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Did You Know? A Roundup of Key Business Facts from 2020

In 2020, Nigeria’s business environment was hit by multiple currents. A global pandemic touched down on our shores, eventually tipping the country into recession. Some businesses struggled; a few thrived. The borders were shut for much of the year, but there was global commerce of a different kind going on via the internet, on smartphones and laptops.

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This article presents the top facts that summarize the business year just passed. Here, we’ll explore the winning and losing industries from the previous twelve months, from the continued rise of the digital economy to the flow of foreign investments.

Taken together, these facts mirror the course taken by Nigeria’s business climate in 2020.

Top Performing Sectors

Nigeria succumbed to pressure from the COVID-19 pandemic and falling oil prices and went into a recession in the third quarter of 2020. This designation is merely technical; national productivity had already declined sharply in the previous quarter.

Sectors like oil and gas, trade, and transportation were hit pretty badly, as were construction, food production, and mining.

But agriculture, telecoms, finance, and pharmaceuticals recorded varying degrees of growth. The pharmaceutical industry was spared the restrictions that shut down most of the economy earlier in the year; and lockdowns forced people to use their mobile devices more, resulting in a strong performance for the telecoms sector.

Foreign Direct Investment and Other Capital Inflows

Foreign Direct Investment (FDI) coming into Nigeria was significantly lower in 2020 compared to the preceding year. Between January and March, the country received $214.3 million in FDI. This shrank to $148 million in Q2, before climbing to $414 million in Q3.

Total capital inflows fell from $5.85 billion in the first quarter of 2020 to $1.29 billion in Q2. It rose slightly to $1.46 billion between July and September.

Find our comprehensive listings of businesses in Nigeria here.

Lagos was Nigeria’s top investment destination, receiving $1.13 billion and $1.21 billion in capital inflows in the second and third quarters respectively.

The Growth Of ePayments

E-payments continued their growth in Nigeria last year. Interestingly, digital transactions had declined during the lockdown (it fell ₦3.83 trillion in Q2 2020. But the value of online transactions soared 50% in the following quarter, to ₦44.3 trillion. They were also worth 70% more than transactions from the same period in 2019.

If data from previous years are anything to go by, most of these transactions are being initiated through mobile phones and tablets.

Nigerians Flocking to Cryptos

Nigerians’ involvement with cryptocurrencies is driven in part by their low trust in an unstable local currency. They’re also attracted by the prospect of fantastic returns on these volatile digital assets.

By December 2020, Nigeria had become the second-largest market for bitcoins on Paxful, a leading global crypto trading platform. Between 2015 and 2020, Nigerians traded $566 million worth of bitcoins on the platform—a volume that’s only been exceeded by the United States.

Despite the risks associated with the fluctuating value of cryptocurrencies, it’s almost certain that more people will join this train in the coming months.

Finance: Banks and Fintechs

The CBN’s stated aim of increasing financial inclusion in Nigeria has encouraged the emergence of several fintech companies in Nigeria. These entities are filling in roles that banks have left unattended; they may begin to rival banks in scale if they maintain their current growth trajectory.

One of the larger fintech, Paystack, was purchased by Stripe, an American payments giant, in a deal worth $200 million.

Banks, on the other hand, had a bitter-sweet year. Following government restrictions aimed at curtailing the spread of COVID-19, several bank branches were forced to shut down. A large number of workers were also laid off. However, many of these institutions appear to have maintained their profitability throughout the period.


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Ikenna Nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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