Business in Kenya vs. Nigeria: 2019 Economic Comparison

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.

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:

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.

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.

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.

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.

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.

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.

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.