When it comes to investing in a high inflation environment like Nigeria, it’s crucial to find assets that can preserve and grow capital over time. Some potentially safer options with decent returns include real estate and agriculture. With large scale urbanization underway, demand for housing continues to rise substantially in major Nigerian cities. Similarly, with a growing population and rising incomes, demand for basic foodstuffs remains strong. Investing in apartments, farmlands and food production could generate healthy returns over a long-term horizon.
Real estate in nigeria provides decent income streams and capital appreciation
The real estate sector in Nigeria has experienced rapid growth in recent years, driven by urbanization, population growth and a rising middle class. Rental yields on residential and commercial properties in cities like Lagos and Abuja can range from 5-10% per annum. Capital values have also risen substantially over the past decade across Nigeria. With mortgage penetration still extremely low, rental housing demand is set to remain high. Investing in a diversified portfolio of properties could provide attractive long term risk-adjusted returns.
Agricultural investments benefit from structural tailwinds
Nigeria has over 80 million hectares of arable farmland, of which less than half is currently cultivated. With imports accounting for major food categories like wheat, rice and dairy, there remains substantial scope to boost domestic production. The Nigerian government is also incentivizing private sector investments across agriculture. Returns vary vastly based on sub-sector, location, scale and efficiency of operations. But investments in commercial farming and food processing could potentially generate 20-30% IRRs. Contract farming models are also gaining prominence linking farmers with domestic processors and export markets.
In conclusion, real estate and agriculture appear relatively safer sectors to invest in Nigeria over a long term horizon, with potential for decent risk-adjusted returns