Investing wisely in the Post COVID-19 Era: The Nigerian Perspective

1.0 INTRODUCTION:

Many investors are in a crossroad to ascertain the best investment vehicle for their resources, as the currently faced pandemic has posed a lot of uncertainty, in which investors are unwilling to take huge risks. If you are on the lookout for minimal risk and accessible investment opportunity for your hard-earned money, that would guarantee the security of your capital and its growth, this is worth considering.

The investment vehicles in this category that have proven to be viable for individual and corporate discerning investors for decades in the Nigerian economy so far have been these co-rivals; Treasury Bills among other financial instruments, and Real Estate.

Looking deep into the present and future with an earnest consideration of the global ravaging pandemic (Covid-19), that has severely affected the major foreign exchange earnings in Nigeria (crude oil), which also has an almost direct knock on the value of the Naira, among others. Though a rebound is expected, but how soon?. It is imperative that the current obtainable yield rates of these investment vehicles are compared side by side for further consideration.

2.0 TREASURY BILLS AS AN INVESTMENT VEHICLE

This has been a choice investment vehicle for many, until the last few years when the yield rate has continually deepened to a less attractive rate from about 18% in 2014 to less than 5% today, thereby diverting the interest of its investors elsewhere, even to other high-risk investments. The rates remain dwindling, however, with careful thought of the effect of the country’s consistent double-digits inflation rate which presently stands at about 12.2% on the yield rate of this investment vehicle (Treasury bills), a discerning investor would definitely have a rethink if such investment must be viable indeed.

3.0 REAL ESTATE AS AN INVESTMENT VEHICLE

Land and investment in land including its developments thereof form real estate. This, as an asset class from inception, has never been severed from its value as long as humanity exists. Even in the ancient world empires, starting from the reign of Egypt to Babylon to Persia to Greece to Rome, and finally to the end of the second world war. The symbol of authority and power has been by the accumulation of occupied territories (lands).

Though civilization, global peace treaties, accords, e.t.c. have to a large extent put out the violent grasp of land among humanity, however the desire to own by every living human remains unquenchable, because its upon it that all activities of life take place.

In Nigeria today, wherever there is a human settlement, the value of land is bound to increase over time. It is expected that some types of income-generating properties may temporarily experience a reduction in demand due to the current force majeure, notwithstanding, a strong rebound is inevitable within a short or mid-term. While, some other properties are expected to maintain status quo, but should be ready to give out some forms of incentives to allow for re-strategy because there usage in situ are for human essential purposes and are outrightly inevitable.

Generally, on the real estate, the present situation warrants yield rates to dwindle, however capital value appreciation in the mid and long-term ever remains imminent, even in the midst of the country’s high inflation rate, hence, establishing its viability. This has been proven during the last two severe global and national economic meltdown in 2008 and 2016 respectively, where property capital value has appreciated well over 200% aside its annual yield ranging between 4% to 11%.

4.0 CONCLUSION:

Now that purchasing power is temporarily expected to fall, causing some vendors of real estate assets who may be in dare need to reduce their asking price in the case of alienation of rights in properties. This is a good opportunity for discerning investors to leverage on this and take well-calculated positions under the guidance of accredited real estate experts (Estate Surveyors & Valuers) for possible obtainable maximum returns.