The five most important things to know about doing business in Nigeria
- “One country, many faces”. Nigeria is a big country – over 200 million people and around 250 different ethnic groups. Avoid using a general approach when doing business in Nigeria. There are often drastic differences between the regions.
- Build Strong Relationships and Personal Trust. Like many other African countries, Nigeria is largely a hierarchical and collectivist society. You must connect with power brokers and build personal relationships. People need to know you before they can trust you.
- “Packaging” Matters – Nigeria is a ‘masculine’ country. The look and feel of your product or service matters. Emphasise brand strength and reputation and display success – formal dressing, “big” shiny vehicles etc.
- Know where to draw the line. There is a lot of overt corruption in Nigeria. Yet, there are many practices that people from (especially) western nations consider corrupt but are not considered so in Nigeria. Knowing where, when, and how to give gifts, for instance, could help you succeed.
- Get a local partner. A “Connected” local partner will help you navigate the business terrain and cultural or legal barriers, significantly increasing the chances for success.
Nigeria is a fascinating country with amazing people. It is Africa’s largest population, and, with over 200 million people, the seventh-largest in the world. It is also projected to become the world’s third-largest country behind India and China by 2050 (Adegoke, 2017). There is a large diaspora population as well, especially in the US and the UK. Nigerians are considered a rather hard-working and determined group. Nigerian Immigrants are among the most successful groups in the US, “surpassing native-born Americans in income and educational attainment” (Bouie, 2020).
It is also known for its huge entertainment industry. Nigeria’s movie industry “Nollywood” releases more movies than Hollywood (50 movies every week) and is the world’s second-largest (Igwe, 2015). Nigeria is also known for famous writers, musicians, sports personalities, and entrepreneurs. On the flip side, the country has an unfortunate amount of unpleasant statistics. Locally, Graft is a major problem. In 2019, it was the 146th most corrupt country – out of 180 countries (Daniel, Nnochiri, & Yakubu, 2020). It is also known for narcotics trade, human trafficking, and cybercrime.
Despite serious risks, there is ample business opportunity in Nigeria. It is Africa’s biggest economy, with a nominal Gross Domestic Product (GDP) of around US$400 billion. It is also the sixth-largest crude oil producer in the world. However, winning business deals in Nigeria depends on several factors. Five of the most important of these factors are described here.
“One country, many faces”
In a sense, it is a country of amazing contrasts. The world’s richest black person – Aliko Dangote, Forbes #162 – is a Nigerian (Forbes, 2020; Nsehe, 2019). It is also very likely that the world’s poorest person is also Nigerian: the country has the largest population of the world’s poorest people (Mwai & Goodman, 2019). Poverty and Wealth straddle side-by-side. Furthermore, there are at least 250 distinct ethnic groups in the country and over 500 spoken languages (CIA, 2020)! This situation makes Nigeria one of the most ethnically diverse countries on earth (Ojo, 2016, p. 1).
Therefore, it is important to avoid generalising when doing business in Nigeria. Over time, and with some guidance, one would learn how to succeed in various contexts. There are common traits across all regions – like respect for older people and those in authority, along with the need to establish trust via strong personal relationships. However, there are often drastic differences in how to conduct business in the largely Muslim north vs the largely Christian south. Even in the southern regions, there are significant differences in the approach to winning deals. One general rule to help navigate these issues is to work with a local partner who understands local customs and has significant connections.
Build Strong Relationships and Personal Trust
On the Hofstede 6-D model, Nigeria scores 80 on the Power Distance (PDI) dimension and 30 on the Individualism-Collectivism (IDV) dimension. Hence, like many other African countries, Nigeria is largely a high-power distance and collectivist society. In high PDI societies, the rich and powerful are generally expected to have their way. In collectivist societies, business relationships are often an extension of personal relationships. Someone who is known and respected by your target group (or the key decision-makers in that group) must introduce you. It is not uncommon to see many other people clamouring for attention from the rich and powerful, and relationships are key to fast-tracking. Your first meeting would most likely be an opportunity to become familiar – people need to know you before they can trust you. ‘Facetime’ is a vital investment – you should visit the country and the persons of interest frequently. The phrase “show face” is commonly used in Nigeria. This phrase means being physically present at your potential client’s celebrations (weddings, funerals, christenings, etc.). If you are invited to such events, it usually means that you are being accepted in the inner circle.
Figure 1: Bill Gates Attends Aliko Dangote’s Daughter’s Wedding
Photo Source: Daily Post (2018)
When you are invited, do attend and (if you can) take along a befitting gift. If you are unable to attend, ensure to apologise in advance, and if possible, send a representative along with a gift. If you heard about an event but were not invited, you could still send greetings and possibly a gift where appropriate. The photo in Figure 1 shows Bill Gates, seated on the “special table” at the wedding of Aliko Dangote’s daughter. (Recall that Aliko Dangote is currently the world’s richest black person.) Bill Gates is seated with the father of the bride, on his right, and the erstwhile Emir of Kano (the king of Dangote’s hometown) on his left. (Prof Yemi Osinbajo, Nigeria’s Vice President, is also seated on the table, on Mr Dangote’s left).
