Business Investments Today

By Adaeze Obi-Umeofia

Nigeria, with a population exceeding 229 million, was the largest economy in Africa until recently, being pushed down to the fourth position, as an IMF forecast suggests. In context, our country is facing its worst economic crisis in decades. The inflation rate reached the decades-high level of 34.19 per cent year-on-year (YOY) in June 2024, up from 33.95 per cent in May and Nigerian Naira has lost about 70 per cent of its value since June 2023. Two of the immediate causes of the crisis are the removal of fuel subsidies and the floating of the currency, which together have caused major price rises. And with these current market uncertainties, businesses, need to take a cautious approach while looking for new investment opportunities. Some of these opportunities include:

1.  Financial Technology (Fintech)

Financial services are a key driver of the Nigerian economy. Innovative fintech services especially, are transforming the face of banking and financial services in the country. For instance, five Nigerian fintech firms – Kuda, PalmPay, Piggyvest, Flutterwave, and MTN’s Mobile Money are among the world’s top 250 fintech companies in 2024. As the country is grappling with an economic crisis, a 28.9 million unbanked population makes Fintech a lucrative and fast-growing business segment in Nigeria.

2.  Clean Energy

Nigeria is far from achieving energy security, despite sitting on the richest oil resources in Africa. According to estimates, renewable sources of energy such as solar, wind, and biomass can potentially produce over 68,000 MW of electricity in Nigeria. According to a report by the Rural Electrification Agency (REA), developing off-grid alternatives offers a $9.2-billion-per-year market opportunity for mini-grids and solar home systems saving over $4.4 billion per year for Nigerian homes and businesses. Renewable energy can play a crucial role in ensuring energy security in the country.

3.  Real Estate – Affordable Housing

Amidst a real-estate boom, millions of Nigerians struggle with affordable housing as the cost of living has steadily increased. According to Nigeria’s Central Bank, there is a growing deficit of at least 22 million homes. The affordable housing crisis is going to get worse as the country is poised to reach a population of more than 400 million by 2050. Investors and developers who prioritize offering affordable housing options can capitalize on this underserved market segment.

4.  Agriculture

Nigeria is undergoing an acute food crisis and relying on increased imports to feed its rapidly expanding population. Whereas, high food imports along with a falling currency put pressure on food prices. Recently, the Minister of Agriculture and Food Security announced an investment of $1 billion for mechanisation of agriculture. Businesses that can imbibe smart farming techniques and modern technologies can reap tremendous value from this.

5.  Pharmaceuticals

The exit of pharma giants like GSK and Sanofi exacerbates the supply constraint in the pharma industry, and rising rates of non-communicable diseases, make pharma a high-potential sector. Recently the government has taken several policy actions such as eliminating tariffs, excise duties, and VAT on specified machinery, equipment, and raw materials to support the pharma industry.

According to Coordinator of the Africa Health Budget Network (AHBN), Dr. Aminu Magashi, “this is a great opportunity for the country’s local pharmaceuticals and manufacturers.”

 In conclusion, the current Nigerian economy, though depressing, still offers options for increased wealth and sustenance, and to achieve this, one needs to pick one of these investment avenues based on a careful study of risks and returns

 …. Adaeze, an accounting and finance expert with Techno Oil Limited and an ex-PwC Senior Consultant, has an MSc in Economic Planning from University College London (UCL), a BSc in Accounting and Finance from the University of Surrey, and professional accounting certifications from ACCA and AAT global accounting bodies.