Africa’s most populated country with about 173 million people, Nigeria is also the biggest oil exporter in Africa, with the largest natural gas reserves on the continent. Nevertheless, that has not helped pull the country out of its economic slump as it has never had enough refining capacity, and now has too few dollars to import more gas into the country.
While this all sounds like doom and gloom for Nigeria, there is one group finding some positive out of the current climate: entrepreneurs. For some months, Nigeria has been restricting the amount of money that can be moved abroad after the global slump in oil prices wiped out the government’s U.S. currency reserves.
A combination of power shortages, a fuel crisis and a currency that’s lost half its value has meant that suddenly “everyone became much poorer in international comparison,” explained Mark Essien, CEO of Hotels.ng, Nigeria’s largest hotel booking site. While he agrees that in the last year the situation in Nigeria economically has become “significantly worse”, it is not all terrible.
“The good news for us specifically as a company, and for other companies in similar situations, is that because our capital comes from outside the country, the dollars we have are reaching much further. For example, a salary we used to pay of N100,000, which was $625, is now costing us (just) $285. So we are able to achieve much more with our capital,” said the entrepreneur, “we have expanded our hiring and added more people to do more work, because we can achieve a lot more now with this”.
Essien continued that for companies who export software, the production costs have dropped significantly, so it has made more sense to hire people in production and development. Software sold abroad now is generating significantly more returns locally. “So generally the opinion in the business community is that with prices dropping, this is the right time to invest in production and building”.
Eseoghene Odiete, a fashion entrepreneur based in Lagos and creative director of Hesey Designs, agrees. She said it is cheaper to hire employees and retain them. There are positive side effects for the company she founded in 2012: “Local patronage has increased. Nigerians are looking inwards to purchase items they would otherwise have gotten from other countries,” she said, citing the exchange rate and shipping costs as the reason.
“A lot of companies that import corporate souvenirs (such as bags and folders) would rather produce here in our local factories. They are aware our quality is also great but have ignored that until now,” said Odiete.
Many companies who produce locally are doing quite well, agrees Feyi Fawehinmi a Nigerian accountant based in London. “You find all of a sudden people can’t afford something foreign and they have to look locally,” he said, mentioning some food businesses, including honey, dried fruits, oats, and cashews who are experiencing growth.
Furthermore, Odiete cites a “very strong creative movement” happening in Nigeria. “Every young person is expressing themselves now instead of waiting for a job,” she said.