Foreign Investment in the Nigerian retail market has reached an all-time high, attracting about $1.3 billion (about N208 billion) in the last two years, owing to rising purchasing power and huge potential of the nation's economy.
Experts believe investors are flocking to the sector as a result of Nigeria's potential - a large population, positive macro-economic growth and a strong appetite for consumer goods.
Findings by Oxford Business Group (OBG) revealed that both foreign and local investors were dramatically expanding their domestic retail footprint in the country.
According to OBG, "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."
They added that the growth in retail space and opportunity had been accompanied by strong economic indicators released by the International Monetary Fund (IMF).
"Real GDP for the year is forecast to grow at around 7%, 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."