Is Nigeria The Luxury Industry's Next Big Opportunity?


Sophie Doran | April 30, 2014

Nigeria's consumer class is on the rise, but is the local market ready for foreign luxury entrants? What are the real opportunities for brands in Nigeria?

Porsche, Rolex Lead Luxury Invasion in Nigeria

Nigeria’s consumer class is on the rise, but is the local market ready for foreign luxury entrants? What are the real opportunities for brands in Nigeria?

Nigeria recently made headlines when the value of its economy all but doubled overnight, after authorities updated their approach to calculating gross domestic product (GDP) for the first time in twenty-four years (The Atlantic).

With this new figure – $509 billion, thanks in part to the inclusion of booming film and telecommunications industries – Nigeria’s GDP has now become the largest in Africa, and the 26th biggest in the world.

Historically the country’s oil and gas sector has been the key driver of the economy, constituting more than 14 percent of Nigeria’s GDP and 95 percent of its foreign exchange earnings (McKinsey).

“ Nigeria’s GDP has become the largest in Africa and the 26th biggest in the world ”

But today, consumer-facing industries have quietly grown into a significant economic force and are poised to continue growing. McKinsey expects that the next chapter of emerging middle class growth will be in the retail sector, fuelled by a new generation of Nigerian consumers.

Famed economist Jim O’Neill believes that the country – alongside Mexico, Indonesia and Turkey (MINTs) – has the right fundamentals to really accelerate their economic growth, chiefly because of its “fabulous” demographics (Knight Frank).

“The MINTs not only have big populations,“ he explains, “but there’s a balance between young and elderly. This means they don’t need to do that much to grow by even faster rates in the decades ahead.”

Indeed, the United Nations expects the country’s population to surpass that of the US by 2050, on track to become the world’s third most populous by the end of this century. Nigeria is already the most populous country in Africa, home to more than 174 million people (CIA World Factbook 2013).

“ Middle- and high-income consumers are enjoying rising levels of disposable income ”

And this population is relatively young. Depending on which statistics you believe, more than half of Nigeria’s population is under 30 years of age and ready to spend. Nigerian culture is often described as ‘image conscious’ and increasingly interested in Western luxury brands, as more Nigerian consumers become well travelled.

Clearly there is much reason for optimism; the youth bulge and rapid rate of urbanisation present promising growth opportunities. In addition, middle- and high-income consumers are enjoying rising levels of disposable income, increasing their demand for a wider range of products and services (Euromonitor).

But as the very same study quite rightly points out, the majority of the population currently lives in poverty and faces significant economic challenges.

Lagos, Nigeria


In 2013 Nigeria was home to 455 ultra high net worth individuals (with a net worth of $30 million and above), a population increase of 3.4% compared to 2012, with a combined wealth of $60 billion (World Ultra Wealth Report).

WealthInsight forecasts that the number of ultra-wealthy individuals will nearly double over the next 10 years. The country ranks third on a list of countries set to create the most millionaires in 2014, representing a 10% increase on 2013, following Indonesia and India (WealthInsight).

Nigeria’s burgeoning middle class have access to an ever-increasing amount of disposable income. Lagos, the country’s most populous city, is expected to have more than $25 billion a year in household spending available to it in 2020 (Retail Gazette).

Nigeria’s commercial capital Lagos, along with four other of Africa’s largest cities, will each have consumer spending of $25 billion or more by 2020, comparable to spending in India’s business hub of Mumbai. Consumption in Lagos is already 134 percent greater than the country average (McKinsey & Co).

“ Consumption in Lagos is already 134% greater than the country average ”

Luxury Market

Retail is a very important industry in Nigeria, according to McKinsey, who estimated that ‘Wholesale & retail trade, restaurants & hotels’ accounted for 16% of GDP in 2010. With the recent knowledge that figures from 2010 are likely to be grossly inaccurate, the importance of the sector could be even stronger.

But the local goods luxury industry is still in its infancy. Only Porsche, Hugo Boss and Zegna have yet opened monobrand stores, generally with local partners.

Luxury watch and jewellery retailers like Cartier, Piaget and Rolex have held franchises in the capital of Lagos ‘for years’ according to pioneer Omoyemi Akerele, founder of Lagos Fashion and Design Week (BoF).

“ In 2011, Nigerians drank more bottles of champagne than were consumed in Russia or Mexico ”

When it comes to shopping, save for overseas purchases or international eCommerce, Nigerian consumers have a handful of concept stores in Lagos mixing African designers with western luxury brands. As with many ‘emerging’ luxury markets, the prices are generally significantly higher than the global average and selection is limited.

That said, Nigeria has a significant local market for champagne and cognac. Between 2006 and 2011, the country was the second fastest growing champagne market in the world by volume, according to Euromonitor. In 2011, Nigerians drank 752,879 bottles of bubbly, more than were consumed in Russia or Mexico.

