Nigeria: How To Make More Successful Investments

In Business Ideas, Business Opportunity, Investment Opportunity by bomaLeave a Comment

I am glad that more of us are interested in doing business in Nigeria or investing on the continent.

This is very evident in the influx of investors and startups this week in Lagos, Nigeria some of which were attending the Lagos StartUpWeek 2017, ProPak West Africa 2017 and so many other events.

If you attended any of the events above, comment on your experiences there. I am sure we would all like to know.

Lagos Traffic

Did you notice anything unusual this week in Lagos? Lagos traffic is normally on a high but this weeks’ traffic was on another level.

A friend of mine was in this traffic for approximately 6 hours on Friday. I had my fair share of traffic woes on Wednesday night.

I was stuck in traffic for almost 3 hours after attending a Capital Square Event – where Rich Tanksley, the Senior Vice President Special Projects of NeuBridges was answering questions from developers and Startups in Ikoyi.

Apapa’s traffic could not have been the sole reason for the traffic this week, it had to be the simple reason that more people were in town for their different events.

In case you do not live in Lagos and you are reading this, Apapa is a Local Government Area in Lagos and home to a number of ports and terminals operated by the Nigerian Ports Authority.

Apapa Road has been under construction these past few weeks and has been making life unbearable for people who have business to do there.

In the last one week, its traffic has spilled over and is now affecting motorists in the rest of Lagos especially those on the Mainland.

That been said, I am still a bit worried about how many of us (especially those of us in the Diaspora) are making largely emotional or uninformed decisions.

As a result, we increase time, risk, and cost to implement our undertakings.

In this article, I want to share 5 practical steps on how to make more successful investments in Nigeria.

Or in other words:

Let me share with you very simple but rarely discussed insights into how you can very strategically cut down risk and increase your investment success in Nigeria – especially when you are investing for the first time.

Here is what to do to succeed in Nigeria.

  1. Seek out Local Talented Expert

One of the best places to look is through LinkedIn.

I recently heard that some people fake their LinkedIn profile page which I found to be very interesting. Because people cannot fake articles, posts, recommendations by others, etc on LinkedIN.

These are what you should be looking at when trying to recruit on LinkedIN.

Look out for the skillset and when you get to speak to them you would be able to know if they are who they say they are online.

I can determine the truth from a lie in less than 2 minutes of having a structured conversation.

Do not limit your search to headlines and summary pages.

Rather dig in deep to find out what others are saying about them, then make your judgement. When you eventually speak with them, look out for local market knowledge.

Also, be humble enough to take their recommendation because they are on the ground and you are not. They see these things on a daily basis.

Some of us have taken out time to research and study the industries that we play in within Nigeria.

We can give you first-hand information on how things are run here, guide you and provide you with access to decision makers that can help you solve your problems easily at faster turnaround time.

We have gone a step further to know how things work so that you won’t waste your time chasing shadows.

  1. Market Intelligence Is Very Important

The Nigerian Market is a high risk/Extremely high opportunity market.

With that in mind, your expenditure and risk may significantly increase. The market is extremely intriguing with huge opportunity but risk for investment is generally significantly higher, too.

Time and expenses almost always significantly increase during your start-up period. So be aware of that when you make a decision!

Nigeria has a lot of regulated industries and the way to get jobs there follow a strict regimen. One of such industries is the oil and gas industry.

Another one is the telecoms industry and so many others.

Soliciting For Agents

Except you plan on looking for work in a different way, then you can solicit for agents. Even this is fast fading away, except the agent is just desperate.

Bear in mind once something comes up that is better than yours they would leave you hanging immediately.

Then the story starts that Nigerians are bad people instead of blaming yourself for being the bad person because you did not do what was the correct thing to do in the first place.

We recently conducted a survey across Lagos on product based businesses where we sort to know if they would like to become agents to foreign based product companies.

Especially the risk adverse ones who do not want to risk anything like their already successful counterparts who risked it to be in Nigeria and are reaping the rewards of that move.

On an average the respondents said the same thing that they would rather be paid for the amount of work it takes to put people’s products in front of its clients and customers.

They claim that it is a lot of work involved and most times a lot of their own money to be trying to take your products up.

This is true based on personal experience, commissions do not help when you have been chasing a job for up to a year especially when the product is new.

The market does not know your product yet so it is a lot harder for new products to get traction immediately but once the market knows and trusts your product everything else becomes a breeze.

Bear in mind, most people already have stock of their own products. A lot of marketers already have their day to day activities and have no plans to add another’s stock to theirs for an agent fee.

The stress in Lagos, is already a problem for a lot of people – the fewer the burden the best.

It is best for the investor to come prepared to invest directly into Nigeria.

