Within a large independent aftermarket (IAM) project in the automotive sector for Nigeria, africon GmbH had the chance to interview more than 50 experts and found that the IAM market in Nigeria is strongly dominated by fake products. A good example is the spark plug market where fakes in 2015 were at 65% but increased to almost 80% in 2016. According to an expert in the IAM market in West Africa, Chinese suppliers have lowered the quality of fakes to meet the lower buying power of Nigerian clients. The current market leader is NGK from Japan with a strong distribution by Asahi Brands. Other brands are distributed through various players e.g. Hydrotrans but also by OEMs e.g. Bosch.
Mobile money has become the most important money transfer system in Kenya by far, in contrast to the European continent where people mostly stay suspicious to such paying systems. africon GmbH with its long-term experience in the payment sector did a research for a leading manufacturer of chip for payment cards. In this context, the Kenyan market of banking and credit cards has been analysed and an important data base including information from more than 50 expert interviews in Nigeria and Kenya with banks, personalisation bureaus, distributors and other key organisations was constituted. Thanks to this extensive research, africon can resume that the Kenyan banking market is saturated. Investments into this sector can hardly be profitable besides banks and telcos who still buy payment cards. The Nigerian market currently shows a strong margin drop for payment chips and new technologies are being explored by banks and payment providers. Nevertheless, the dynamic development of mobile money is an important opportunity for the IT sector and internet security companies.
The slide of the month January showed that Western Africa is a very active region for hotel development. The rise of the construction sector also drives the need of interior design and sanitary products. Two third of the total Nigerian turnover in sanitary products come from retail business. Only one third of the products are sold in construction projects such as hotels or office buildings. Whereas, when it comes to high-end class, the ratio changes and project business dominates the selling of sanitary and interior decor. Key to success in Nigeria is the identification of key players.
The segmentation of the Nigerian market illustrated by the sanitary sector is typical for Africa. Small distributors and unofficial markets dominate. Still, africon sees an opportunity for large contracts in high-end projects. A successful market entry must cover the whole distribution chain.
Some African countries are known for its dynamic tourism such as Kenya and Tanzania, Namibia, Botswana and South Africa. Idyllic pictures of Safari-tourists can be drawn out of this imagination. However, the hotel industry that is also linked to business travelling is the most prospering in Western Africa. The first slide of the month in 2017 indicates that 45% of the African new hotel rooms were built in Western Africa. Also, in Nigeria more than 10.000 hotel rooms were planned in 2016, that is more than in any other African country. Angola and Kenya also show an interesting number of 3.000 to 8.000 rooms planned in 2016.
Thus, africon sees interesting potentials in the construction and interior furnishing sector. German companies can profit from the African construction boom as much in providing services as in selling sanitary equipment, furniture and floor covering.
The slide of the month December illustrates the market shares of different tractor brands in Nigeria which was researched in a large filter project over the past 6 months. The market leader is New Holland with about 20% of the present tractors in the country, followed by John Deere and Mahindra. Different Chinese products also take a big part of 20% on the market and are partly locally produced within a SKD production. As africon GmbH we believe that the market in Nigeria will continue to grow strongly as various initiative programs by the government will drive local production and imports.
While the slide of the month October showed an increasing demand of steel in African countries, the slide of the month November analyses the government’s role in steel projects. A serie of 101 interviews with executive managers in the steel industry showed, that in countries having an incentive program for steel projects, politicians have real influence on the sector’s decisions. Politics and economy can be linked strongly in these countries, a factor that must be considered when choosing geographical centers for the market entry of your company.
The slide of the month October shows that more and more steel is used on the African continent while steel production does not increase significantly. This gap must be disserved by imports but it also indicates interesting investment possibilities for the steel processing industry. Seeing the need of steel increasing, we can also resume that construction is going up since 2005.
The slide of the month September, which was created during a large IAM automotive and off-highway project, shows a drastic decrease of construction machinery imports to Nigeria since 2014. Close to the last presented slide about vehicle inflow to Nigeria, statistics show an important downwards trend of the automotive sector in general. The number of imports of construction machinery decreased by 65% between 2013 and 2015. A positive change is not foreseen for the ongoing year.
However, africon predicts a large market for spare parts in construction soon, before new sales will rise in 2018. Investors might find interesting potentials in this area while detailed analysis of the formal and informal markets as much as insights into local dynamics are recommended.
With the upcoming interst in Nigeria of various OEM and after market companies, africon GmbH did a comprehensive study on the Nigerian automitive market with focus on OEM production but also on the local spare parts markets.
One of the key findings has been that the vehicle inflows to Nigeria have dropped significantly due to lack of FOREX but also due to implemented taxes for vehicles. Our recommendation for aftermarket companies:
1. Evaluate the informal markets in Nigeria very closely as “official” companies are hadly present
2. Find a way of taking influence directly in the market by contacts to local players
3. Educate the market on the benefit of buying genuine parts as fakes are dominent in Nigeria
For more information please do not hesitate to contact us on firstname.lastname@example.org.
The slide of the month July shows continuous growth of more than 20% in payment cards for Nigeria. At the moment the total market has got about 42 million cards according to various sources. The major share of payment cards in Nigeria are debit cards with almost 98%. Credit cards have not been popular in the market. Verve, a national payment scheme still holds the strongest position however with sincere competition from Mastercard. The bank with the most cards in the market is First Bank, followed by UBA and Ecobank.
At the moment the following trends can be observed:
- Strong marketing activities to push China Union Products to come by end of 2016
- Mobile solutions on the rise with payment cards being a commodity product
- Growth in agent networks resulting in the need for more solutions
Over the past 2 years africon has developed a strong understanding of the Nigerian payment cards market and would be happy to answer all questions on email@example.com.
November 7 - November 8