CLIFF

LIN

Marketing Professional


Business Environment Analysis: Nigeria

October 16, 2013Cliff Lin

Executive Summary

Nigeria is one of the most culturally rich yet traditional nations of the world. It is both male-centric country and class conscious, with men making most of the important household decisions and respect given to those with titles and degrees. Although education is gained by a lucky few, the literacy rate of Nigeria is still considerably low in comparison with that of developed countries. Nigerians place much emphasis on areas of life that have no place in the intellectual world. Focusing on building relationships with their business partners rather than fulfilling signed contracts results in harmonious dealings in the realm of business. Harmony exists also in the area of faith, for Islam and Christianity, the two religions dominating Nigeria, exist in without strife. Although the culture of Nigeria is charming, the living conditions of the country are horrendous. The majority of the population lives in poverty, and only half of Nigerians have access to clean water.

The eighth most populous country on the planet, Nigeria was once a British colony. It retains a political and legal structure similar to those of Britain, and English remains the official language of the country. Nigeria’s legal system comprises the English common law, the constitutional law, and the Islamic law. The laws enforced in any particular region depend on the demographic structure of that area. For instance, the northern region enforces the Islamic law because the population of Muslims in the north is high. Nigerians do not have many regulatory laws, especially with respect to the water supply industry. The lack of an adequate legal structure is accompanied by corruption in the political realm. Racial tension and oil disputes have led to dishonesty among Nigerian political parties and authority figures. “Kickbacks,” wherein authority figures accept money for pardoning offenses, are the dominant way of dealing with crimes in Nigeria.

Nigeria was an agriculturally inclined country before the oil boom made oil the primary source of revenue for the country. Approximately 25% of Nigeria’s GDP depends on the oil industry. However, with the recent shift to green technologies, Nigeria faces a negative growth in its oil revenue. As a result, government spending is likely to decrease in the future. Already, about 70% of Nigerians live below the poverty line, and water prices in Nigeria are higher than those in New York and Tokyo in terms of purchasing power parity. It is no wonder that the water sanitation system in Nigeria is insufficient. CAWST could effectively improve Nigeria’s water sanitation system with its specialized knowledge and technologies.

Bringing the knowledge of clean water into the country is feasible, given the extensive transportation systems present. The country offers a large network of highways and a plethora of car rental companies, complete with drivers. A few competitors, such as The United Nations Children’s Fund (UNICEF) and WaterAid, have taken advantage of the transportation and communication conveniences of the country. Unlike CAWST, however, these organizations do not provide long-term solutions to Nigeria’s sanitation problem.

Social, Cultural and Demographic Forces

Cultural Norms and General Values

The culture of Nigeria is heavily influenced by its politics. Nigeria is currently experiencing the longest period of civilian rule and democracy in its history (BTN). The fact that Nigeria is so diverse has given Nigerians a sense of collective identity within distinct subcultures (BTN). As individuals, Nigerians are especially easy to do business with (BTN). In places like the U.S. and China, people do not necessarily like a person before doing business with them. Nigerians, however, try hard to find reasons to like their business partners. Nigerians view class and age as determinant of a person’s intelligence (BTN). Older people and people with a university degree are often given the privilege of leading a group. Regardless of age and educations, Nigerians view price as negotiable, and they generally quote at least 50% more than they are willing to settle for (BTN). Despite this unconventional business practices, Nigerians are reportedly the happiest people in the world, considering family life and culture more important than material wealth (BTN).

Familial Structures and Roles

Nigeria is “a highly male-centric society” (IC). Polygamy is acceptable, and the male adult of the household makes most of the decisions regarding family issues and household consumption (Oyekanmi). Centre for Affordable Water and Sanitation Technology (CAWST) should target the male adults of Nigeria because they have the most power over household.

Social Organization

In addition to living in a gender-biased society, Nigerians are subject to classism. Those with degrees exploit their formal titles to gain respect (IC). There are situations in which people insist on being addressed by all of their prefixes or designations, including: Dr., Engr., Ambassador, Gen., Chief, MSc., PhD, and Fss (IC). Given the emphasis on social status, CAWST would effectively persuade Nigerians of the need for sanitation if the company sent people with professional titles to educate the public.