From 2011 to 2016, champagne consumption in Nigeria is expected to more than double. Only France will see a higher volume growth in champagne sales over that period.

“People may find it surprising that Nigeria came second in the rankings, but it has an extremely extravagant elite, with Nollywood and the oil industry,” revealed Spiros Malandrakis, a senior analyst at Euromonitor.

Hennessey’s commemorative bottle celebrating Nigeria’s Golden Jubilee

“Nigeria is the largest market in Africa and the Middle East for Moet Hennessy,” echoed Nigeria marketing manager, Tokini Peterside, to Business Insider. “For Hennessy cognac, Nigeria ranks among the Top 10 consuming countries in the world.”

Furthermore the private jet industry is said to be ‘booming’. Aviation experts and analysts have said that Nigeria is the fastest growing aviation market in the world after China. 70 new private jets are projected for delivery in the country over the next five years, with an estimated commercial value of $2.8bn.

The market will double in size in the next ten years according to Khadar Mattar, Regional Vice-President, Sales, Middle East, Africa and Turkey, at Bombardier.

“ Nigeria is the fastest growing aviation market in the world after China ”

“People are flying outside Nigeria now; people are flying within Africa because of their business expansion; people are flying to Europe because of their business expansion and the financials that they require.”

“Imagine I want to fly from Lagos to Namibia; it takes me two days to get there on commercial airlines. I will have to go to South Africa first before going to Namibia, or I have to go to Europe first. But with business aircraft, I can go and come back the same day.”

“Therefore I am very optimistic about the business aviation market in Africa. People are now taking it seriously. They are looking at smaller airports to develop within and outside Africa. But it takes time. Infrastructure is needed.”

“ Nigeria is ranked 147 out of 189 economies in the ease of doing business index ”


The most immediate challenge for luxury brands entering Nigeria is the complicated business environment. The country is currently ranked 147 out of 189 economies in the ease of doing business index, compiled by The World Bank.

This figure has decreased 9 places since 2013, suggesting that the situation is actually deteriorating. The ranking identified factors such as access to electricity, enforcing contracts, gaining permits and tax issues as problematic. It has also been suggested that corruption must be understood before entering the market (African Business Review).

“Whilst current policy and regulation is clearly paving a way for foreign investment, there is still much work to be done to encourage luxury brands to set up Nigeria,” explains Edward Craig, Retail and Leisure director at legal firm Charles Russell.

Porsche, Lagos

“Customs administration needs to be less cumbersome and the Nigerian government also needs to implement tax reforms to address the possibility of double taxation. The process of land administration (for example, taking on a lease) is also a key area that requires reform.”

Administration issues aside, there is an inescapable ethical discussion that comes with selling luxury goods in a country where more than 100 million people live in poverty, surviving on less than $2 a day. And where the origin of much of Nigeria’s wealth – or furthermore, the means by which it was acquired – is under the spotlight.

In a conversation with an unnamed luxury brand CEO, Vanessa Friedman revealed that he “just didn’t feel comfortable with where a lot of the money was coming from. It was partly, he said, a moral decision.”

“ There is an inescapable ethical discussion that comes with selling luxury goods in Nigeria ”


There are definitely opportunities for luxury brands in Nigeria but for the moment, the landscape remains incredibly complex. The business environment is difficult, infrastructure is in its infancy for luxury brands and there are undeniable social considerations.

That is not to say market entry is impossible, but it must be executed in a respectful way with a solid understanding of the local environment. For this reason, partnerships or franchise agreements seem like logical models under which to learn more about Nigeria and its consumers.

A new wave of multibrand retail and concept stores, fusing African designers with western luxury goods, look to provide brands with a relatively low-engagement opportunity to build awareness at a local level.

Brands should also continue to court wealthy Nigerian consumers overseas, where they are already traveling and shopping. London is a known hotspot, where they often send their children to be educated.

“ Brands should also continue to court wealthy Nigerian consumers overseas ”

But eventually luxury brands will open monobrand boutiques in Nigeria, following the lead of Porsche, Hugo Boss and Zegna in Lagos. As Vanessa Friedman suggested, “luxury has that safety-in-number thing, so if a few more stores enter the market the whole thing will tip and they will all start to look for space.”

Eight Nigerian cities containing 16 percent of the nation’s population are expected to drive 36 percent of consumer spending growth, as per capita consumption in large cities is much higher than in Nigeria as a whole. So, as we have seen in China and India, it is not unlikely that we will one day witness retail development in cities beyond Lagos.

If the media is to be believed, its Africa’s time. And as the continent becomes an increasingly important player on the global stage, one can only expect further development. Both luxury and otherwise.

To further investigate local luxury markets on Luxury Society, we invite your to explore the related materials as follows:

- Mexico Is Latin America’s Biggest Luxury Goods Market
- Inside France’s €16.8 Billion Luxury Goods Market
- As Asia Slows, Luxury Grows in Indonesia