Current Sectors to Invest in Nigeria (2023)
Nigeria is a land of immense potential, and the investment opportunities available in the country are numerous and varied. Whether you are looking to invest in agriculture, tech, or real estate, there is something for everyone.
While each investment opportunity has its own unique set of risks and rewards, it is important to remember that investing always carries some level of risk. As an investor, it is up to you to do your due diligence, conduct research, and make informed decisions based on your risk tolerance and financial goals.
Despite its challenges, Nigeria is a good place to do business. High returns on investment (ROI), relatively low labor costs, a massive market, large consumer spending resulting from her large population (estimated at over 200 million people), and a large endowment of natural resources to provide input to industries are some of the critical drivers.
Investing is an essential aspect of building long-term wealth. With the right investment strategy, you can build a solid financial foundation and secure your future. Nigeria, with its abundant natural resources, growing population, and thriving economy, presents a vast array of investment opportunities.
There are numerous sectors in Nigeria to invest in that can provide a smart entrepreneur with a lifetime of wealth. Many investment opportunities exist in this country as a problem that anyone can take advantage of. Nigeria, the most populous country in Africa, is a rapidly growing market with a number of promising sectors for investment. Here are some of the top sectors to consider:
TOP SECTORS TO INVEST IN NIGERIA
Now, let’s take a look at the top sectors of the Nigerian economy where you should put your money. Opportunities abound in these sectors, whether you are a microentrepreneur or the owner of a large multinational corporation:
Small and Medium Scale Enterprises (SMEs)
Small and Medium Scale Enterprises (SMEs) are the backbone of the Nigerian economy. The National Bureau of Statistics reports that Small and Medium-sized Enterprises (SMEs) make up 96% of businesses and 84% of employment in Nigeria. These SMEs number around 17.4 million, and they generate approximately 50% of industrial jobs and almost 90% of the manufacturing sector, measured by the number of businesses operating.
How to Invest in SMEs
Investing in small and medium-sized enterprises (SMEs) is an excellent way to support local businesses and make a profit at the same time. This involves providing funding to help these businesses grow. You can choose to invest in SMEs either through:
- Equity: Equity financing entails purchasing shares in an SME
- Debt financing: Debt financing involves giving a loan to the SME
- Additionally, there are crowdfunding platforms where you can also invest in SMEs.
Foreign Exchange Trading
Forex involves buying and selling currencies to make a profit. The Nigerian Forex market is regulated by the CBN and offers several opportunities for investors.
Some Forex trading strategies that you can use include trend trading, range trading, and breakout trading. These strategies involve analyzing market trends and making trades based on those trends.
To invest in Forex trading, you need to open a Forex trading account with a broker. There are several Forex brokers in Nigeria, such as FXTM, XM, and HotForex. After opening an account, you can start trading currencies and making profits.
The technology industry in Nigeria has experienced remarkable growth in recent years, evidenced by the emergence of various tech startups that have attracted substantial investments from both local and foreign investors.
Furthermore, Nigeria boasts of a rapidly expanding pool of tech talent, which is supported by a plethora of tech hubs and incubators. Consequently, the industry has access to a vast talent pool, robust funding mechanisms, and favorable policies that position it for exponential growth.
Investing in Nigeria’s tech startups typically involves providing seed funding or venture capital. Interested investors can choose to invest through venture capital firms, angel investor networks, or by directly investing in the startups themselves.
Overall, the Nigerian tech industry is an attractive investment destination, offering a wealth of opportunities for investors looking to tap into its potential for growth and innovation.
Nigeria Treasury Bills
NTBs are short-term debt securities issued by the government to raise funds from the public. They are considered one of the safest investment options in Nigeria because they are backed by the full faith and credit of the federal government. Treasury Bills have different tenures ranging from 91 days to 364 days, and they are issued through auctions held by the Central Bank of Nigeria (CBN).
The returns on Treasury Bills are not fixed and vary based on the investment period. As of January 2023, Market Forces Africa reported that the yield on 364-day bills was 4.78%. Conversely, the yield on 91-day bills was 0.29%, while that of 182-day bills was 1.80%. You can earn more significant returns by opting for longer tenures, but this comes with the risk of interest rate fluctuations.
