Retailers Chase Returns in Booming But Volatile Kano

10 Apr 2014

Posted by Gideon Ogidi

Gov Rabiu Kwakwanso

Opening a modern supermarket in a city under threat from an Islamist insurgency, with the added uncertainty of wobbly public power supply, 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?

Small wonder then that major retail investors like South African grocer Shoprite and Wal-Mart unit Massmart Holdings are opening stores in  Kano, the northern commercial hub of Nigeria, Africa's number one oil producer, and since Sunday, its largest economy.

"I always want to be bold enough to say, you can't be in Nigeria without being in Kano," Massmart Holdings' Africa Director Mark Turner told Reuters in Johannesburg at the Reuters Africa Summit this week. Nigeria, along with Angola and Kenya, is a strategic target market for the Wal-Mart subsidiary.

Kano is a dusty centuries-old Sahel belt metropolis that once offered gold, salt, slaves, leather and famed indigo-dyed textiles in its teeming 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", Kano consumers can wheel their carts between shelves replete with commercial brands from across the globe in a brand-new, air-conditioned Shoprite supermarket, anchoring a larger $85 million 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 emir of Kano State capital. The mall is designed to house 85 shops and will be among Nigeria's biggest.

But the presence of armed and uniformed guards searching vehicles, opening boots, checking the underside for explosives with mirrors and frisking all shoppers is a sign that this particular mall location faces unusual security challenges.

Despite being far from Maiduguri, the epicentre of a bloody five-year insurrection against the Nigerian state waged by Islamist sect, Boko Haram, mostly in the North-east, 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.

"We cannot wish away the fact that there are security concerns," Mohammed Hayatu-Deen, the Maiduguri-born entrepreneur and banker who chairs the group developing the Kano mall, said.

The hulking power plant standing alongside the mall building - capable of producing nearly 5,000 kilowatts - is a 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 just like food and water, you can't survive without them," said another local businessman working on the mall. He asked not to be named, but his words encapsulate problems that are some of the biggest brakes to investment and growth not just in Nigeria, but in Africa as a whole.

But despite the resilient optimism, Kano's commerce and industry have suffered from the Boko Haram insurgency and from restrictions to combat it like curfews and roadblocks. Tourists' visit  to the city's historic sites has also dwindled.

Foreign souvenir-seekers are rare now at the five centuries old Kofar Mata indigo dye pits, famed for the distinctive blue cloth that was a feature of the trans-Sahara trade. "We have no capital to develop," said one of the dyers, Haruna Baffa, 30.

But Hayatu-Deen was confident the arrival of more tenants at the Ado Bayero mall would have a dynamising effect.

"Nothing succeeds like success," he said.