Randy Buday, Managing Director/CEO of DHL Express Nigeria, shares his thoughts on the Nigerian economy.
How is the fall in the oil price impacting Nigeria’s general business environment?
Nigeria is the eighth-largest exporter of crude oil in the world – the economy is almost entirely dependent on this revenue.
Unfortunately, there is a very large sector of oil services and other companies which are dependent on the production of oil and they have also been negatively affected by the low price of crude.
The reduced oil revenue has created a shortage of available foreign exchange, thereby increasing inflation and the volatility of the exchange rate, which has created an unstable operating environment for companies in Nigeria.
We are seeing a situation where many companies cannot access foreign exchange for the importation of their raw materials, thus forcing them to purchase foreign exchange from the parallel market at a very high premium.
Describe your medium to long-term outlook for the Nigerian economy
The above describes the short-term situation in Nigeria.
However, this country has an amazing ability to overcome operational, environmental and political challenges as demonstrated in the past and the general outlook for the future is very bullish for the Nigerian economy.
The price of crude oil will eventually increase to a level that will bring in the much needed forex to run Africa’s largest economy.
Nigeria is also home to Africa’s largest population, which is one of the fastest-growing consumer markets in the world.
The future bodes well for the consumer goods sectors as Nigeria has a very young population with almost 45% under the age of 14. You also have a rapidly-growing e-commerce industry and, not to forget, the agriculture sector, which is now receiving a lot of attention from the government.
DHL Express recently entered into a partnership with Total whereby customers can now send packages from Total service stations. How important are these types of partnerships in a country where informal retail still accounts for as much as 90% of the market?
Our recent partnership with Total has increased our retail footprint throughout Nigeria exponentially; we now have service points in locations where we have been under-represented and also with extended service hours.
Several years ago we embarked on an aggressive campaign to increase our retail presence throughout Nigeria and we now have over 400 DHL retail outlets.
In an earlier interview with How We Made it in Africa you highlighted online retail as a fast-growing industry in Nigeria. How has the sector evolved in recent years?
As expected, the sector has continued to maintain its rapid growth with many new players flooding into the market while the larger, more established players have continued to scale their operations.
With continuous improvement in power, Internet penetration and a young population, I expect that this will continue for a long time.
The e-commerce firms have started a re-awakening in the nation’s financial industry, with many of the banks innovating and developing new ways to attract young and tech-savvy customers.