This article is culled from NigeriaFormations(http://nigeriaformations.com), a leading business formation and advisory firm based in Lagos and London.

Nigeria with an estimated population of 160 million is potentially the highest consumer market in Africa and a fertile ground for companies and investors looking for growth opportunities.

After an unsettled period of military rule which was hallmarked for poor governance, the weakening of public institutions, engendering a hostile environment for private sector growth and impoverishing the majority of Nigerians, Nigeria has settled back into democratic governance and is now promoting private enterprise as the engine of growth by deregulating and liberalizing important sectors of the economy such as telecommunication sector, the down stream petroleum sector, and the power sector.

The lack of investment in infrastructure over the years by the previous military governments created investment opportunities at the inception of democratic rule. As the popular Chinese proverb goes “In every crisis, there is opportunity”, indeed most entrepreneurial ventures arise from solving problems. The most successful of the new ventures that arose from the infrastructural crisis was in the telecommunication sector which began with the National Communication Commission (NCC) in 2001 licensing operators Econet (now Airtel), MTN, MTEL and subsequently licensing the Nigerian owned mobile operator Glo in 2003. This move led to the explosion of mobile telephony in Nigeria from an installed capacity of 450,000 telephone lines in 1999 to 85 million by 2010 making Nigeria the country with the fastest-growing teledensity in the world.

According to Dr Ngozi Okonjo- Iweala Nigeria’s Finance Minister these new ventures in the telecommunication sector created about 100,000 direct jobs and about 5 million indirect jobs while also improving access to market information for farmers and traders as well as facilitating banking transactions. The growth of the telecommunication sector led to a further diversification of the Nigerian economy, with the growing demand for housing and retail goods engendered by the growing middle class.

This growing middle class has now created further opportunities for investments. According to Mr Segun Aganga Nigeria’s current Minister for Trade and Investment and a former Managing Director at Goldman Sachs, Nigeria at the moment has an estimated housing deficit of 17 million housing units and yet there are currently only 20,000 active mortgages in the country. The Minister further asserted that government is making concerted efforts to increase the number of active mortgages as a Mortgage Refinance Corporation would soon be established. The Mortgage Refinance Corporation when established is expected to push down interest rates in Nigeria from the current 20 percent to 13-14 percent thereby making mortgages more affordable. This could creat a great opportunity for discerning investors given the growing demand for housing.

Agriculture, Education and Healthcare are also neglected areas that offer great opportunities for capital growth given the estimate that 42.8% of the population are below the age of 15 years. There are also opportunities in further infrastructural development such as in roads, railways and electricity, especially as the Government adopts policies to encourage public private partnership through concessioning.

With an average GDP growth rate of 6.8% since 2005, the IMF forecasts that Nigeria’s growth rate could cross into double- digit territory in the 2012-2015 timeframe which would put Nigeria ahead of two other emerging markets, Brazil and Russia and slightly behind India and China.

There are however, challenges and risks to overcome, such as non competitive infrastructure, unfinished distribution networks and a shortage of skilled labour. It is however, pertinent to note that many international companies in a variety of industries such as MTN, Coca Cola, Nestle, Guinness, Lafarge ,General Electric and indigenous entrepreneurs such as Aliko Dangote, Mike Adenuga, Oba Otudeko, Jim Ovia, Pascal Dozie, Leo Stan Eke and Ernest Azudialu have consistently shown that the attractiveness of the economy and consumer base outweigh any concerns about the business or political risks.

It appears that some strategic investors are already taking advantage of this potentially lucrative market as according Dr Okonjo-Iweala a former Managing Director of the World Bank and Nigeria’s current Minister of Finance, Nigeria is now Africa’s leading investment destination with a Foreign Direct Investment (FDI) of $8.9 billion which represents 16 percent of Africa’s total FDI of $55 billion in 2012

Whether your company decides to enter Nigeria through organic growth, acquisition or joint venture, your company would need to asses its threshold for risk, institute desired controls and decide on the speed to market. Whatever strategy your company chooses to adopt, strong and clear governance are a must. At NigeriaFormations with our local knowledge of the Nigerian business environment we strive to provide you with professional business support services to make doing business in Nigeria pleasurable.

Written by: Nazo Anya Business and Legal Risk Analyst at NigeriaFormations Limited (http://blog.nigeriaformations.com/2012/12/why-you-should-invest-in-nigeria/)

Nigeria is full of business opportunities.With approx.160 million people in this country,that's'alot of potential customers for new investments in this country.