Growth of organised retail in Nigeria

In the last couple of years, Nigeria has witnessed a significant growth in the number of retail malls being established across the country. Experts believe that these malls play a crucial role in advancing the organized retail market in Nigeria. Winston Osuchukwu, the Managing Director of First Ally Asset Management, and Tokunbo Omisore, the Founder of TOP Services, recently joined CNBC Africa to shed light on the importance of infrastructure malls and their impact on the retail sector in Nigeria. Osuchukwu emphasized that retail malls are more than just developments; they serve as essential infrastructure for organized retail to thrive. By providing purpose-built trading spaces, malls offer several advantages that benefit retailers, customers, and suppliers. Retailers are relieved of the burden of constructing their own facilities, leading to increased efficiency and cost savings. Moreover, retailers can leverage shared resources within malls, facilitating economies of scale. This centralized approach also benefits small and medium-scale suppliers by providing them access to large retailers, enabling rapid business growth. One of the key insights shared during the discussion was the regional focus of mall development. While the concentration of malls is evident in urban centers like Lagos, there is a growing need for such infrastructure in secondary cities across Nigeria. Omisore highlighted the importance of affordable neighborhood malls as a means of catering to the local community's needs. Despite the challenges in funding retail projects, including high-interest rates from banking institutions, efforts are underway to explore alternative financing models. The conversation turned towards Real Estate Investment Trusts (REITs) as a solution to the funding gap in mall development. Osuchukwu elaborated on how REITs could provide long-term financing for infrastructure projects, such as malls, by involving institutional investors like pension funds and life insurance companies. This arrangement aims to create a sustainable funding mechanism that aligns with the extended lifespan of infrastructure assets. TOP Services has been at the forefront of developing affordable neighborhood malls, focusing on design-to-budget principles to ensure cost-effective operations. The company aims to support local retailers and promote community-based businesses within its mall developments. Despite challenges like fluctuating energy costs, TOP Services remains committed to creating accessible and affordable retail spaces for both retailers and consumers. Looking ahead, both Osuchukwu and Omisore expressed optimism about the growth prospects for organized retail in Nigeria. With the potential for expanding the number of malls and diversifying retail offerings, the sector is poised for significant development. By fostering a conducive environment for local businesses and leveraging innovative financing models like REITs, the organized retail market in Nigeria is set to witness a transformative evolution. As the retail landscape continues to evolve, the role of infrastructure malls in supporting organized retail will be key to driving economic growth, employment opportunities, and community development. With a strategic focus on sustainability, affordability, and inclusivity, the future of retail malls in Nigeria looks promising.