Business in Kenya vs. Nigeria: 2019 Economic Comparison

Busines in Kenya vs. Nigeria: Economic Comparison 2019

Performing a quick country-by-country comparison between business in Kenya and business in Nigeria gives business managers a reference point on how to prioritize each market for their growth plans in 2019.

 

To support business development and sales managers in assessing which African country to prioritize in their organization’s expansion plan, we developed a tool (kpakpakpa’s Africa Market Potential Index- AMPI) that provides a quick way for managers asses market potential across the African continent.

 

Our Africa market potential index (AMPI) measures key metrics in critical areas of each country’s economy, social-political landscape, technological adoption, infrastructural developments, and the efficiency of doing business.

 

kpakpakpa’s AMPI measures the market attractiveness of 48 African countries, across seven pillars. These seven pillars act as key determinants to the short and long-term market potential of each country.


 

The seven pillars, and their respective weighting factor, that make our market potential Index

 

Factors

Description

Weighting

Market Size & Appeal

This evaluates the size and appeal of the domestic market.

20%

Macroeconomic Resilience

Measures the stability of the macroeconomic environment.

20%

Political Landscape & Governance

Measures the quality of governance.

10%

Social & Human Development

Measures social development of the country.

10%

Investment in Technology, Infrastructure & Logistics

Measures the efficiency of technology, logistics, and infrastructure as a supporting base for the business environment.

15%

Economic Diversification

Measures the degree of dependence of the economy on the sectors and resources in the country.

10%

Business Ease

Measures the ease of doing business in the country.

15%

Market Potential Index

The weighted average of the seven factors above to determine the market potential of each economy.

100%

 

Within each pillar, a set of key indicators have been included with specific weightings to arrive at the overall pillar rank and score. The first two pillars – market size & appeal and macroeconomic resilience – are short-term factors, and account for 40% of the total weighting.

 

The other five pillars are long-term factors and this account for the remaining 60% of the total weighting.

 

There are definitely no absolutes in the search for the best market to prioritize in Africa. There will be different answers for different organizations and industries.

 

You would know best what is necessary to asses opportunity and risk for your organization’s growth plans. Use this tools as a starting point to find the countries that fit properly with your company’s expansion strategy.

We use this tool to perform country comparisons.


Business in Kenya vs. Nigeria

In this article, we do a country-by-country comparison to understand the market potential of doing business in Kenya vs. Nigeria. The market potential across the seven pillars for both countries are:

 


Nigeria

Kenya

Market Size & Appeal

88

22

Macroeconomic Resilience

29

64

Political Landscape & Governance

58

67

Social & Human Development

52

74

Investment in Technology, Infrastructure & Logistics

36

57

Economic Diversification

6

32

Business Ease

55

76

Africa Market Potential Index (AMPI)

48

54

 

The market potential for business in Kenya is higher than that of Nigeria.

 

Out of all seven market pillars except for market size and appeal, Kenya performs better than Nigeria.


Country Information

Here is some basic information about both countries.


Nigeria

Kenya

Full Name

Federal Republic of Nigeria

Republic of Kenya

Flag

Currency

Nigerian Naira

Kenya shiling (KES)

Time Zone

(UTC + 1)

(UTC+3)

Capital city

Abuja FCT

Nairobi

Climate

Temperate

Warm and humid tropical to temperate along the coastline

Area

West Africa

East Africa

Telephone code

(+234)

(+254)


Market Size, Appeal & Resilience

The only pillar that business in Nigeria performs better that business in Kenya is Market size & appeal.

With a GDP over 4x that of Kenya, Nigeria’s market size and appeal for business expansion is more appealing than that of Kenya. However, Kenya boasts a more resilient macroeconomic landscape with lower inflation, interest rates, and unemployment levels.

 


Nigeria

Kenya

GDP ppp (nominal)

$1,325.81 Billion

$183.78 Billion

GDP (nominal)

$376.28 Billion

$74.94 Billion

GDP growth

+2.1%

+1.9%

GDP per capita

$2,758

$1,789

Exports

$33.3 Billion

$5.69 Billion

Imports

$35.53 Billion

$16.9 Billion

Balance of current payments

$7.32 Billion

$(-3.7B) Billion

External debt (% of GDP)

23.4%

55.6%

Foreign exchange reserves

$ 47.25 Billion

$11.93 Billion

Interest rate

14%

9%

Inflation

11.14 %

4.35 %

Unemployment

18.8%

11.5%

Market Size & Appeal

88

22

Macroeconomic Resilience

29

64


Political Landscape & Governance

Good governance takes factors such as national security, safety, rule of law, political participation, and human rights. The Mo Ibrahim Index of African Governance (IIAG) was used to determine the score and rank for this pillar.

Business in Kenya performs significantly better than Nigeria in terms of good governance.

