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Retail Sector Attracts N208 billion Foreign Direct Investments

By on August 15, 2012

Shoprite, Ikeja

The Nigerian retail sector has attracted approximately$1.3 billion or N208 billion over the past two years. The phenomenon represents the effects of increase in consumer spending as the growth of the middle class continues to surge in Africa’s second largest economy.

According to the Oxford Business Group, “By the end of June, Shoprite, the continent’s biggest retailer opened its fifth shop in Nigeria, and another two are on the cards for the middle of next year. Shoprite, has outlined plans to open up to 700 stores in the country, and Massmart, South Africa’s second-largest retailer and partly owned by Walmart, has announced that it intends to increase its presence from two to 20 stores.
“Also, Spar, Europe’s largest retail network, has partnered with Nigeria-based Artee Group to tap into the local market, cutting ribbons at a new outlet in Lagos and one in Abuja. Looking ahead, the firms aim to increase their Lagos network and expand into Port Harcourt and Ota in Ogun State over the next six months.”

Other indigenous players expanding rapidly in the retail sector include Addide, a neighborhood chain of supermarkets located on the Lagos mainland. The local player has grown from one lone store in 2008 to 14 stores and counting this year.

The Oxford Business Group report adds, “Real GDP for the year is forecast to grow at around 7 per cent, according to the IMF. This has had a positive impact on people’s ability to spend, with GDP per capita levels estimated at $1656, up from $1541 in 2011 and $390 in 2001, according to Renaissance Capital, a multinational brokerage. The firm also said that the country’s middle-class segment earns about $6000-7000 per year, bringing the purchase of modern household goods within range.
“But as development of formal retail gathers momentum, investors are becoming increasingly attuned to factors that could limit growth. Firstly, retailers decry the lack of adequate space. Modern outlets are dependent on the standards of newly built, large shopping malls. However, cumbersome access to land, high costs and the short duration of bank financing is constraining developers’ appetite.”