Even though some Nigerians are respected more than others due to their social class, Nigeria offers a cosmopolitan atmosphere. Still, another kind of favoritism occurs as a result of the 250 ethnic groups in the country. Commonly, people favor those who possess the same ethnicity, religion, or language (IC). This phenomenon has led to the establishment of laws against ethnic favoritism. In order to avoid law suits, then, CAWST should exercise caution when dealing with people of different demographics.

Literacy and Education

While ethnicity has some bearing on whether a Nigerian receives an education, the amount of schooling a Nigerian gets depends largely on gender. Approximately 64% of males receive an education, whereas only 57% of females go to school (EW). Additionally, school life expectancy for males is 9 years on average (CIA), while the average school life expectancy for females is 7 years (CIA). Therefore, males more readily understand written ads. In our targeted segment of male adults, the rate of literacy is 75.7%, and 62% of the targeted male adults speak English (CIA). This phenomenon confirms that male adults are the ideal group to be exposed to our information. Still, the usage of words should be minimized in ads for a couple reasons: first, the literacy rate of the entire population is only 68 % (CIA); second, even though English is the official language, approximately 51% of the population as a whole does not speak English at all (IC). Luckily, translation agencies like Translator Café are there to help CAWST overcome the language barrier.

Cultural Imperative Business Customs

Nigerians place a greater emphasis on personal relations than on education (IC). Relationship-building based on trust and mutual support among all of an enterprise’s stakeholders is crucial to successful business conduct (IC). Unlike Canadians, who have “faith in the impersonal, impartial institutions of the state,” Nigerians believe in “power relations and allegiances that are largely contingent on personal agreements” (IC). Whereas in Canada crime is dealt with via the law, criminals in Nigeria often avoid punishment by means of bribery (CIA). Since crime in Nigeria does not necessarily result in conviction, when working with Nigerian sponsors and companies, CAWST must be extra vigilant of commercial fraud (IC).

Belief Systems

Though fraud remains a concern for those doing business in Nigeria, citizens of the country have strong religious values. According to the CIA, 50% of the population is Muslim, 40% is Christian, and 10% holds indigenous beliefs. It would make sense, then, for CAWST to give seminars at churches and mosques. Training sessions could also be held at times when Christians and Muslims gather together in large groups.

Living Conditions

No matter how great their faith, Nigerians cannot escape the harsh realities of earthly life in a developing country. According to the Daily Trust newspaper, a mere 53% of Nigerians have access to clean water. The World Bank states that, in rural areas, “No more than 5% of the population has access to [clean] water.” Without clean water, Nigerians are forced to drink highly contaminated water. Water-borne diseases are always a threat and are responsible for an infant mortality rate of 9.4 % (CIA). By replacing contaminated water with clean water, CAWST would help decrease the infant mortality rate.

Nevertheless, survival for Nigerians is challenging not only because of water contamination but also because of food shortage. The main cause of the shortage is that Nigeria’s population grows at a much faster rate than does the agricultural sector (Pulitzer Center). Attempting to define the Nigerian diet is difficult, since Nigeria is a very diverse country and different ethnic groups eat different types of food. However, tea is an important commodity in the northern, Muslim-dominated part of Nigeria, which makes coffee houses popular in Nigeria (FBC). Additionally, stews are popular amongst most Nigerians, since they are composed mostly of water and therefore offer a economical way of satisfying hunger (Nason). Since the shortage of food makes water an important aspect in the Nigerian diet, the need for clean water is ever present.

Health Care

The present condition of water in Nigeria is one of several factors that negatively impact the health of the nation. According to the CIA, the number of health risks for Nigerians is very high. The Public Health Agency of Canada (PHAC) advises travelers to “avoid all travel” [to Nigeria]. Both the CIA and the PHAC affirm that water-born diseases increase infant mortality rate and drastically lower the life expectancy of adults (the average life span in Nigeria is 47 years). CAWST is capable of reducing the mortality rate and cost associated with health problems by offering preventative measures against water-borne diseases. Since CAWST potentially reduces health care expenditure, the Nigerian government has incentive to help us promote CAWST.

