Naija, Nollywoods or Ogas are all common terms associated with the new kingpins of Africa. Although the country has been plagued with recent outbursts of civil, political and religious turmoil, Nigeria has become an international player in the luxury goods market, and has the potential to become the largest economy in Africa.
Nigeria is a middle income, mixed economy and emerging market, with burgeoning financial services, communications, technology, and entertainment sectors. It is ranked 30th in the world in terms of gross domestic product as of 2013, a leap from 40th place in 2005, and 52nd in 2000. It is the second-largest economy in Africa behind South Africa, and is on track to become the richest country in Africa in 2014, when their new GDP rebasing result is out early this year.
By 2020 predictions see Nigeria becoming one of the 20 largest economies in the world.
Its re-emergent, though currently underperforming, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African region.
Even though 63% of the Nigerian population still lives on less than one dollar a day, the elites, who control the nation’s resources, are the big spenders. (Perhaps it worth noting that an estimated $600 billion of Nigeria’s wealth was appropriated by corrupt industry executives and politicians between 1960 to 1999.) In 2003 it was estimated that $170 billion lies hidden in foreign accounts.
Whether they are in Paris or in Harare, Nigerian tycoons make sure they leave a trail of expensive colognes and flamboyant cars. Contrary to common the Western stereotype of an African man wearing beads and animal skin, the modern Nigerian man is easily identifiable: by expensive clothing, jewellery and luxury vehicles.
In the stores of Lagos and Abuja, liquor retailers making more shelf space for rare whiskies and French Champagne, as the premium alcohol consumer market in Nigeria is developing rapidly. According to the latest figures on the global champagne market by Euromonitor International, champagne consumption in Nigeria will reach 1.1 million litres by 2017, with 2011 consumption at almost N8 billion (R553m).
Nigerians spend more than any other country in Africa on luxury goods, but mostly when they travel abroad because so few options are available at home. “Africans are big-spenders across the world, but they cannot spend their money at home,” said Franca Sozzani, editor-in-chief of Italian Vogue. “We need to help them.” Yet she cautioned that: “Africa is a continent, not a country, and must not be considered as one market.”
Despite the extreme levels of poverty and inequality currently bereaving the continent, high-flying fashion brands such as Hugo Boss are already operating in Nigeria, while Prada, an Italian fashion label specialising in luxury goods, has disclosed plans to enter the market next year.
It comes as no surprise that luxurious car brands such as Porsche and Rolls Royce all have their latest editions being showcased at exhibitions in Nigeria and South Africa.
Porsche Nigeria general manager, Julian Hardy, estimates that around 200 Nigerians currently own Porsches. The firm aimed to sell 100 vehicles in Nigeria during 2012, rising to 300 a year thereafter.
According to Euromonitor, 0.4% of Nigerian households had an annual disposable income of more than US$100,000 (at purchasing power parity) during 2011.
Over and above this, Nigeria is the second-largest market of private luxury jets. According to Nigerian paper, Punch, private jet ownership in Nigeria increased by 650%, from 20 jets in 2007 to over 150 jets in 2012. A staggering $6,5bn has been spent in the acquisition of private jets in Nigeria in the last five years.
Lack of infrastructure is holding Nigeria back from producing its own luxury goods… for now. Brands looking for new markets will be well-advised to set up shop in this African powerhouse.