How to Invest in Treasury Bills
Investing in Treasury Bills is easy and straightforward. You can participate in the auctions by filling out an application form and submitting it to an authorized dealer bank. The minimum investment amount is usually N50,000. At the end of the tenure, the principal and interest are paid directly into your bank account. Treasury Bills can also be traded on the secondary market.
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. Mutual funds offer you the opportunity to diversify your portfolios and invest in a variety of assets such as stocks, bonds, and real estate. They are managed by experienced fund managers who make investment decisions on behalf of investors.
Some of the mutual funds in Nigeria include the Stanbic IBTC Aggressive Fund, FBN Money Market Fund, and the ARM Money Market Fund. To invest in mutual funds, you need to identify a reputable fund manager and fill out an application form.
The minimum investment amount varies depending on the fund manager, but it is usually between N5,000 and N100,000. Mutual fund units can be purchased and redeemed on any business day, and the proceeds are usually paid into your bank account within a few days.
Oil & Gas Sector
Oil and gas is an excellent industry with numerous investment opportunities. Nigeria currently relies on oil and gas for the majority of its revenue; you can choose to play a dominant role in the sector by assisting the government with refineries or begin production/distribution of end products such as asphalt, bitumen, and the rest.
Nigeria is a major oil-producing country and the sector is a significant contributor to the country’s GDP. The government is making efforts to increase transparency and improve the business environment in the sector, making it an attractive option for investors.
Regardless of the sectors in which you choose to invest. Keep in mind that you must have at least a basic understanding of how it works before putting your money there. We hope you find this information useful as you embark on your investing journey.
Health Care Sector
Without a doubt, one of the most pressing issues confronting the majority of Nigerians is the lack of access to high-quality health care. Health care is another brisk investment opportunity in Nigeria.
Providing quality care by investing in the construction of hospitals where they are needed and hiring the necessary personnel. You can also collaborate with a variety of organizations to accomplish this. Though the process of establishing a hospital, pharmacy, or other related health care facility is highly regulated and can be time-consuming at times, it is unquestionably a worthwhile sector in which to invest money in Nigeria.
Agriculture is one of the most profitable sectors to invest in in Nigeria. It not only has a high return rate, but it can also be done with low labor costs. Nigeria also has ideal weather conditions for agriculture, as well as fertile and arable land.
Nigeria has a vast agricultural sector, with a range of crops including cocoa, rubber, and palm oil. The sector has significant potential for growth and investment, particularly in the areas of processing and value-added products.
You can consider livestock farming such as pig farming, poultry farming, and snail farming, or you can focus on crop production such as rice, tomatoes, beans, plantain, maize, and so on. If direct farming is not for you, you can invest in agricultural companies. They assist you in investing your money and returning it to you on a regular basis with interest.
The Nigerian entertainment industry has seen a lot of growth in recent years, from music to movie production to the emergence of relaxation centers like cinemas.
Despite being one of the fastest growing and most popular industries, there is still room for many new investors to enter. Many relaxation centers, movie production companies, and music production companies are still needed. In addition, many types of equipment, such as cameras, studio sets, and training of sector professionals, are produced, creating a fertile ground for investors to invest money in Nigeria and earn a lot of money.
The education sector is one of the best investment opportunities and most profitable sectors in Nigeria. We are all aware of how Nigerian public schools have fallen short of expectations, paving the way for private investors and entrepreneurs. The importance of a good education, whether for a professional career, skills, or knowledge, cannot be overstated, as many people strive to obtain it for a variety of obvious reasons.
You can enter this industry by offering standard basic schools, tertiary schools, trades learning centers, and other related schools. You’re in for a profitable adventure if you use a good penetrating strategy.
Nigeria has enormous purchasing power; however, only a few indigenous companies are benefiting from it. Furthermore, a greater proportion of purchasing power is extended outside of the country. Most household and other types of products used in Nigeria are imported, indicating that the sector is underutilized.
Nigeria’s manufacturing sector requires a large number of investors who are capable of producing goods and commodities required by Nigerians. Investing in the manufacturing sector will be one of the best sectors to invest in Nigeria with a good marketing and distribution strategy.