 


Nigeria

Kenya

Political Regime

1999 Constitution of Nigeria

Constitutional Republic

President

Muhammadu Buhari

Uhuru Kenyatta

Next Election

2019

2022

Good Governance Score (out of 100)

58

67


Social & Human Development

An economy is only as productive as its people, so the level of social and human development is indicative of progress and future productivity. This pillar looks at the general welfare of the society – access to education, basic amenities, and healthcare.

 

To get the score, we used a normalized score derived from the IIAG score for Human development and cross-referenced that with the Human Development Index (HDI) by the United Nations Development Programme.

 

Kenya also outperforms Nigeria in this indicator.

 


Nigeria

Kenya

Total population

194 Million

49 Million

Growth

+ 2.6 %

+ 2.5%

Population density

210 per sq. km

78 per sq. km

Median age

17.9 years

19.7 years

Index of human development (0 – 1)

0.527

0.555

Literacy rate

51.08 %

78.73 %

Life expectancy at birth

53

67

Child mortality rate

104 per 1,000 births

49 per 1,000 births

Urban Population (%)

50.3%

25.7%

Main cities

Lagos, Abuja, Port Harcourt, Kaduna

Nairobi, Mombasa, Kisumu

Religion

Christianity, Islam, Indigenous

Christianity, Islam, and Indigenous

Languages

English, >520 languages spoken – Main languages Yoruba, Igbo, Hausa.

English, Bantu Swahili, Kikuyu, Luhya, Luo

Social & Human Development Score (0 – 100)

52

74


Investment in Technology, Infrastructure & Logistics

The measure of growth in any economy is how its constituents allocate its resources more efficiently. Adopting new technology is a way of boosting productivity. The level of investment, development, and adoption of new technology is indicative of the productivity level of an economy.

 

Also, the infrastructure that enables businesses to produce goods and the ease of moving these goods around through efficient logistics channels is a major determinant of success for businesses in any economy.

 

A weighted average of the IIAG’s Infrastructure score and World Bank’s Logistics Performace Index gives the score for this pillar.

 

Business in Kenya gets the edge over business in Nigeria when graded over the entire infrastructural development in each country – particularly in regards to electricity availability. Kenya also has a higher economic complexity index (ECI) which is an indication of the complexity of products developed within the country.

 


Nigeria

Kenya

Logistics Performance Index (World Rank)

2.53 (110 of 160)

2.81 (68 of 160))

Infrastructure Score (Mo Ibrahim Index)

33.2/100

59.4/100

Economic Complexity Index (ECI)

-1.54

-0.61

Access to electricity (% population)

59.3%

56%

Investment in Technology, Infrastructure & Logistics Score

36

57


Resources & Economic Diversification

Economic diversification is generally taken as the process in which a growing range of economic outputs is produced.

 

The landscape for business in Kenya is clearly more diverse than Nigeria – the latter with a strong dependence on crude oil exports for the bulk of revenue generation.

 


Nigeria

Kenya

Share of industry (% of GDP)

22%

17%

Share of services (% of GDP)

55.8%

45.4%

Share of agriculture (% of GDP)

21%

32%

Main Resources

Oil, Cocoa, Cashews, Ginger,  Tin, Columbite, Iron ore, Coal, Limestone, Lead, Zinc,

Limestone, Soda ash, Salt, Gemstones, Fluorspar, Zinc, Diatomite, Oil, Gypsum

Export Concentration Index (0 – 1)

0.7344281297

0.1959517733

Economic Diversification Score ( 0 – 100)

6

32


Business Ease

The business ease pillar is a measure of how easy it is to partake in business activities in each country. Using a weighted average of the World Bank’s ease of doing business score and IIAG’s business environment score as a determinant of this pillar, Kenya is easier to do business in than Nigeria.

 


Nigeria

Kenya

Ease of doing business (World rank)

145 out of 194

80 out of 194

Points of Entry

Lagos Port Complex and Tin Can Island Port in Lagos; Calabar Port, Delta Port, Rivers Port in Port Harcourt, and Onne Port.

Kilindini Harbour

Rule of Law

Financial markets

Nigerian Stock Exchange (NSE)

Nairobi Securities Exchange (NSE)

Business Ease Score (out of 100)

55

76


Winner

Kenya

Using the kpakpakpa AMPI tool as a starting point for your analysis, the market potential for business in Kenya is higher than that in Nigeria.

 

Nigeria does better because of short-term advantages such as its current market size and appeal. Kenya fares better in long-term pillars such as business ease, social development, infrastructural advancement, and most especially in good governance.

 

Use this framework and customize it to your business priorities to choose between which of the two countries you want to prioritize.

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About The Author

Nifemi Aluko

Connecting global organizations with quality information and insights to help them succeed in the Nigerian market… Passionate about business, technology, and music.

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