Based on Hofstede’s 6-D model of national culture, Nigeria scores 60 on the Masculinity-Femininity (MAS) dimension and is a medium-high ‘masculine’ country. Unlike feminine countries that emphasise caring for and protecting the weak, a masculine country emphasises performance, achievement, and status. This means that people tend to associate success with the show of strength. The ‘look and feel’ of your product or service matters a lot. It is therefore important to emphasise brand strength and reputation, where possible. If you do not have a strong brand, you could showcase the big brands you have worked with and emphasise the type of feedback and praise or recommendation you have received from big and well-known brands. It is also important to display ‘personal success‘. You would be judged by your dressing, not just the quality but the suitability (Oyamendan, 2015). In some contract bids, it is stated that the contractor’s presentation would be assessed as well. You can dress formally in a (really) good formal designer suit or dress, and equally good shoes. For extra “marks” you could get a fitting Nigerian national dress, combining the best of High MAS and low IDV. This show of success extends to other things like accessories (watch or phone) and big shiny vehicles (Alhassan & Sambo, 2014).
Know where to draw the line
One of the biggest challenges foreign companies face in Nigeria is differentiating between what is corrupt and what is not. Not knowing where to draw the line has caused huge problems for some well-known global names in Nigeria. Undoubtedly, there is a lot of overt corruption in the country. The nation consistently ranks amongst the most corrupt nations in the world, based on Transparency International’s (TI) index. However, there are many practices that foreigners (especially people from western nations) would consider corrupt but are not considered so in Nigeria. A good example is giving gifts. Gifts are mostly expected and could help you succeed. It is also noteworthy that some organisations are now adopting hard-line anti-corruption practices – forbidding or criminalising any type of gift-giving. Therefore, knowing what type of gifts to give, when to give them and how to give them, is pertinent.
Get a local partner
Perhaps the most important lever for success here is to get a local partner. A “Connected” Nigerian partner could help navigate the business terrain (including cultural or legal barriers), increasing chances for success. They could help resolve knotty issues like Graft. Working through their connections (remember high PDI, low IDV), they could make your bid match the potential client’s needs and help you get a favourable review. In one of his blogs, Mr Gates said that he and Melinda (his wife) are “lucky to have him [Aliko Dangote] as a partner (and friend!)”. Their respective foundations jointly entered a US$100 million partnership to end malnutrition in Nigeria (Gates, 2019). One can only imagine the kind of access Mr Gates obtains for his projects through such a partner in Nigeria.
On a final note, foreign businesses must avoid using one approach for doing business across different African countries. Africans in different countries differ from each other in so many ways. Even within specific countries, like Nigeria, significant differences exist across regions and ethnic groups. (Most African nations were ‘created’ by amalgamating different peoples, only in the last 100 years or so.) It is important to get help to understand and do business in Nigeria, or anywhere else in Africa.
Short case study
In their book, “In Pursuit – Journeys in African Entrepreneurship”, Chukuka Chukuma and Osaretin Oswald Guobadia shared their experiences about doing business in Nigeria (Chukuma & Guobadia, 2020). These two professionals left Nigeria, in their late teens, to study and work in the USA and later returned, as grown men with families, to pursue work and business opportunities, in Nigeria. Before leaving Nigeria, they had not been significantly exposed to ‘the real Nigeria society’ – especially how business is conducted in the country.
One story from the book described how Osaretin relentlessly chased a deal worth millions of dollars, over three years, from a Nigerian Government Agency (Chukuma & Guobadia, 2020). He finally got a call to travel to Abuja to meet a Director General (“DG”) for final approval. (The DG is basically “the guy with the golden pen, whose signature greenlights projects”.) Since the meeting was scheduled for 10 am, Osaretin took a morning flight from Lagos, intending to return in the evening. He arrived in Abuja and reached the DG’s office 30 minutes earlier than the scheduled time. At the DG’s office, he met a huge crowd in a spacious waiting room. He was confident that he would see the DG at 10 am, since there was an actual appointment, unlike most of the crowd (or so he thought). Osaretin did not realise that the large crowd reflected Nigeria’s high PDI. A few people in the crowd were scheduled for 7:30 am appointments; nevertheless, they all seemed comfortable waiting for whenever they would be called in by the oga*.
Osaretin’s 10 am appointment did not hold, and four hours after his scheduled time, it became clear that he would have to spend the night in Abuja, even though he did not plan for that. It seemed like he was the only one slightly agitated by not knowing when the oga will eventually call him in. He was also the only one with the audacity to remind the oga’s executive assistant that he had a 10 am appointment. Osaretin soon found out that it is possible to keep visiting offices like the one he was in, for several days on end, before seeing the oga. He failed to realise the influence of high PDI and low IDV on doing business in Nigeria. With some quick thinking, Osaretin called a friend, who was another Director that worked under the DG. He quickly called his friend and kept nudging him to push buttons to help actualise the meeting. In the end, it was the relationship with the Director he knew that helped him succeed. The next day, that Director took him to meet the oga, (the DG) and with the Director’s help, Osaretin eventually obtained the approval and won the deal.
*Oga, the Yoruba word for boss, is a term used to describe power holders across Nigeria.
The article is published on cubein.eu, a platform designed to help European SMEs with business and innovation in emerging markets. The Cube In project is led by Hofstede Insights, the parent company of Hofstede Insights Nigeria. Cube In is fully financed by the European Commission.