Home » Africa: Nigeria’s Growing Population Poses Challenges and Opportunities Across Sectors Similar to South Africa Says CEO of Broll Property Group

Africa: Nigeria’s Growing Population Poses Challenges and Opportunities Across Sectors Similar to South Africa Says CEO of Broll Property Group

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Nigeria’s ever-increasing population, which is expected to double in size in less than three decades, will present numerous challenges and opportunities across various sectors in the coming years.

According to howwemadeitinafrica.com, despite experiencing similar economic challenges seen across many developing nations across the world following the Covid-19 pandemic, Nigeria’s construction market was still valued at over $135 billion in 2022. Many other industries are also growing or showing great potential. It is just about tapping into the right markets at the right time.

Even with a slowdown in the economy, an increase in fuel prices, and the devaluation of the naira, Nigeria is showing signs of recovery. On a recent visit to the country by Horne, he noted several opportunities in retail property despite a move away from malls by many tenants.

READ: News: Cairo, Kinshasa, Lagos, lead in the Top 10 African cities with the highest population growth from 2022 to 2023

The challenges experienced by South Africa’s commercial property market are similar to those experienced by other markets on the continent, especially Nigeria, notes Broll Property Group’s CEO, Malcolm Horne.

A key trend spotted by Horne was the unwillingness by corporate businesses to sign up to long-term leases. “Instead, they are looking for flexible solutions, which has led to a dramatic fall in traditional office demand and an increased appetite for flexible, co-working spaces.

The office sector has continued to see very few leasing deals this year. Similarly in South Africa, we are seeing the hybrid working model adopted during Covid being re-implemented by a number of employers as a way of cushioning employees from the impact of inflation and fuel price increases.”

READ: Africa: With over 1m population Ikorodu becomes Nigeria’s 12th largest city and 3rd in South West

Horne says although there has been a decrease in unemployment according to official statistics, Nigeria was hot on South Africa’s heels in respect of its high unemployment figures. Along with the increased instability and insecurity in many of the northern regions of Nigeria, there has been an increase in crime because of the difficult economic environment.

“Given the economic challenges being faced in Nigeria and South Africa, in particular, both are seeing a substantial increase in the loss of talented and highly educated professionals to Europe, Canada and the United States. This leaves fewer skilled people to fill roles as well as lower tax revenue for governments,” Horne says of the effects of the continuing economic downturn in these countries.

Other challenges currently facing the continent include vulnerable and fluctuating exchange rates, which are easily affected by politics – whether it’s the currency decisions in Nigeria or the infrastructure and debt issues faced by Zambia and Ghana. Even geo-political events, such as the war in Ukraine, can have major and lasting impacts on the economies of African countries.

Horne says the over-reliance on transporting goods by roads across the continent instead of by rail or sea also presents as a major challenge to many African countries. “One just needs to look at the increase in transport and logistics costs in South Africa as a result of the crumbling rail infrastructure. The impact of movements in the fuel price are felt directly and immediately by all consumers.”

But with every challenge there is an opportunity. “The growing population means a greater number of opportunities in education, housing and healthcare. I am surprised by the number of Nigerian and Ghanaian families who choose to educate their children in the United Kingdom and United States. With this becoming increasingly unaffordable, there is a real opportunity for private education providers across the continent,” adds Horne.

“Historically, there has also been a preference to pursue healthcare overseas, but with the exchange rate movements, more citizens are seeking out private medical care in-country. We are also seeing interest in the manufacturing sector although this is not across the board. The falling currency and the increased cost of importation has led to more fast-moving consumer goods (FMCG) groups looking to convert to in-country manufacturing and assembly.”

Horne pointed to other untapped opportunities within Nigeria, South Africa, and other African markets such as affordable housing with accessible and decent retail and education facilities nearby. Even making use of vacant office space in prime nodes such as Sandton, popularly known as Africa’s richest square mile, to be redeveloped into affordable accommodation, allowing people to live closer to where they work, presents numerous opportunities.

“Another opportunity that should be considered are specialist residential developments such as old-age homes. The brain drain has left a number of middle-class elderly people with no one left to take care of them,” he notes, adding that the fast-growing industries of healthcare and pharmaceuticals present further opportunities. The pharmaceutical industry requires specialised manufacturing and storage facilities that need constant and consistent power supply.

Another opportunity lies in data centres, which are highly in demand in South Africa and across the continent as the world moves towards a more connected and automated world. “Currently, the biggest challenge to this opportunity in South Africa, for example, is the country’s unreliable electricity supply,” adds Horne.

 

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