Market Overview
The lack of reliable and uninterrupted power supply, inadequate infrastructure, and increasing insecurity undermine the growth and development in Nigeria. Land, air, and water pollution associated with the activities of the oil and gas exploration and production, and climate change issues pose serious challenges to the environment as erosion, desert encroachment, and other environmental issues continue are becoming more frequent.
Households in Nigeria spend up to US$9 billion on water, sanitation, and hygiene. Approximately US$19 million worth of potable water is consumed daily in Nigeria. The ration of the population that has access to potable clean water varies across the country, with 77.9% having access to improved water sources, while 22.1%, lack access to clean water, especially in the rural and northern parts of the country.
With respect to waste management, about 42 million tons of solid waste are generated annually in Nigeria, with only 20-30% of the waste collected and/or appropriately disposed, managed, and/or recycled. Nigeria included waste in its revised Nationally Determined Contribution and is developing a Nigeria Circular Economy Program that encompasses the establishment of a Circular Economy along the waste value chain with green start-up. Additionally, the country is collaborating with the World Economic Forum to establish a National Plastic Action Partnership dedicated to eradicating waste pollution.
Market Opportunities
In response to the United Nations Environment Programme’s (UNEP) report on the Ogoni land clean-up, the Nigerian government, is coordinating a clean-up exercise of the area through the Hydrocarbon Pollution Remediation Project (HYPREP). The clean-up project, according to UNEP, will take between 25 to30 years to restore the environment. This indicates that an initial allocation of US$1 billion is required for the clean-up of oil spills over a period of five years. The clean-up is expected to be funded by both the federal government of Nigeria and the international oil companies. Shell Nigeria is also executing fully-funded clean-up projects in other areas.
With the support of the Ministry of Environment, HYPREP and UNEP provide opportunities for environmental oil pollution clean-up and remediation of the Ogoni land. HYPREP recently announced a Request for Proposal, offering opportunities for U.S. firms who have experience, technology, and expertise in environmental remediation. U.S. companies with experience with ground water and surface water, soil and coastal swamp remediation, bioremediation, water, and wastewater treatment are especially suitable for such initiatives.
The Nigerian government initiated a program to provide quality water to at least 70% of its population, aiming to provide at least 120 per capita per day for domestic use. The program ensures that potable water quality is never impaired by run-off discharges or organic and inorganic matter. This initiative includes several states in the federation. The United States Agency for International Development (USAID) is supporting several states in the federation on their water, sanitation, and hygiene (WASH) programs. There are opportunities for wastewater management through state utilities. U.S. wastewater management companies can explore investment opportunities and areas of partnership offered by providing technical assistance to manage the full spectrum of wastewater management and recycling activities.
Nigeria is one of the ten target countries under the Senator Paul Simon Water for the World Act of 2014 to receive U.S foreign assistance related to water and sanitation. USAID has been supporting the Nigerian government both at the federal and state levels through a variety of government organizations, including the Federal Ministry of Water Resources and State Water Boards, State Ministry of Water Resources, the Small-Town Water Supply and Sanitation, and Rural Water Supply and Sanitation Agencies.
The Effective Water, Sanitation, and Hygiene Services (E-WASH) is a four-year USAID flagship, with a value of approximately US$60.4 million. This program involves technical assistance to strengthen the governance and institutions in the urban and local Water, Sanitation, and Hygiene Services (WASH) subsector in five Nigerian states of Abia, Delta, Imo, Niger, and Taraba. As a result, the institutions will improve their commercial and financial performance in providing improved water supply services for the urban population. State governments instituted several reforms to transform their State Water Boards into corporate entities. The budget includes a US$19.2 million utility support fund for small repair work and the purchasing of equipment such as pumps and meters.
Small Town WASH: This five-year US$8 million activity (20% cost share) is focused on facilitating the recovery of select crisis-affected communities in small towns in the northeast states of Adamawa, Borno, and Yobe. USAID is currently designing the Water Resources Management for Enhanced Water, Sanitation, and Hygiene (WRM-WASH) program under the new partnership initiative.
In relation to sanitation and hygiene, industry operators also see opportunities in the provision of mortuary services, like the construction of cemeteries, embalmment, and cremation centers as well as other ancillary services associated with the management and disposal of dead bodies. Major cities in Nigeria lack adequate cemeteries or mortuaries. Even where they are available, they lack appropriate infrastructure and embalming chemicals to manage the corpses. In the state of Lagos, there were only ten public mortuaries until an Israeli company established mortuary services by constructing a cemetery, which benefited from selling gravesites at prices ranging from US$2,000 to US$5,000 per grave. Mortuary operators see opportunities in technical partnerships with foreign caskets builders.
