool $1.5 billion, solidifying the homegrown giant as a leading force in Africa’s biggest oil-producing economy. With the 212 million-barrel reserve acquired in the megadeal, Oando essentially doubled its capacity. And there’s reason to believe Oando’s share will grow. Antagonized by an infamously corrupt government — approximately a fifth of Nigeria’s output, or 400,000 barrels per day, is stolen — many foreign multinationals have migrated their operations offshore, where oil is more difficult to illegally tap. That just serves lucrative onshore reserves to local companies on a silver platter. Oando licks its lips.
The Pitch: Pan-African Domination
Chairman: Aliko Dangote
Size: $24B estimated valuation
Recent Moves: Dangote Cement is (1) Nigeria’s biggest publicly traded company, (2) commanded by Africa’s richest man, (3) has hiked profits by 30 percent (4) in a market that grew 15 percent in 2013, (5) just opened a $1 billion plant that will surge output by 40 percent and (6) plans to construct plants in 11 African countries. Smells like G-R-O-W-T-H. Oh, and the fundamentals! Cement is an essential ingredient of Nigeria’s booming economy, and Dangote Group is a behemoth, with holdings in sugar, flour, real estate, telecommunications and beverages. By fostering cozy, in-bed relationships with the country’s political elite, the “predator[y]” Dangote has reveled in protectionist import bans, according to a 2007 cable to Washington released by WikiLeaks. As Nigeria explodes onto the world stage, Dangote follows.
Innoson Vehicle Manufacturing
The Pitch: Leading Nigeria’s auto revolution
Chairman: Dr. Innocent Chukwuma
Size: 7,400 employees; 300 units/month
Recent Moves: Innoson is not only the first indigenous car manufacturer in Nigeria, but in all of sub-Saharan Africa. It’s incipient, yes: Its inaugural batch of cars rolled off the lot in 2013. But like many Nigerian companies, its potential for growth is practically unlimited. (Plus, who doesn’t love history in the making?) Currently, Nigeria imports almost its entire fleet, to the tune of $7.4 billion in 2013. However, the unveiling of the Nigerian Automotive Industry Development Plan could mark a new era for indigenous automakers. The plan will raise tariffs to 70 percent for imported cars in a bid to create 300,000 jobs and spur a Nigerian industrial revolution, with Innoson auditioning for the leading role.
- Nathan Siegel, Nathan covers global business, sports and culture for OZY, where he landed after putting his dreams of basketball stardom on hold ... for now. After a childhood of jumping from country to country, Nathan is used to feeling like a tourist everywhere he goes. Follow Nathan Siegel on Twitter Follow Nathan Siegel on FacebookContact Nathan Siegel