Financiers must focus on Nigeria’s local market - CNBC Africa

Financiers must focus on Nigeria’s local market

Western Africa

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“There are a couple of well-placed local retailers, that’s an opportunity to support emerging operators in that segment. For that market, the way to serve it is hard currency and we’re seeing flow even from the financial institutions,” said Adeleye, the head of real estate finance at Stanbic IBTC Bank.

Foreign Direct Investment (FDI) in Nigeria accounted for 41.67 per cent of the total FDI in West Africa and 14 per cent of total inflow into Africa in 2012 but it is still unclear how much of this investment is present in the real estate space in West Africa.

“What we’re seeing in the financing market is that there’s quite a lot of interest, an attraction to the market. It’s seen as a real growth opportunity in both retail and commercial real estate. We’ve seen quite a significant growth of capital flow towards projects in that segment,” said Adeleye.

“By our count, including Nigeria and Ghana and one or two other regional countries in the West Central Africa region, we’re seeing flows of about 1.2 billion in the last year alone flowing into the market. And we’re seeing that from experienced, professional, disciplined investors and developers. I think we’re up for a real change in the retail landscape.”  

Adeleye believes that this is an opportunity for regional financial institutions to invest in the retail space and more importantly in the local market.

“We’re seeing retail centres becoming bigger, seeing an influx of retailers which obviously increases the demand for retail space. We’re seeing the growth and emergence of local retailers. It’s become an opportunity for people to develop their own retail chains,” he said.

He also insisted that while international investors can play a part in the real estate sector, local investors are more knowledgeable on it.  

“In my view the future of retail across the West African markets will be a combination of international and local but it will be driven a lot by the local because there’s an understanding of the market, of the taste, of the retail dynamics in terms of what the market wants.”