Nigeria has a large and growing population, providing a potential market for locally-produced goods. The government is also looking to increase local production and reduce reliance on imports, making the manufacturing sector an attractive option for investors.
Investing in cryptocurrency in Nigeria has become increasingly popular in recent years. Cryptocurrencies such as Bitcoin, Ethereum, and others have gained significant attention and adoption among Nigerian investors.
One of the reasons for this is the country’s large population of tech-savvy youth, who are attracted to the decentralization and borderless nature of cryptocurrencies. Additionally, the high inflation rate and unstable local currency, the Nigerian Naira, has led many Nigerians to seek alternative investment options.
To invest in cryptocurrency in Nigeria, you first need to open an account with a reputable cryptocurrency exchange. Some popular exchanges in Nigeria include Busha, Binance, and Quidax. These exchanges allow you to buy and sell cryptocurrencies using Nigerian Naira or other major currencies.
It is important to note that investing in cryptocurrency can be risky, as the value of cryptocurrencies can be volatile and subject to large fluctuations. It is essential to do your research and understand the risks before investing. Additionally, it is important to keep your cryptocurrencies safe by using a secure wallet and following best practices for securing your account, such as using two-factor authentication and keeping your private keys secure.
Unlike in the past, traveling is now one of the most popular daily activities for many people. Nowadays, almost everyone travels, and the transportation industry is expanding.
You can capitalize on these investment opportunities by establishing a transportation company that provides safe and comfortable transportation between states and cities. To accomplish this, invest in or establish airlines, travel agencies, or collaborate with reputable organizations.
Retail Trade & E-commerce
Retailing is one of the fastest growing sub sectors of the Nigerian economy and will continue to be so for a long time due to a growing population, rising consumption, technological advancements, an increase in mobile payment, and the growing sophistication of the working population.
Another aspect of retailing that is gaining traction in Nigeria is ecommerce. Popular brands such as Jumia, Konga, and Jiji currently dominate the sector.
As the number of internet users grows by the day, so do the opportunities in the Ecommerce space. According to recent data from the National Communications Commission ((NCC), approximately 111 million Nigerians access the internet, with a significant proportion of them shopping online.
The Nigerian real estate industry holds immense potential for investment in the country, owing to the rising population and housing demand. This market guarantees high returns on investment and includes a variety of properties in high demand such as:
- Residential Properties
- Commercial Properties
- Mixed-Use Properties and more.
The investment returns vary across different regions of Nigeria. For instance, in Lagos, select real estate investment plans provide an annualized yield of 10% and a guaranteed capital gain of 10% to 20% over two to four years on particular properties.
If you’re considering investing in the Nigerian real estate market, you can explore various opportunities such as rental properties, commercial real estate, and more.
Economic Outlook in 2023
The economy of Nigeria appears to have a bright future. In the upcoming years, the nation is anticipated to experience robust economic growth, supported by ongoing investment in the oil and gas industry as well as other industries like manufacturing, tourism, Real estate and agriculture.
Nigeria is a significant producer of crude oil and is thought to have the largest oil reserves in all of Africa. The Nigerian government is making significant investments in the growth of the nation’s oil and gas industry, which is anticipated to drive economic growth in the years to come. Additionally, Nigeria has sizable natural gas reserves, which is another important source of income for the nation.
Additionally anticipated to make a sizable contribution to Nigeria’s economic expansion is the agricultural sector. The nation has large areas of arable land and a sizable population that is moving into cities more frequently. As a result, there is a sizable market for agricultural goods, which is anticipated to expand in the upcoming years.
Nigeria’s manufacturing industry is also anticipated to expand. The nation has a sizable supply of raw materials and a burgeoning manufacturing-skilled workforce. It is anticipated that this combination will increase Nigeria’s manufacturing output.
Another industry in Nigeria that is anticipated to expand is tourism. Travelers from all over the world visit the nation because of its diverse landscape and rich cultural heritage. Nigeria is anticipated to grow as a tourist destination over the next few years with continued investment in infrastructure and marketing.
Do you want to invest in Nigeria but are unsure where to begin? It’s not just you. It can be challenging to stay on top of new investment trends given the nation’s rapidly expanding economy and wealth of opportunities. Prepare yourself to discover the fascinating future of investing in Nigeria!