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6
However, from all the
projections as well as all
that is happening, our
economy is struggling.
Consider the following:
7
Nigerian Economy: Growth Rate
6.7 6.5
5.9
2.3 2.1
Nigerian Economy: Inflation Rate
8.7
9.2
9.3
9.6
11.4
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Although other countries
(especially those with a heavy
dependence on oil revenue) are
experiencing a downturn as well, the
bad news is that most of them are
better prepared to handle the situation
better than we are.
I will illustrate this shortly.
Drop in oil price
$100
$63
$29
$30
$39
Note: If the oil price
stays above $38,
Government will be
able to fund the
2016 budget and
things may not be
as bad as expected.
Based on the drop in oil prices
(and other factors), the value of
the Naira has dropped drastically.
Although the official CBN exchange
rate is N196, black market rates
currently fluctuate between
N315 and N350 to a Dollar.
Finally, our external reserves
(or savings) are very low
($27.8b as at December 2015).
Consider the following countries:
Country Foreign Reserves ($)
China 3.4 Trillion
Brazil 359 Billion
India 346 Billion
Algeria 155 Billion
All the FOREX transaction
restrictions we are currently
experiencing is largely due to
Government efforts to shore up
our foreign exchange reserves
and halt the depreciation
of the Naira.
1. As Nigeria’s main source of
income is oil (over 90% of FOREX
earnings & 70% of Government
revenue), it means we have less
money to spend as a country.
Therefore the amount of money
within the system is reduced,
and the cost of living & doing
business rises.
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2. We don’t refine enough fuel to
meet local consumption. And so, we
are spending scarce resources to
buy refined products at premium
prices.
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3. Nigeria is an export driven
economy. We import everything
(including tooth picks!) and we pay
in Dollars.
This means the cost paid by
importers increases, the more the
Dollar rises, therefore the cost
of goods and services will also
increase as I am sure you have
experienced.
17
There is a current push
towards a diversification of
the economy. Using this as
a stepping stone, I will
spotlight 3 areas of
opportunities briefly.
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Agriculture
Nigeria’s population (186.4m) is
the largest in Africa and 7th
largest in the world.
Someone has to feed all those
people. Also, consider the global
drive towards the consumption
of organic/fresh products.
Agriculture contd.
There is a lot of Government and
private funding opportunities in
this area. Some of these include:
Fund for Agricultural Finance in
Nigeria (FAFIN) and Agricultural
Credit Guarantee Scheme Fund
(ACGSF).
But you need strong idea and
business concept.
Agriculture contd.
Whatever part of the value chain
you choose to pursue, the
opportunities are there. But you
must bring creativity to it. Always
ask how can I make it better?
Cf: OmoAlata, Hay Country Foods,
KayMart
Services
The service sector accounts for
52% of Nigeria’s GDP in terms of
employment.
There are vast opportunities here
due to the large size of Nigeria’s
middle class (Africa’s middle class
of 313 million people is the fastest
growing middle class category in
the world).
Services contd.
The middle class spends on
comfort. Therefore, the question is
what service can you provide and
how can you provide it differently?
Technology & Social media
To understand the potential
here, consider the following
facts and figures.
Technology & social media contd.
The opportunity here is to find out
what you can provide for these
people (below 35) that they need
on a daily basis.
For this demographic,
technology and social media
are important.
Technology & social media contd.
Find out what they want, what
they need, what they eating, what
they wearing, where they going
e.t.c.
Then ask what can I provide
and how can I leverage
technology to do it.
Whatever opportunity you decide
to pursue, you must strive do
things differently and you must
remain consistent.
Due to the tightness in the
economy, there is a drop in
demand as people become more
careful with spending.
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34
The law of Demand & Supply
states that when a standard
commodity is offered by
numerous sellers to numerous
buyers, price falls.
Tweak the assumptions
undergirding this law and you
will differentiate yourself and
your business.
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Uncomoditise yourself, product or service
Create business distinction
Distinguish your customers
Be advantageously comparable to your competitors
Retain your customers
Create desire for your skills, products or service
Make access to your market difficult for competitors (because irreplaceable)
Adapted from Alder Consulting’s Brand Septagon. ©Alder Consulting 2016
If you just concentrate on any 2
of the foregoing, you are on
your way to making the best of
the opportunities that come
your way.
I wish you success in your
endeavours.
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