Economy
Open-Air Markets Account for 97% of Nigeria’s Retail Sales
By Modupe Gbadeyanka
A new report by the Boston Consulting Group (BCG) has revealed that the retail sales landscape in Nigeria is dominated by open-air markets despite an increase in supermarkets, convenience stores, and other modern formats.
In the survey, it was disclosed that over 600,000 small shops and open-air markets are in the country’s retail space, accounting for 97 per cent of national sales of food, beverages, and personal care products.
The report The Future of Traditional Retail in Africa showed that African consumers on average continue to buy more than 70 per cent of their food, beverages, and personal care products from the continent’s more than 2.5 million small, independent shops despite the rise in e-commerce and changes in consumer behaviour accelerated by the COVID-19 pandemic.
“The willingness of traditional retailers to diversify, and embrace digital solutions coupled with the growing interest of investors to provide digital solutions show they will find opportunities to grow and remain the cornerstones of African economies in the future,” said, Stefano Niavas, Managing Partner in BCG Nigeria, and co-author of the report.
The report noted that modern retail remains very fragmented and is led by international hypermarket brands. Modern chains are struggling to expand due to currency devaluation, underdeveloped and inefficient transportation infrastructure, poor logistics capabilities, inadequate electrical power, and other complex challenges.
More importantly, the digital maturity of shop proprietors is also substantially higher than the national average. The level of financial inclusion varies widely across the region and is generally in line with the general population. While 85 per cent of Kenyan shop managers have a bank account, only 40% of their counterparts in Nigeria have one.
High numbers of African retailers also reported that they feel under pressure from modern retailers. In response to such challenges, traditional shops are diversifying well beyond daily essentials, such as fresh and packaged foods and home cleaning and personal hygiene products. Many small retailers now sell telecom products, such as prepaid cards and SIM cards.
New Digital Solutions
Several digital technology providers are addressing inefficient distribution systems that often force retailers to close their shops for several hours so they can go purchase goods from wholesalers.
The Nigerian B2B digital marketplace Alerzo, for example, enables more than 100,000 users—90 per cent of whom are women—to purchase inventory directly from manufacturers, receive and make cashless payments, and better track their revenues.
Digital marketplace in Nigeria such as Alerzo also facilitates a portfolio of digital services, including airtime purchases, bill payments, and peer-to-peer transfers. In the long run, such platforms aim to provide super apps with a large selection of services.
This would enable them to totally digitize traditional retailers and integrate them into the formal economy. Start-ups are also providing working capital and financial management systems to help traditional retailers grow and run their businesses more efficiently; however, they must overcome a lack of awareness and training among retailers.
The Future of Retail in Africa
The study found that traditional retailers will continue to dominate. But to thrive, they must modernize by offering new services and leveraging opportunities offered by digital solutions.
Niavas added, “Based on our analysis, many small retailers are already aware of the evolving retail landscape and are ready to improve their business premises, quality of products and expand across the country.”
Based on current trends, the modern retail sector in Nigeria, even though it is growing fast, is likely to remain small, and still may not account for more than 5 per cent of retail sales by 2030. Due to structural problems in Nigeria mentioned earlier, foreign investors are likely to remain hesitant about entering the market.
Given the central role that traditional shops will continue to play in Africa’s retail landscape, there will be a number of opportunities for various players in the ecosystem as the environment evolves.
Investment funds can find opportunities to provide capital and management expertise that will enable local modern retail chains to scale up in new cities.
An active start-up ecosystem is interested in providing digital solutions that will solidify the role of traditional retail in Africa and enable the sector to become the commercial interface across the continent.
Digital solutions can help manufacturers of fast-moving consumer foods improve their control over go-to-market strategies and provide data to better understand retailers.
Banks and telecom providers can achieve growth by developing new business models and offers that are adapted to traditional retailers’ needs.
By Adedapo Adesanya
Fitch Ratings has projected Nigeria’s external debt service to reach $5.2 billion this year from $4.7 billion in 2024, though it maintained a stable outlook for the country in its latest rating.
The agency also cited a minor delay in the payment of a Eurobond coupon due on March 28, 2025, as a reflection of persistent challenges in public finance management.
The rating firm had upgraded Nigeria’s long-term foreign-currency issuer default rating to ‘B’ from ‘B-’, with a stable outlook.
