If you’re interested in investing in Nigeria as well as investment opportunities in Nigeria, you’ve come to the right place. Since I published my article titled, Money: What I Wish I Knew 15 Years Ago, some people have asked the question, “Subomi, where can I invest in Nigeria?” In this article, I will provide answers. As usual, I speak from personal experience, and not as a financial adviser. You should perform your due diligence before making a financial decision.
Start With Saving!
The first step to investing in Nigeria is to save! This is because you need seed capital to make your first investment. A simple way to do so, is to set aside at least 10% of your salary (and other income sources) every month. Separate your savings from your account immediately, so you do not spend by. Instead, transfer it to a high yield investment account, NOT a savings account. There are two types of investment account you can use. You could try a simple savings app like PiggyBank or CowryWise or a higher yielding money market fund account.
Once you’ve saved some seed capital, you can now explore investing in Nigeria using the suggestions below.
1. N2,000 to N50,000
Money Market Funds
Start your investment journey with a Money Market Fund Account. In simple terms, it is an account managed by a credible Asset Management institution licensed by Nigeria’s Securities & Exchange Commission (SEC). A Money Market Fund helps individuals with small amounts of money, to come together to invest as a group. The funds are managed by professional fund managers. These fund managers invest in securities issued by governments, financial institutions and large corporations. Money Market Funds are liquid & safe and do not include stocks & shares.
When considering a Money Market Fund, look out for these phrases – “Guaranteed Income” and “Open-Ended”. What they mean is, your principal is guaranteed and you can top up your account or cash out at any time. (Usually there’s a small penalty if you cash out before 30 days.) The ease of topping up allows you to transfer a percentage of your earnings, on a regular basis. The flexibility of cashing out means you can use the funds to invest in other things, as soon as you are ready.
At the time of writing, the performance of Money Market Funds was about 11% per annum i.e for 12 months. (If you cash out earlier, calculate your return for only the number of months you invested for.) This is much better than a savings account or Treasury Bills which has a return of about 4% per annum. In addition, because the returns on Money Market Funds are compounded monthly or quarterly, they provide a better return than most savings apps, which are not compounded.
Examples of Money Market Funds include Stanbic IBTC Money Market Fund, ARM Money Market Fund and Stanbic IBTC Guaranteed Investment Fund. The minimum investment is between N5,000 to N10,000. Investment One’s Abacus Money Market Fund has a minimum investment of N2,000. Please visit this page, for a step-by-step guide for opening a Money Market Fund Account.
2. N50,000 – 750,000
Another option for investing in Nigeria, is credible agriculture crowdfunding platforms. I keep an updated list of credible options in my investment course.
If you invest in agriculture, please do not put all your eggs in one basket. For instance, Poultry usually has the shortest tenor and the lowest investment commitment. But, should there be bird flu, you will lose your profit, even if your principal is insured. So, I advise you to spread your investment across different types of farms – e.g. rice and maize – as well as different companies.
You may also consider investing directly in farms, to cut out the middle man (the agriculture crowdfunding firm). You will receive profits after harvest. However, due diligence is important.
3. N750,000 to N1,000,000
Another investment opportunity in Nigeria, is Virgin Land. In Lagos, you may buy land from about N500,000 (minus cost of documentation), and you can also take advantage of land opportunities in your home town. Buy from government institutions or credible real estate developers to avoid “Omo Oniles”.
When buying land, identify areas that are close to business districts or main roads, in the hope of selling in future, at commercial rates. You may also target growing residential areas. As people retire to those areas, the value of real estate will rise. You may learn more here.
Before you invest on any platform, remember to do your due diligence and note some important points:
- Find out the specific return on the amount you’re investing
- Ask about fees and taxes, if any
- Review the performance of the investment platform for the last 6 months to 1 year
- Google the main promoters
So in summary, if you’re thinking of investing in Nigeria, I would advise you to start with a mix of Money Market Funds, Agriculture and Virgin Land. I also teach about other investment opportunities in Nigeria in my investment course – including Venture Funding, Export, Cryptocurrency and the Capital Market. My course is online and can be taken from anywhere in the world. After the course, I connect people to credible investment managers and deal flows.
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