A recent KPMG survey has shown that consumer goods and financial services are the most attractive investment sectors in Nigeria, adding Nigeria remains an attractive destination for investors seeking sustainable growth opportunities within the continent
The report ‘Doing Deals in Nigeria 2019’, is an outcome of a survey of 50 senior business executives working in global companies which have a presence in Nigeria and have completed at least one acquisition in Nigeria in the last four years.
The highlights of the report at a press briefing at its Head office in Victoria Island, Lagos show that 70 percent of the respondents are strategic investors while 30 percent are financial investors with 66 percent residing abroad and 34 percent being indigenous respondents.
The survey attempts to take the pulse of buyers in their approach to this sometimes complex but rewarding market, revealed that Consumer Goods, Financial Services, Energy, Mining and Utilities, Telecommunication, Media & Technology and Business services sectors accounted for about 88 percent of investments in the country in the last two years.
The report also provides potential investors with insights into how best to do deals in Nigeria, leveraging the experiences of people who have been through the process and completed transactions.
Analyzing summary of the survey, Ijeoma Emezie-Ezigbo, Partner, Deal Advisory, KPMG in Nigeria, disclosed that the survey findings focused on three parts; the case for Nigeria, deal dynamics and key deal drivers. Mrs Emezie-Ezigbo noted that “the survey reiterates that Nigeria is still one of the most compelling M&A markets in Africa”.
Based on the findings, Nigeria will continue to be open for business and attractive to investors in the long term, with investors expecting Consumer Goods, Financial Services, and Pharma, Medical and Biotech to be the top three attractive sectors over the next four years. This is largely similar to the First Edition, however, Healthcare comprising Pharma, Medical and Biotech improved significantly, from ranking 7th in the last survey, to 3rd sector in terms of attractiveness.
With respect to deal dynamics, the target’s customer base continues to be the most important consideration in target selection for investment. On the other hand, IP/technology and regional distribution channels are also important considerations, based on investors’ response in this Edition.
In view of our recent economic recession, it is not surprising that economic volatility ranked no. 1 as the most important challenge to investing in Nigeria, unlike last year, where the survey found the lack of physical infrastructure to be the single most important challenge to investing in Nigeria.
As investors navigate through the challenges of Doing Deals in Nigeria, it is noteworthy that the most important aspect of due diligence they believe they could have done better is ‘to allocate more resources to the transaction evaluation process.’