Thursday, May 31, 2012

Malls boost Nigeria's economy

Nigeria's retail sector, which accounts for 17 per cent of the local economy, has seen a favourable change over the last years. The growth and relative stability of the nation's economy over the past years has also significantly contributed to the expansion of the country's middle class.

Investment conditions, interpreted as transparency measures, favourable economic climate and appropriate regulation/taxation are also playing an important role in the development of Nigeria's retail sector.

The 2003 ban on a wide array of imported goods that included clothes, shoes, selected foodstuffs, among others, by the Olusegun Obasanjo administration intended to stimulate local production, saw a good number of Nigerians flying to Dubai and to other regional commercial centers to do their shopping.But, all that has been gradually reducing, in favour of Nigerian-based retail shops that have gained in diversity and in sophistication and that have also benefited from increasing public affluence.

While the country cannot be said to be undergoing a consumer revolution, it is drifting towards such a revolution with shopping malls springing up in every nooks and crannies.

A cross section of people who spoke to LEADERSHIP said this development would be a healthy one especially in the area of affordable products and creating thousands of new jobs.

They however, added that it would make business tough for local retailers who may find it a bit difficult to compete favourably under this new arrangement.

"Many local retailers with small shops and unattractive shops and stalls will find it rather tough to compete with mighty malls like Palms, Shoprite, Spar etc., which prices and business environments are geared towards maximum consumer satisfaction and unforgettable shopping experience," Mr. Cornelus Nweke a shop owner in Wuse Market said.

" It is therefore imperative for small retailers to start bracing up for the challenges that are inherent in the construction and running of these mighty shopping malls and a consumer revolution. Any attempt by them to ignore this emerging trend may sweep most of them out of business especially with goodies like affordable consumer items for low-income earners, air-conditioned havens and variety of amusements that would be offered by these shopping malls," he added.

Lured by the country's growing population, increasing purchasing power of the elite and limitless investment opportunities, foreign and local investors are falling over themselves to set up new ultra-modern shopping malls.

Malls are springing up everywhere in places like, Abuja, Port Harcourt, Lagos, Enugu, Kano, Kaduna etc.

South Africa's Shoprite Holdings Limited is said to be the most aggressive of the international retailers operating in Nigeria. According to sources, the company planned to open as many as 700 outlets across the country.

Nigerians are also eagerly anticipating the entrance of three global retail giants; Wal-mart of the United States of America, Carrefour of France and Tesco of the United Kingdom.

Walmart is the world's largest public corporation when ranked by revenue, and the largest retailer in the world.

Carrefour is the second largest retail group in the world in terms of revenue and third largest in profit after Wal-Mart and Tesco.

Tesco Plc, on the other hand, with Cheshunt, United Kingdom as its headquarter, is the third largest retailer in the world after Wal-Mart and Carrefour.

Other important malls in Nigeria include The Lagos City Mall, the Silverbird Galleria in Lagos, Ceddi Plaza and Grand Square in Abuja.You also have The Tinapa Mall in Calabar, Cross River State.

Upcoming mall projects include the Ikeja City Mall in Lagos, The Polo Park Mall in Enugu State, a planned shopping centre in Ilorin, Kwara State and Spar International among others.

On what the entry of these multinational giant retail groups portend for Nigeria, an economist based in Abuja,Dr.Samson Adamu, said: "They will transform Nigeria into a proper modern economy; attract more foreign direct investments; expand the manufacturing sector; increase supplies of goods and services in order to meet the induced increase in demand; create new and quality jobs; improve living standards and influence further development of the capital market."

He added : "Retailers are critical economic agents who help to create demand because of their affinity with both the consumers and producers. In fact, retail sales are an important economic indicator because consumer spending drives much of the economy. Imagine the number of people and companies involved in producing, distributing, and selling the goods used on a daily basis like food, clothes, fuel, and so on.

"The development of the Nigerian retail market is contributing to improve local employment and training; it is also increasing tax collection of state and government authorities who are starting to realise the importance of formalising retail and shopping activities; it is generating additional demand for agricultural products; and it is showing local and foreign investors that Nigeria offers great business opportunities that with time and maturity should materialise in attractive returns."


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