How I Test Nigeria’s Economic Health

Nigeria is a very exciting country. I pay attention to those numbers from the National Bureau of Statistics. But no matter what the bureaucrats publish, we have a way to test them, to a certain degree, as a way of validating what to use in business decision making. It is not a perfect model but most times, it helps us remove ambiguity in some decision-states.  I do talk to foreign investors, who are investing in Nigeria, and I like to ensure that I am fact-prepared to offer insights.

The following are some of our processes:

• Photos of Ships at Ports, from Marina Lagos: Every month end, I have two friends who work in different high-rise buildings along Marina in Lagos take photos and send to me. They take photos of ships coming and leaving Nigerian ports. We have seen that the density of these ships have correlated with economic dynamism in Nigeria. Yes, the density also correlates to the general feelings and confidence of businesses and citizens, irrespective of the official statistics. During recession, the density of the ships dropped significantly. As the economy recovered, the number of ships rose.
• Airlines Scheduled Flights: At month end, count the number of scheduled flights in the leading airlines. What we have noticed is that when flight demand increases, airlines add more flight schedules. During the recession, they reduced the numbers significantly. We use that flight frequency to indirectly model the health of the economy. We focus on Lagos, Kano, Abuja and Port Harcourt in/out routes
• Photos of Parked Aircrafts: There is a positive correlation between the health of the economy, and how many aircrafts airlines are leasing and putting into services. Usually from 7pm when most of the local aircrafts have parked, you can get a good insight on the confidence level of airlines by looking at how many aircrafts they have in service. Most of them are parked in Lagos and Abuja which are usually the take-off airports to other destinations in the morning.

There are two other things which I will not share here. Yes, they are trade secrets in our business. Pardon me for that.

When we have collected the data and photos, we run them through a code to make sense of them. What happens is that we get really great insights about the economic health of Nigeria. You would be surprised how these indicators track consumer confidence and business sentiments. That drives strategy and also positions us to see what is happening in the economy more efficiently. Our clients get the benefits because we help them feel the optimal state of the economy.

You do not need to be an economist to build a model to extract data to help you. In places like Nigeria where data collection remains primitive, entrepreneurs must be creative as they make decisions in the allocation of capital. The data you invest upon should not be based on what some bureaucrats in Abuja and Washington DC are publishing. Most times, they are off by months as the collection process is inherently slow.

Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.