Investment in Modern Technology for Potable Water Production
U.S. firms can participate in the market for potable water production through joint partnerships and invest in the establishment of water bottling plants, construction of waterworks plants and boreholes with modern technology for production, processing, treatment, and packaging of potable water. There is also opportunity in the exports of automated treatment plants, storage tanks, water pumps, tankers, water valves, generating sets, and other technological goods.
Export of Water Maintenance Infrastructure and Systems
The significant growth of the real estate sector in Nigeria provides significant opportunity for the exports of water maintenance infrastructure systems for both domestic and industrial usage. U.S. firms that have such systems can find distributors or partners for the introduction and exports of relevant equipment.
Other investment opportunities flourish in every spectrum of water resource development, such as:
- Abstraction/extraction: treatment, storage, transmission, distribution, billing, and collection
- Upgrades of old water infrastructure and construction of new water supply systems, especially water pipeline infrastructure, given majority of available pipeline networks across the country are decaying, rusted, damaged, or submerged under clogged drainage system
- Local manufacture of water and sewage treatment chemicals, local production of water supply, and sanitation equipment such as hand pumps, pipes, rubber ring gaskets, borehole casing, and conducts
- Construction of water storage tanks, provision of water utility equipment, and services, such as motorized boreholes, reliable geo-referenced hydrological, and hydro geological data
- Construction of dams, reservoirs for water supply, farming, and energy
- Establishment of water quality laboratories, rainwater collection, and management, such as the project initiated by the state of Jigawa in April 2005, which was a one-year cooperation agreement with China’s northwestern province of Gansu on rainwater utilization that incorporates training on water resources collection and management
- Construction of silos
Other opportunities exist for:
- Supply of drilling chemicals, such as bentonite, especially as the government has placed a ban on the importation of bentonite, so any U.S. company that partners with local firms to establish a bentonite production facility will benefit greatly, since currently, there is only one bentonite production firm in the nation
- Water equipment supplies, such as water pumps, especially submersible, centrifugal, and hand; chemical feed pumps; drilling chemicals; water treatment chemicals, such as chlorine, calcium hypochlorite, and various plumbing materials; consultancy services; and private sector participation in the construction of water works and dams
There is also a demand for water project consultancy services, especially as the sector is being privatized. This offers a highly competitive avenue for American expertise and technology, given that there are only a few American companies that are already involved in the sector in Nigeria.
Additional opportunities exist in:
- Dam and irrigation construction, equipment, accessories, spares, and management
- Water bore hole drilling equipment, geological investigating equipment, and reverse osmosis equipment
- Water and waste treatment plant
- Water purification systems
- Water bottling plants and water metering and monitoring equipment
- Pipes, fittings, and pipe reticulation
- Water filtration media, such as anthracite, granular activated carbon, calcite, manganese green sand, filter sand, MTM, softener resin, and point of entry (POE) and point of use (POU) filters and purifiers
- Gas chlorinator
Supply of Recycling Plants and Other Waste Management Equipment
The approval of regulatory frameworks, such as the National Policy on Plastic Management, for recycling of waste is an indication of the government’s dedication to waste management. Therefore, U.S. firms can enter partnerships with massive recycling plants that will help waste management companies operating in Nigeria. Several large-sized companies operating in the food and beverage sector formed an alliance called The Food and Beverage Recycling Alliance (FBRA), which is committed to promoting the sustainability of the environment by driving self-regulatory post-consumer packaging waste recovery within the food and beverage sector. The alliance is heavily involved in plastics recycling.
Waste Recycling
There are also opportunities for U.S. waste management firms to establish representative offices and/or subsidiaries with the focus on waste treatment and recycling. This would require processing relevant regulatory permits/licenses and mode of operation within the country. There are opportunities for technical assistance around e-waste, automotive tire, and medical waste recycling. For example, with adequate funding support, investors can design, construct, install, and manage a Floating Resource Recovery Plant that will convert municipal solid waste (MSW) to electricity and potable water. This type of project is very attractive to state governments, especially when executed on an equity participation model of a 10 to 20-year Build-Own-Operate-Transfer (BOOT) basis.
Investment in Waste-to-Energy Initiatives
Recently several states put out Expressions of Interest and Requests for Proposal seeking joint venture partnerships and technical assistance for the development of integrated waste-to-energy projects, including municipal waste and biomass. U.S. firms can also play a significant role in this area, either directly by setting up plants in Nigeria or indirectly by supplying the equipment required for the conversion of waste-to-energy to complement the current power output from the national grid.