The $5.2 billion in debt service, according to Fitch, includes $4.5 billion in amortisation payments and a $1.1 billion Eurobond repayment due in November.
The development highlights the growing pressure on public finances despite ongoing economic reforms by the federal government.
Fitch noted, “The government external debt service is moderate but expected to rise to $5.2 billion in 2025 (with $4.5bn of amortisations, including a $1.1 billion Eurobond repayment due in November 2025), from $4.7 billion in 2024, and fall to $3.5 billion in 2026.”
It warned that although Nigeria’s external debt service remains within manageable levels, high-interest costs, weak revenue performance, and limited fiscal space remain significant concerns, adding that general government debt was expected to remain at about 51 per cent of GDP in 2025 and 2026.
However, it expressed concerns over the government’s revenue position, noting that interest payments will consume a substantial portion of income.
“We expect general government revenue-to-GDP to rise but to remain structurally low (averaging 13.3 per cent in 2025–2026), largely accounting for a high general government interest/revenue ratio, above 30 per cent, with federal government interest/revenue ratio of nearly 50 per cent,” it stated.
The company observed that Nigeria’s gross reserves rose to $41 billion at the end of 2024, before declining to $38 billion due to debt service payments.
Despite this, Fitch expects the country’s reserves to average five months of current external payments over the medium term, above the median for similarly rated economies, adding that recent policy reforms had contributed to increased foreign exchange inflows and better monetary stability, with inflation projected to average 22 per cent in 2025.
“Net official FX inflows through the CBN and autonomous sources rose by about 89 per cent in Q4 2024. We expect continued formalisation of FX activity to support the exchange rate, although we anticipate modest depreciation in the short term,” a part of the report stated.
It commended the government’s commitment to economic reforms, including the removal of fuel subsidies, liberalisation of the exchange rate, and tightening of monetary policy, noting that these steps had improved policy credibility and strengthened Nigeria’s ability to absorb shocks.
However, the agency warned that risks to Nigeria’s external and fiscal position remained, particularly if oil prices fall or policy implementation slows down.
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By Adedapo Adesanya
The Katsina State government has attracted an investment worth about $500 million for the development, financing and execution of a series of major energy infrastructure projects across the state.
The state government recently sealed the deal with a United Kingdom-based leading Pan-African clean energy infrastructure development and asset management company, Genesis Energy Holding.
The Memorandum of Understanding (MOU) between the two parties outlines a strategic partnership for the development, financing, construction, operation, and maintenance of key energy projects.
In addition, these projects aim to accelerate the industrialisation and socio-economic advancement of Katsina State and provide clean, reliable, and sustainable energy solutions for the region.
It also provides the framework for the collaborative development of a diverse portfolio of energy projects, focusing on solar, wind, hydro, mini-grids, and natural gas solutions.
The Governor of Katsina State, Mr Dikko Radda, described the partnership as “a significant step toward providing reliable, cost-effective, and environmentally friendly power solutions, fostering economic growth, and attracting investments to Katsina State.”
“This MOU represents a major milestone in our ongoing efforts to build resilient infrastructure that will not only address Katsina’s immediate energy needs but also lay the foundation for a prosperous and greener future for generations to come.
“The first of the series of projects being constructed under this partnership will shortly be commissioned before the end of this April 2025,” he added.
On his part, the Chairman and CEO of Genesis Energy, Mr Akin II Omoboriowo, noted that, “Lighting Up Africa is more than just a vision for Genesis; it is the very heartbeat that drives us. We are committed to enduring the rigorous process of developing and financing projects to bring sustainable energy solutions to the continent.
“For Genesis Energy, this marks a significant milestone as we continue to actively partner with Katsina State in achieving energy independence, creating a pivotal opportunity to industrialize the state and position it as a major player in clean and renewable energy generation.”
The primary objective of this collaboration is to address the state’s growing energy needs and support the Nigerian Government’s broader energy security and sustainability goals.
The MOU lays the foundation for creating a multi-phased energy platform that will provide power to critical sectors, including healthcare, industry, and agriculture while contributing to the regional transition to a green economy.
The key initiative of the MOU involves powering critical sectors and providing critical energy infrastructure across key sites across the State, deploying suitable energy technologies.
Phase One of the projects is expected to be executed concurrently across multiple initiatives, aimed at promoting energy independence, facilitating industrialisation, creating jobs, and displacing significant amounts of CO² emissions.
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