The Nigerian paint & coatings market is growing rapidly with the increase of private and government investment in infrastructure and the growing demand for higher quality products and services.
With Nigeria experiencing significant construction and infrastructure growth, and as an economic boom is currently driving the country towards industrialization, the paints & coatings industry is quickly becoming a strategic growth market.
Today, the Nigerian paint industry is one of the largest producing in the county and major player in the employment of labour and economic advancement.
According to the latest data (2016) compiled from the Standards Organisation of Nigeria (SON) and Asoko’s company database, there are 68 registered paint producers in Nigeria that meet SON requirements.
In all, the registered paint manufacturers are concentrated in 9 states namely; Kaduna, Plateau, Ogun, Lagos, Enugu, Edo, Rivers and Imo.
The Nigerian paints & coatings market was worth an estimated $200 million in 2012. Growing by an estimated CAGR of 9.01%, the market was an estimated $218 million in 2013 and will reach $238 million in 2014.
In 2012, according to Frost & Sullivan, decorative paints & coatings which have a strong correlation with the real estate industry was an estimated 71% of the total volume of paints & coatings in Nigeria. However, from our analysis we estimate total sales volume to be around an estimated 128 million litres a year.
Challenges and Prospects of the Nigerian Paint Industry
We will begin by outlining the challenges faced by the Paint Industry:
1) NEGLECT BY THE GOVERNMENT
The Nigerian government is one that is obsessed with oil and gas sector and treats it with utmost priority to the detriment of other sectors. Most manufacturing industries in Nigeria are self-dependent and this is a sad reality.
Apart from collecting taxes and cost of certification from these companies, the government provides no incentives and barely carries out routine checks.
This limits the percentage of the paint industry’s contribution to the gross domestic product of the country.
The absence of an efficient regulatory practice also increases the emergence of new industries and thus reduces the standard of products and frustrates rapid development.
2) ACCESS TO FACILITIES
Many companies in the Nigerian paint industry are not publicly quoted and cannot easily obtain funds from the Nigerian capital market. This means that production is limited to individual capability.
Apart from financial limitations, the industry also faces a major challenge in the epileptic power supply, the end of spending huge sums of money on diesel for production.
The inability of the government to properly equip the standard organization of Nigeria with adequate facilities and laboratories is the hindrance to the certification and testing of products to meet international standards; producers have to obtain international certification at a huge cost that only a few companies can afford.
Another pressing issue is the unavailability of raw materials needed for production, paint manufacturers import about sixty per cent of raw materials used and this dwindles production capacity.
Prospects of the Nigerian Paint industry include:
Looking at all the above, the conclusion, despite the obvious challenges, is that Nigeria is the new frontier for doing business. Opportunities can be found in nearly every sector, but especially those that apply to the fast-growing sectors of the economy such as construction and real estate. The paints and coatings sector leverages on the success of the general economic boom in Nigeria and is, therefore, a deserving sector to consider for foreign suppliers and investors.
1) QUALITY CONTROL
The efforts made by the Paint Manufacturers Association of Nigeria and the standard organization of Nigeria to maintain the minimum standard of paint manufacturing so far has improved quality production and promoted healthy competition.
2) HIGH DEMAND
There is a rapid increase in the construction of buildings for private and commercial purposes virtually everywhere in Nigeria. This has greatly increased the demand for paint products which are backed up with an effective channel of distribution for the upkeep and benefit of the industry.