Late last week, Porsche announced that it was expanding into Nigeria with a new dealership to open in the capital city of Lagos. What caught my eye reading this was not necessarily Porsche’s plans (although if you wonder how successful Porsche is going to be given Lagos’ reputation for gridlock, you’re not alone). Rather, what I found interesting was the comment by Michael Wagner, Porsche’s Manager for Africa: “The Nigerian market is in a league of its own. We see Nigerians’ spending power outstripping that of their South African counterparts.”
In case that surprises you, Jim O’Neill’s comments to the Guardian about his views of the South African economy may come as a shock. O’Neill was made famous by his coining the BRIC term. According to the Guardian, “He is also bearish about South Africa’s growth prospects over the next five years. Gross domestic product (GDP) growth has been revised down from 3.2% to about 2.7% for this year, 3.6% in 2013 and 4.2% in 2014. Comparatively, the rest of Africa is expected to grow on average by about 7% over the short to medium term, according to the International Monetary Fund (IMF). China and India, on the other hand, are expected to power ahead with between 7% and 10% growth.” He went on to share “South Africa is already losing out on investment to other rising economic stars on the continent. Countries such as Nigeria carry more power now … Just look at what is happening in the African Union. South Africa can’t claim any more, apart from its sound fiscal and financial systems, to be the superpower on the continent.”
Whether or not Nigeria can rise to meet the challenge of becoming a legitimate emerging economy will have much to do with whether it can quell the violence in its northern regions, and the next set of economic reforms the country badly needs to finalize. Regardless, moves like that Porsche recently announced suggest that multinationals believe Nigeria holds the potential to make this transition to a sustainable emerging economy, and they are positioning their businesses with the goal of accessing the Nigerian consumer in mind.