Kano, Nigeria - Opening a modern supermarket in a city under threat from an Islamist insurgency, with the added uncertainty of wobbly public power supplies, may sound like a retailer’s nightmare.
But what if that city stands on one of the oldest trade crossroads in Africa, offering a major chunk of one of the largest and fastest-growing retail markets on the continent?
No surprise then that major investors like Shoprite and Walmart unit Massmart are opening stores in Nigeria’s second city, Kano, the northern commercial hub of Africa’s top oil producer and largest economy.
“I always want to be bold enough to say, you can’t be in Nigeria without being in Kano,” Massmart’s Africa director, Mark Turner, said at the Reuters Africa Summit this week. Nigeria, with Angola and Kenya, is a strategic target market for the Walmart subsidiary.
Kano is a dusty centuries-old Sahel belt metropolis that once offered gold, salt, slaves, leather and famed indigo-dyed textiles in its markets at the end of an ancient caravan route linking Libya to black Africa south of the Sahara.
Now, amid banner signs proclaiming “lower prices you can trust”, consumers can wheel their carts between shelves replete with commercial brands from across the globe in a new, air-conditioned Shoprite supermarket, anchoring a larger $85 million (R890m) shopping mall development in the city.
In the coming weeks, Massmart will join Shoprite by opening one of its Game household appliance stores in the same Ado Bayero Mall, named after the Kano emir. The mall is designed to house 85 shops and will be among Nigeria’s biggest.
But the presence of armed guards searching vehicles – opening boots, checking the underside for explosives with mirrors – and frisking shoppers is a sign that this mall location faces unusual security challenges.
Despite being 600km distant from Maiduguri, the epicentre of a bloody five-year insurrection against the Nigerian state waged by Islamist sect Boko Haram mostly in the northeast, Kano has also suffered the insurgency’s impact.
Bombings and shootings by Boko Haram militants killed at least 185 people, mostly Muslim civilians, in Kano in January 2012. Explosions in July last year killed 11 people, and police and military roadblocks are now a feature of life in the city.
The hulking power plant standing alongside the mall building – capable of producing nearly 5 000 kilowatts – is testimony to another challenge: guaranteeing uninterrupted electricity in a country whose power deficit is notorious and where the rumble of the generator starting up is as familiar as the roar of traffic.
“Power and security are like food and water, you can’t survive without them,” said a businessman working on the mall. His words encapsulate problems that are some of the biggest brakes to investment in Africa as a whole.
“Trading in Africa is not easy, it comes with challenges, whether it be power or infrastructure. It’s really about how you gear up to keep trading as consistently as you can through all these challenges. But the risk reward is there,” said Turner, whose company operates in 12 African states.
The continent’s expanding population rapidly approaching 1 billion includes an emerging middle class of consumers eagerly embracing Western brands, products and lifestyles.
Turner said investors should consider each market carefully on its own merits.
Reflecting Kano State’s demographic draw for retailers, its population almost rivals that of Rwanda, and investment bank Renaissance Capital ranks the northern territory as Nigeria’s second-wealthiest local economy after Lagos State. In a 2013 report, it estimated Kano’s economy at $17bn, equivalent to Botswana’s. – Reuters