Some proposed and ongoing waste-to-wealth projects that are in the pipeline and which offer huge investment opportunities include:
- Conversion of animal and food waste-to-fertilizers for agriculture
- Conversion of domestic MSW into bricks or panels used for construction
- Conversion of plastic materials to green diesel (fuel) for motor vehicles and machinery
- Conversion of oil for energy or industry as other by-products, which are expected to produce water and energy
- Conversion of other recyclable materials, such as glass and metals
- Conversion of wetlands, land replenishment, and construction of engineered landfill sites and incinerators (both mobile and fixed) for medical waste
- Construction of biogas and waste oil management and gas recovery /carbon credit plants to generate energy and gas
- Construction of wastewater, common effluence treatment, and sewage plants
- Supply of compactor trucks, tippers and pay loaders, monitoring equipment, and other ancillary equipment
U.S. waste management companies can also explore other investment opportunities and areas of partnership offered by providing technical assistance to manage the full spectrum of waste management and recycling activities.
Technology is needed in areas such as:
- Provision and rehabilitation of sewage/drainage infrastructure, procurement of requisite equipment for collection and disposal of waste, monitoring, and enforcement, training, and manpower disposal
- Technical assistance related to advisory/consultative knowledge on waste management
- Support for public sector participation/involvement, such as landscape/beautification programs, waste management, and collaboration with the federal, state, and local governments as well as NGOs, CBOs, CDAs, and multi-donor agencies
- Technical support to establish a framework for the implementation of drainage, monitoring/control of outdoor advertising, enforcement of environmental laws and regulations, appropriate public enlightenment, and environmental education
- Construction of high temperature incinerators, recycling plants, and central sewage treatment facilities
Sewage Management
Currently, many sewerage systems across the country are not functioning optimally. The state of Lagos alone indicates that it will require at least over 50 secondary-level treatment facilities and the rehabilitation and upgrade of existing sewerage systems. This presents a unique market opportunity for U.S. technology and services suppliers and operators in this segment to introduce and establish modern integrated sewerage systems in collaboration with the federal and state governments to deal with the environmental and health challenges caused by lack of proper and adequate sewage disposal in Nigeria.
Competitive Landscape
The sachet and table water segments of the potable water sector are highly competitive and are fragmented across the country. However, buyers still retain a strong buying power, as the market is very price sensitive and reacts to any price adjustments.
The medical, sewage, and waste management subsectors are largely monopolistic and are dominated by the federal, state, and local governments across the country. Recently, there has been an openness to investments from the private sector, thus creating more public-private partnership systems for improved waste management across the country.
Trade Barriers, Intellectual Property, Taxes
Nigeria employs a combination of tariffs and quotas for the dual purpose of taxing international trade for revenue generation and protecting local industries from highly competitive imports, especially in the downstream subsectors. From a value added tax (VAT) perspective, the Finance Act 2020 was signed by the President of the Federal Republic of Nigeria in December 2020 and took effect from January 1, 2021. Its intent is to reinforce the provision of section 10 of the VAT Act, also known as the Principal Act, which requires foreign suppliers of taxable goods and services in Nigeria to register for VAT and include VAT on invoices issued to Nigerian customers, effective February 2020. The VAT charged on an invoice is required to be withheld and remitted to the Federal Inland Revenue Service (FIRS) by Nigerian customers.
The lack of enforcement of intellectual property laws continues to undermine profitability of businesses, as counterfeit products flood Nigerian markets as quickly as the authentic products enter the market.
Contact Us
Benedicta Nkwoh - Senior Commercial Specialist. Email Benedicta Nkwoh.
Ms. Benedicta “Ngozi” Nkwoh is the Senior Commercial Specialist at the U.S. Consulate in Lagos, Nigeria. She specializes in U.S.-Nigeria commercial trade relations and has over 20 years of experience with the U.S. Commercial Service, assisting numerous U.S. businesses entering and expanding the Nigerian market. Nigeria is the gateway to the sub-Saharan Africa (SSA) region. Nigeria offers tremendous opportunities to U.S. companies and can be a very rewarding market to interested U.S. exporters. We are open to business and encourage American companies to reach out to us.
Nkwoh also oversees standards and works with the Sierra Leone Partner Post and other West African non-partner posts. She is in charge of the following sectors: oil and gas; power; and renewable energy, environment, marine, and mining.