Language relevant to doing business

English is the official language in Nigeria ever since the colonial past with Britain (IC); however, 51% of the people in Nigeria do not speak English. It is important for CAWST to offer the services in Hausa, Igbo, Yoruba, Fulani, and Kanuri. These languages, including English, make approximately 80% of the whole population (Seibert).

Political, Legal and Regulatory Forces and Trends

Political System

Nigeria is governed by a federal presidential representative democratic republic, in which the president is head of the state and the government consists of multiple parties (Dina, Akintayo, & Ekundayo). Politically, Nigeria is in a state of instability (CFR). Nigeria is an oil-rich country, but power struggles over oil revenue has engendered Nigeria with corruption (CFR). About 80% of the revenue gained from the oil industry is accrued by 1% of the population. Fortunately, president Ọbasanjọ “spearheaded the creation of an agency to fight [oil] corruption” (CFR). Following is a list of corrupt Nigerian groups compiled by the CBI, going from most to least corrupt: police, political parties, national and state assemblies, local and municipal governments, federal and state executive councils, traffic police and FRSC, and NEPA electricity agency. It would make sense for CAWST to have less interaction with these parties to avoid damaging its image.

Legal System

The legal system in Nigeria comprises the English common law, the constitutional law, and the Islamic law (Dina, Akintayo, & Ekundayo). However, the Islamic law is only enforced in the Northern states where Muslims are more dominant (Dina, Akintayo, & Ekundayo). The English common law reinforces property rights stating that CAWST can legally own and use equipment. The Islamic law focuses mainly on human rights, such as freedom of speech, peace, and justice (Alchien). Accordingly, CAWST can expect to inform citizens of their current conditions regarding water quality and lifestyle without being punished or censored.

Regulatory Environment

In the international context, “under Nigerian law, foreigners are allowed to wholly own companies or part own companies with Nigerians” (Adoga). A new foreign company settling in Nigeria needs to “apply and obtain the relevant license of the sector it intends to invest, apply for a business permit, expatriate quota and residence permit from the Federal Ministry of Internal Affairs” (Adoga). Nigeria has vague and chaotic legislation with regard to foreign companies (Adoga). Complex multi-national ownership structures are the new corporate vogue, eliminating tax responsibilities, local operational regulations and even operational visibility (Adoga). In fact, there is no law protecting the local companies from the international firms (Adoga). Much like foreign business policies, the water sanitation industry procedures severely lack regulations. This absence of regulations explains why the quality of water in Nigeria is so foul (Wateraid).

Economic Factors and Trends

Population

Nigeria is one of the largest and most diversified African countries, both socially and culturally. The population comprises 150 million people, with over 250 ethnic groups speaking 550 languages (CIA). Since the population density of the northern desert region is lower than that of the tropical southern region, CAWST should focus more on the latter. The population of male adults is approximately 42 million. Targeting male adults would be effective not only because they are the heads of the households but also because they account for one-third of the population. With a growth rate of 2.025% (GlobalEdge), Nigerians will rapidly develop a greater need for clean water.

Economic Statistics

Nigeria’s GDP in 2007 was $296.1 billion (purchasing power parity), with a growth rate of 6.4% and an estimated input of $2000 per capita (GlobalEdge). According to the Daily Trust, the Nigerian government is now starting to focus on sanitation problems as a means of decreasing the mortality rate. As well as living in an unsanitary environment, 47% of Nigerians do not have access to clean water (Daily Trust). Fortunately, the water sanitation industry is growing and continues to receive government support. CAWST is able to respond effectively to the sanitation needs of the Nigerian government.

A study conducted by Aigbokhan states that the percentage of the Nigerian population living below the poverty line is increasing. Approximately 105 million (70%) Nigerian live in desperate circumstances (Aigbokhan). This figure equals a little more than three times the population of the whole of Canada. By providing Nigeria with clean water, CAWST would lower household expenses associated with health care. Alleviating health-related expenses would provide families with disposable income.

Trade Data and Analysis

Ever since the oil boom of the 1970s, Nigerians have depended on exporting oil for their survival in the world market (CIA). Oil and natural gas make up approximately 97% of all Nigerian exports (CIA). In fact, Nigeria has become so oil dependant that 25% of its GDP depends on this resource (GlobalEdge). Nigerians will have to adjust to the growing demand for green products, which decrease the necessity for oil and gas (GlobalEdge). The already declining oil industry experienced a growth rate of -5.6% in 2007 (CIA). Because a large portion of the Nigerian government’s budget comes from oil revenue, a decrease in oil export is likely to reduce the budget. Unfortunately for CAWST, the resulting economic recession will likely hamper government spending on sanitary systems.

