According to the article by Louise Lucas called “Food groups aim expansion recipes at local consumers” published on 14th September 2011 published in the Financial Times, Africa has large potential for international food and beverage business. The business is likely to boom in the economies because of its high population, wealth distribution, competitiveness, government policies, and the nature and style of the continents lifestyle. According to the article, the most crucial aspect when working in the market is to understand the target market and aim at providing products of the right quality , price, and tastes (Louise, 2011).
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Some countries in Africa has high population that offers food and beverage industry market and labor necessary for the survival of the industry; high populated countries like Nigeria, Kenya, South Africa, and Egypt have population that can consume the products to support the industry. When it comes to labor, the industry is labor intensive; there are numerous unemployed skilled and unskilled people in the continent that can offer such at competitive prices.
In the fight of hunger and promotion of foreign direct investments, African government has policies that target international company’s investments in the continents; with such incentives, international companies in the food and beverage industry benefit.
Political, legal, economic and cultural environment of Nigeria
When operating in international scenes, it’s important for a business to undertake an international business venture analysis:
Nigeria has been under military rule for 33 years from 1966 until 1999; however, the country held peaceful election in 1999, when Olusegun Obasanjo, was accorded power in a peaceful transition, in 2010, after the death of Umaru Musa Yar’Adua, Goodluck Jonathan assumed the leadership of the western African country. The system of governance follows the Westminster System model, with an executive president and he is the head of state. During election, the president is the candidate with the majority vote and is expected to be in office for a term of our two time elective post.
In Nigeria the constitution is supreme where both national and international companies are expected to abide to the rules; companies are governed by companies act that has certain requirements that the government wants them meet, they include taxation, making returns, meeting requirements of minimum wages, and registration.
Federal Republic of Nigeria is regarded as a middle income state with a mixed economy; according to the world bank report, Nigeria is one of the few world countries that have clicked the point of middle class and has the potential of becoming a first world country if its resources are utilized appropriately. The large population in the country is a source of labor; human resources and natural resources combined has made the country’s economy being the 37th in the world and second in Africa according to 2007 world GDP (PPP) report. A joint report by Economist Intelligence Unit and the World Bank, in 2009 stated that the country’s GDP was 292.6 billion in 2007; this was a sharp rise from 170.7 billions recorded in 2005. During the year, the GDP per capita was $692 in 2005 but rose to $1,754 per person in 2007 (Federal Government of Nigeria 2011)
The country economy is driven by oil and fuel reserves that are exploited by modern technology; trade in the country is supported by government initiatives and infrastructure like communication, transports and technology. In 2010, Citi-Group, the country economic standing is expected to be on an upward rise until 2050; the constant growth has been facilitated by technological innovations and adoptions in the country.
The people of Nigeria are divided mostly between Christians, Muslims and earthiest; they have their culture rooted in the religion that one subscribes to. Culture of the country is that they need to live within their means and treat themselves occasionally. Although the country is performing relatively well in the region, the economic development has been hampered by corruption, bad governance and military rule as has been experienced in the country. There are times that the country has had clashes among the people and this has hampered the attainment of developmental goals.
In the entire sub-Saharan countries, Nigeria is considered as one of the country with the richest natural and human resources only if they are exploited and used in an effective manner. The country has the extremes of having the rich and the poor within the economy thus hindering revolutionist that is associated with the rich in the community (Federal Government of Nigeria 2011).
Nigeria rank in the Global Competitiveness Report? What are the major challenges to doing business in Nigeria and are these challenges primarily political, economic, and cultural?
According to Global Competiveness report of 2009-2010, Nigeria was ranked 127th best country to do business; the statistics can also be interpolated that the country was 13th worst country to do business.
The low ranking of the country can be attributed to politics and ineffective government frameworks that the country has enacted; to get an operating license in the country is a hassle and the rate of bribe is one of the highest in the world. The economic richness of the country, oil, also contributes to rivalry among people of different class, locations, and wealth distribution. Such political rivalry makes the environment challenging for international business.
Although the country’s culture cannot be fully blamed for the low ranking, Nigerians are proud, boastful, and choosy; such characters are likely to hinder the prosperity of food and beverage industry in the country (Martin, 2006).
Federal Government of Nigeria. 2011. Official Website of Nigerian Government. Web.
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Louise, L. 2011. Food groups aim expansion recipes at local consumers. Web.
Martin, M. (2006). Nigeria: current issues and historical background. New York: Nova Publishers.