Working with 30 Million People as Nigeria’s Total Addressable Market Size

The total effective addressable market in Nigeria, according to my model, is 30 million people. I have an extensive analysis to support that number here. Largely, if you are in the consumer market space, work with 30 million people over the 200 million people number for most product categories. Of course, food goes for 200 million people because all man must eat but “non essentials” like electronics should be pegged at 30 million as the total addressable market. Yes, my model posits that only 30 million Nigerians have decent disposable income to care about the next non-essentials to worry about.

In most of my analyses when it comes to people that actually have money to spend or pay for (technology) solutions in Nigeria, I use 30 million people. Yes, despite 198 million human population, the effective addressable market in Nigeria is less than 30 million people.

Lack of understanding of this possible total addressable market is partly the reason many entities are struggling in our digital sector: they model huge consumer base only to experience shocks during execution. Quartz captures that sentiment in a quote credited to the CEO of Gloo.ng, an online supermarket, which recently re-strategized out of ecommerce: ‘Sticking with the e-commerce model, Olusanya tells Quartz, was “going to be a big challenge” down the line given the reality of a small addressable middle class market and continued logistical issues’.

But Konga’s struggles didn’t happen in isolation as more players in the e-commerce and online marketplace space have faltered over the past 18 months. OLX, a popular classifieds platform backed by Naspers—Africa’s most valuable company, Efritin, an e-commerce platform for used goods, DealDey, an online discounts platform and Careers24, an online jobs marketplace also backed by Naspers, have either scaled back operations significantly or shut down entirely.

Indeed, this week, Olumide Olusanya, CEO of PayMente, parent company of Gloo.ng, an online supermarket, announced the company has pivoted away from e-commerce. Olusanya says the move is down to a lack of long-term faith in the e-commerce model after running Gloo.ng for six years. Sticking with the e-commerce model, Olusanya tells Quartz, was “going to be a big challenge” down the line given the reality of a small addressable middle class market and continued logistical issues. The point about market size is linked to Nigeria’s wider economic struggles over the past three years.

When it comes to business models, do not import things without considering if you have the numbers, locally, to make them work. You would not be wrong, for assuming that for most product classes, you have only 30 million to sell to. Simply, build for 30 million people in Nigeria across many sectors!

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