Pricing Level for Product Category

The pricing level for water is exceedingly high in Nigeria (Poverty News Blog). The UNDP claims that Nigerians pay a lot more for water than do people in New York and Tokyo, the two cities with the highest cost of living worldwide. CAWST can effectively reduce the price of water by turning unusable water into clean water. If the supply of purified water increases, the equilibrium price goes down and more people can afford clean water.

Technology and Geographic Forces

Geography and Climate

The total surface area of Nigeria is 923,768 km², 98.6% of which is land and 1.4% of which is water (UNI). By comparison, the total surface area of Canada is 10 times larger, albeit with 8.92% in water (CIA). Nigeria, with its relatively small area of habitable living space, has a population approximately 5 times greater than that of Canada (CIA). The crowded nature of the country makes sanitation all the more important to Nigeria.

Science and Technology

The task of CAWST is to offer information on water, while the sponsor companies are responsible for providing the sanitation equipment. Therefore, it would make sense for CAWST to analyze data and communication technology invested in by the Nigerian government. According to Internet World Stats, “Nigeria is one of the biggest and fastest growing telecom markets in Africa.” Another fast growing sector in Nigeria is the computer market (JIDAW). Many Nigerians are learning about computing technology through the Computer Literacy Project, designed by World Youth. As a result, Nigerians are becoming more comfortable with computing and communication systems. Therefore, CAWST can easily and effectively deliver vital information to Nigerians with relative ease.

Industry and Market Analysis

Market Analysis

The demand for water sanitation systems is undeniably high, for 70.5 million Nigerians do not have access to clean water. The rapid population growth, coupled with inadequate advances in sanitation, has driven up the price of sanitized water, giving the commodity a high market potential (UNDP). As mentioned in the “Living Conditions” section, most northern Nigerians are Muslim. To avoid ideological conflict, CAWST would send Muslims to the northern region of Nigeria to deliver water sanitation seminars and workshops.

Transportation and Infrastructure

Because CAWST provides knowledge, and knowledge is given by people, the accessibility of our products is equivalent to the transportability of our staff. Although Nigeria’s land space is 10 times smaller than that of Canada, there are only 70 airports in Nigeria, which is few in comparison with Canada’s 1343 airports. Relative to geographic surface area, however, Nigeria has approximately 1.9 times more highway space than does Canada. Nigeria also has a multitude of car rental companies, and drivers are usually part of the rental package (Virtual Tourists).

Communications

News advertisements are the most effective means of exposing our customers to our ads because Nigeria ranks second on the newspaper market in Africa (Nation Encyclopedia). Approximately 1.5 million daily newspapers circulate in Nigeria (Nation Encyclopedia). Collaboration with the Nigerian government is also an effective way of promoting CAWST because only three television broadcast stations exist in Nigeria and the government controls two of them (CIA). If the government provides us with a television advertising venue, approximately 12 million people will be able to see the ads. Internet promotion tactics would be ineffective, as there are only about 5 million internet users in Nigeria (IWS).

Competitor Analysis

CAWST competes with several non-profit and profit companies. UNICEF, which has a positive image, is a well-known charity that offers a wide variety of resources to children only. UNICEF offers clean water to Nigerian children for free, but, unlike CAWST’s practice of providing water sanitation, this act does not offer a permanent solution. Additionally, UNICEF offers clean water only to children under the age of 15, which accounts for merely 44% of the population. Rather than focusing solely on water sanitation, UNICEF addresses other issues, such as gender equality, child protection, and child survival development. The shortcomings of UNICEF would make it impossible for Nigerians to credit this organization for any future development of the water sanitation industry. On the other hand, CAWST would be immediately recognized for its contributions to water sanitation.

WaterAid is another competitor with a structure similar to that of CAWST. However, WaterAid provides both knowledge and equipment, while CAWST supplies only the knowledge. With respect to brand image, WaterAid is new and provides low-cost water sanitation structure. Unfortunately, the technology WaterAid provides lasts only for a short period before new technology is implemented. This policy is difficult for Nigerians because it periodically requires them to adapt to new technology. An additional drawback of WaterAid is that it tends only to rural areas, unlike CAWST, which provides sanitation to everyone.