Invest in developing a market entry strategy done where they would either pay a fixed fee or some form of compensation to motivate their work to be done on their behalf.

Don’t forget to include a marketing budget and a capital base in your bank account – this is very important for success in Nigeria.

Before you change your mind, you might want to ask these 5 companies how market because they made it in their first one year of doing business in Nigeria.

  1.  Invest into a small local company that has clients and customers already queuing 

The alternative to number 2 is to invest into a small local company that has clients and customers already queuing.

We did not say give the small local company your brochures and tell them yet again about juicy commissions, NO!

Invest means Financial Investment from Day one. You need to put down finance to get a return on your finance. Not brochures and then be expecting to get a financial return on your brochures.

We are sorry to burst your bubble but it does not work like that. You cannot expect to reap where you did not sow.

Sow a corn seed and reap maize.

You might argue that you would train them.

On what really?

Are you training them on something that would value to them and increase their bottom line?

Or are you training them on how they would sell your product?

How does your training them on selling your product help them eventually?

Sorry, if you are offended but the truth has to be told.

That is why it is still best to invest directly, so you have complete control of your business. You would be able to recruit a team to help you move your products or services into the desired market by yourself or with the help of a consultant.

There are lots of small local companies that has clients and customers already queuing up in Nigeria but do not have a chance to get local loans to meet their demands because of double digits interest rates.

You could come to the rescue and invest financially into that clients and customers capital after doing your independent due diligence of course and save the day and make your return on investment.

Bubez foods is one great example, 2 years in the business of selling pap in Nigeria.

Invest in a business like theirs for expansion and you will be in business straight away with your investment, because Bubez Foods has clients already queuing up!

These are the stories to look out for when you want to invest in Nigeria not directly.

So here is an important lesson.

Do not settle down with a promise on how great a company will be when you just put the money in.

Instead, consciously look out for those that already have customers queuing or that meet a very clear local demand in the country that is currently simply not being met.

Then do your own market assessment and due diligence.

  1. Go for consumer-based high scalability

One huge success contributor in Nigeria is its huge population.

Nigeria has over a 180 million people and still counting. It’s scalability factor is enormous for any forward-thinking business or investor.

You can easily scale your product or service across Nigeria and can even expand beyond to other countries in Africa.

I saw an extreme example from one of my contacts on LinkedIN which we modified for this post.

In her example, if you are investing into the import of specialist medical equipment then scalability is low, because there are only so many private hospitals in a given market that could afford such kind of equipment.

You quickly hit your ceiling and growing can be difficult.

Even though I do not 100% agree with this analysis of the medical example which I would come back to in a jiffy.

Back to my contact’s example:

If you invest into a company that farms and processes fish for example the scalability is enormous both within the country and across the borders.

Everyone has to eat!

We understand the value of fish across borders (which is crucial for easy cross-border expansion).

You can simply expand production capacity and sell to a wide range of customers and clients including supermarkets, hotels, restaurants, traders etc.

Now the reason, I do not completely agree with the medical example is because currently there are breakthrough bankable specialist equipment that are not yet available in any markets yet.

Imagine investing in one of these new medical specialist breakthroughs with a hospital in Nigeria.

Now you can imagine the amount of ROI within the shortest possible period.

At least for this one illness, Nigerians would no longer have to go out for medical tourism. Other countries would come to Nigeria for medical tourism.

You have added value to the country, your investment and to your future clients.

Nigeria could become the Mecca for this treatment.

There are lots of different research centres round the world with such specialist medical equipment all looking for investors to help actualise their dreams.

Forterun Global is privy to this information.

We are still working on the details though. If you are an eye or a spinal cord specialist hospital, we would like to hear from you. Contact us below.

  1. Contribute your own skills

Here is an important factor that can increase the success of your very own investment.

That is the level of contribution you can and are able to make towards the company you are investing in.

A lot of the investments in Africa are entrepreneurial investments.

To safeguard your investment, you cannot just put in money and wait for a reaping.

In fact, many Nigerian Entrepreneurs and SMEs are looking for investors who have more to offer than just their money.

And in return you don’t just get a share of the company, but you enter a personal and professional partnership.

This can be rewarding to both of you in terms of the impact.

If you are investing in Nigeria for the first time, be aware of those five strategic steps.

Apply them consciously to cut down risk and increase your success potential when investing in Nigeria.

Forterun Global provides insights and analysis on more than 27 industries in Nigeria. We provide the strategic insights needed to enter into the Nigerian market. To learn more about how we can help you grow, contact us below.

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HAPPY INDEPENDENCE DAY TO ALL NIGERIANS AND OUR NUMEROUS NIGERIAN CLIENTS

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