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We recently interviewed a number of prominent players in Nigeria’s rapidly growing Citizenship and Residency By Investment industry. The picture that emerged from these interviews is one of serious challenges, but also of significant potential reward for those who can overcome them.
Doing business in Africa, and Nigeria, in particular, is not for the faint-hearted:
- Strict capital controls hamper investment migration companies’ ability to accept payments from clients within viable time fames – as of 2020, Nigerians can only move $10,000 per month out of the country.
- Add to that these the average Nigerian’s fear of being scammed by either locals or foreigners, and business development practitioners in Africa’s largest economy have their work cut out for them.
But it’s not all gloom and doom: With an ever expanding middle class and over 29,000 millionaires residing in Nigeria, the country’s demand for second residency and citizenship solutions is growing by the day.
Key Golden Visa market drivers
Rising terrorism threats and and high crime rates are among the key reasons Nigerian families apply for American or European residency. Currency devaluation and access to better education are frequently cited as reasons as well. For high net worth traders and business professionals who frequently need to travel internationally, the economic citizenship programmes of the Caribbean, and St Lucia, Grenada (E2 Visa Programme eligibility) and St Kitts and Nevis, in particular, are steadily gaining in popularity. The USA’s version of a Golden Visa, the EB5 Immigrant Investor Program, issued residency permits to 97 Nigerian investors by as early as 2018.
A prominent Lagos-based economist is on record as saying that the range of opportunities that are available to Nigerian children is limited because the range of education is limited.…Your money can’t buy you the quality of education that is available abroad and the [opportunity] gap will only get bigger.
It is also expected that emerging climate related threats may lead to an increase in the size of Nigeria’s investment migration market bourgeon in the coming decades.
Unique market characteristics
In terms of new marketing penetration, conventional wisdom would have it that firms either need to partner with local business or establish their own in-country operations in order to succeed.
According to the CEO of prominent citizenship by investment firm operating in Lagos and Abuja, however, his firm discovered very early on that an actual office was not a pre-requisite, and have been running a leaner, more remote work oriented operation ever since.
While this may seem counter-intuitive in a market where interpersonal trust is a vital business catalyst, many well-heeled Nigerians prefer dealing with foreign businesses and service providers, given the high propensity for fraud and identity theft within the country.
UAE shopping trips are a regular occurrence for the Lagos jet-set, so client meetings frequently take place in Dubai.
Another key trend in Nigeria is the rise of female entrepreneurs and traders, both as key economic contributors, and as potential citizenship by investment clients. Citizenship and residency applications by Nigerian women as the primary or sole applicants appear to be on the rise, and in instances where applications are submitted by couples, women are increasingly playing an instrumental role in the decision-making process.
The face of wealth in Nigeria is also changing: Aboard business and first class flights out of Lagos, one doesn’t see only banking execs and asset managers – many of the business travellers are entrepreneurs and traders.
Key business development challenges
As in many other African countries, cash is king in Nigeria, and a large percentage of big-ticket deals involves hard currency, frequently denominated in US dollars. This kind of commercial pattern creates obstacles for citizenship firms in terms of compliance requirements and proving source of funds – not to mention tax clearance.
It is therefore vital to know exactly what a specific CIP programme’s requirements are before even suggesting it to the prospective client. Failure to do so can lead to unsuccessful residency or citizenship outcomes, which in turn can wreak havoc with firms’ reputation even before market development efforts get properly off the ground.
While industry feedback across the board suggests that the Nigeria market has significant operational challenges, the upside potential for innovative, adaptive firms is substantial.