References

Adoga, B., O. New frontiers for corporate regulations in Nigeria. HG.org Worldwide Legal Directories. Retrieved June 2, 2009, from http://www.hg.org/article.asp?id=6228

Aigbokhan, B., E. (2000). Poverty, growth, and inequality in Nigeria: A case study. African Economic Research Consortium.

Alchien, A., A (2008). The concise encyclopedia of economics: Property rights. Library Economics Liberty. Retrieved June 2, 2009, from http://www.econlib.org/library/Enc/PropertyRights.html

AllAfrica.com (2009, March 30). Nigeria: Residents taste first clean water in 10 years. Retrieved June 2, 2009, from http://allafrica.com/stories/200903310740.html

AllAfrica.com (2007, June 26).Nigeria: Environmental Sanitation Day – Uses and abuses. Retrieved June 2, 2009, from http://allafrica.com/stories/200706260716.html

Business Travel Nigeria (BTN). Nigeria culture, facts about Nigeria, customs, business and social ethics. Retrieved June 2, 2009, from http://www.business-travel-nigeria.com/nigeria-culture.html

Center for Affordable Water and Sanitation Technology official website. Retrieved June 2, 2009, from http://www.cawst.org/index.php?id=23

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Center for Intercultural Learning (IC). (2009). Travel report for Nigeria. Foreign Affair and International Trade Canada. Retrieved June 2, 2009, from http://www.voyage.gc.ca/countries_pays/report_rapport-eng.asp?id=218000

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Dina, Y., Akintayo, J. & Ekundayo, F.(2009). Guide to Nigerian legal information. NYU Law Global. Retrieved June 2, 2009, from http://www.nyulawglobal.org/globalex/Nigeria.htm#_LEGAL_SYSTEM

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Europa World (EW). Nigeria, Europa world online. Taylor & Francis E-reference, 270 Madison Avenue, New York, NY, 10016-0602. Retrieved June 2, 2009, from http://www.europaworld.com.proxy.lib.sfu.ca/entry/ng?ssid=668812233&hit=1

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Poverty News Blog (2009, Feb 05). The high price of water Nigeria. Retrieved June 2, 2009, from http://povertynewsblog.blogspot.com/2009/02/high-price-of-water-in-nigeria.html

Seibert, U. (2008). Nigerian languages ordered by size. The University Iowa, Department of Linguistics, Faculty of Arts. Retrieved June 2, 2009, from http://www.uiowa.edu/intlinet/unijos/nigonnet/nlp/langsize.htm

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The Daily Trust Newspaper Online. 53% of Nigeria has no access to water. Retrieved June 2, 2009, from http://www.news.dailytrust.com/index.php?option=com_content&view=article&id=527:53-of-nigeria-has-no-access-to-clean-water&catid=36:property&Itemid=30

The Online NewsHour. In Nigeria, scarce water supply and high food prices leaves families hungry. Retrieved June 2, 2009, from http://www.pbs.org/newshour/bb/africa/jan-june09/nigeria_04-15.html

The World Youth Empowerment Foundation. Projects of WYEF. Retrieved June 2, 2009, from http://worldyouth1.tripod.com/wyefprojects.html

The United Nation Children’s Fund (UNICEF). Retrieved June 2, 2009, from http://www.unicef.org/index.php

University of Northern Iowa. Nigeria background information. Retrieved June 2, 2009, from http://www.uni.edu/gai/Nigeria/Background/Standard5.html

Virtual Tourist. Retrieved June 2, 2009, from http://www.virtualtourist.com/travel/

WaterAid Charity International Site. Retrieved June 2, 2009, from http://www.wateraid.org/

 

 

Cliff Lin

Cliff Lin

Internet Marketer

Cliff is an Internet Marketing guru with extensive experience in ecommerce and internet marketing roles. He has solid small business background, successful ecommerce experience, and internet marketing expertise. He is capable of implementing the latest interactive marketing tools for company, as well as backend information systems to maximize efficiency.

Cliff Lin

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