With the seemingly intractable recession and uncertainties surrounding the Nigerian economy, economic and investment experts have predicted that the nation’s economy will gain the confidence of the international community and discerning local investors in 2017.
This is against the backdrop of the performance of the Gross Domestic Product of the economy in 2016, especially in the last quarter, which grew at 8.99 per cent, higher than the 7.88 per cent projected last year.
Analysts expressed the belief that the GDP performance would give hope to both local and foreign investors in the country that the new year would bring returns for them.
PROMISING SECTORS
While some investors remain undecided and pessimistic about the possibility of the economy coming out of recession in 2017, financial analysts, economists, captains of industries and observers have said that the new year will witness a spill-over of 2016’s growth rate.
They added that there were high expectations that the year might bring good returns for discerning investors.
A huge investment is required in equipment to reduce the moisture level in maize, tomatoes, pepper and groundnut… Investors will make money in post-harvest technology
REAL SECTOR
With a population of about 180 million, there is an acute shortage of essential products and services, which represents veritable investment platforms across major sectors of the economy.
Investment analysts believe that the manufacturing sector offers high prospects in terms of return on investment, being the largest sector in terms of employment generation, participation of blue chip as well as Small and Medium Scale entrepreneurs in 2017.
Principal Partner, McFolly and Associates, Mr. Yinka Adeniji, observed that the real sector (the manufacturing sector) should be an investment hot spot this year. His prediction is not unconnected with the initiatives of the Federal Government, implemented through the Ministries of Transport and Works, to boost manufacturers’ activities, which focused on breaking the jinx of the poor supply chain in the industry.
He explained that the completed $1.457 billion Abuja-Kaduna rail line and the prepared and forwarded bills on National Transport Commission and Nigerian Railway Corporation to the National Assembly would enhance regulation and further open opportunities for discerning investors in private sector investment.
“Poor road network and transport system have been the major challenges faced by manufacturers, and if these innovations are implemented, several moribund industries would be revived.
Also, the near completion of the international terminal at the Akanu Ibiam International Airport, Enugu and Bakassi Deep Sea Port, will boost commercial activities in the region,” he projected.
An investment analyst, Mr. Ajibade Owoeye, explained that the rehabilitation of some major roads, which began last year, would impact and boost the distribution channels of manufacturers in the new year.
Some of the roads are Lagos-Ibadan expressway, Onitsha-Asaba-Benin road, Ilorin-Jebba-Mokwa-Bokani road, Birnin Gwari-Kaduna road, Kano-Western Bye-pass, Kano-Potiskum-Damaturu-Maiduguri expressway, Oju/Loko-Oweto Bridge, KanoKatsina road and Port Harcourt-Enugu expressway, among others. According to him, the roads have been clogs in the wheels of manufacturers’ distribution networks because a lot of their goods spend days and, in some cases, weeks on the roads, due to their poor state.
“With the N70 billion the Federal Government paid to contractors handling the roads, the manufacturers, especially farmers, would heave a sigh of relief, as their goods and products would get to consumers earlier than planned,” he said.
Aside from the attractions of investment in the works and transportation ministries, he added that some feats achieved by the government in the power sector would contribute to the rebound of several defunct industries in the real sector, a development that is expected to attract investors to the sector in 2017.
Some of these include the World Bank’s $237 million pact with government to improve power in the country and the fixed damages at the Jebba, Kainji and Shiroro hydro-power stations, among others.
ICT Experts in the Information and Communication Technology sector have pointed at some areas waiting for investors to tap into in the sector.
Though, the ICT industry watchers agreed that a lot of investors had positioned themselves in the lucrative sector, they argued that there were more lucrative areas waiting for investors.
The Chief Executive Officer, App Clinic, a technology blog, Mr. Yemi Adeboye, disclosed that the cost of data was still very high in Nigeria because there were few operators in the segment.
He also alleged that efforts of the GSM operators to frustrate data providers, who were not into voice services, had been another hindrance to the growth of the segment in the country.
He noted that the GSM operators made fortunes from 3G, which was designed as a voice network with good data, but did not make much money from data.
According to him, it is not because data is not lucrative, but because they make 100 times more revenue per megabyte on voice phone call compared to data. “This is one of the reasons mobile operators do not really want data everywhere, because if there is data everywhere, most people will start using WhatsApp and Skype, and stop paying for voice calls. That is what the operators of the defunct Code Division Multiple Access failed to do,” he said.
The Chief Executive Officer, Mobility Arena, Mr. Yomi Adegboye, said, “If more investors can come into the segment, the jinx will be broken. I see that happening in Nigeria in the next couple of years. When that happens, no one is going to pay for calls; they’ll just be buying data bundles. That is what is happening in Europe now, where all the phone calls and Short Message Service are free and unlimited,” he told The Point.
AGRICULTURE
An agricultural economist, Mr. Kehinde Ejioye, declared that the agriculture sector would also be an investment hot spot in 2017. His assertion is not unconnected with the initiatives implemented by the government last year to boost agriculture and agro-allied industrial activities, which focused on the business of agriculture as against traditional production.
He said, “It entails modernisation of processes, improved logistics and the drive towards import substitution, which made food import bill fall from an all-time high of N3.19 trillion to N635 billion.
“The success of the Agricultural Transformation Agenda and Growth Enhancement Support schemes, where the Ministry of Agriculture partnered the private sector, will expectedly trigger massive investments in food production, making agriculture an exciting sector in the country in 2017.”
The Managing Director, Choice Farm, Mrs. Taye Taiwo, agreed that the agriculture sector probably had the best prospects in 2017.
According to her, the government now provides incentives for local manufacturing businesses that are investing in wheat milling and other industries. She added that specifically, the wheat industry needed more private sector participation to establish modular milling technology.
She said that apart from servicing the Nigerian market, businessmen who invested in the technology had the opportunity to extend their markets to Ghana, Ivory Coast and Kenya, from where companies had approached Nigerian firms for collaboration on the modern technique.
Taiwo further stressed that processing food crops into finished products was the key to unlocking fortunes for investors in the agricultural sector in the new year. “A huge investment is required in equipment to reduce the moisture level in maize, tomatoes, pepper and groundnut, as a way of preserving them, thereby reducing wastage, right from the farm gate to the point of sale, which can even be outside the country. Investors will make money in postharvest technology,” she said.
STOCK MARKET
Within the financial sector, the capital market is touted as another lucrative sector to invest in this year, though indices still look unattractive.
Another investment analyst, Mr. Adefemi Adewale, recommended stocks of Guaranty Trust Bank Plc, First Bank of Nigeria Plc, Zenith Bank Plc, Nigerian Breweries and Dangote Cement, which he said were leaders in their sub-sectors.
He listed other stocks with prospects of high returns to include Lafarge WAPCO, Unilever, Nestle and Flour Mills. The optimism of the experts is informed by the performances of the listed stocks at the peak of economic recession in the country. For instance, GTBank, which at N15.00 was among the low priced stocks at the beginning of 2016, had risen to N28.00.
It is the highest valued stock in the banking sector and has maintained the position for about five years. Aside from that, Zenith Bank, NB, Nestle and Dangote Cement have all been consistent with returns on investment, and a dividend payout of a minimum of 75 kobo per share when their counterparts paid 10 kobo or less. A stockbroker, Mr. Oladipo Osho, projected that the development witnessed in the stock market in 2016 would be sustained in the new year.
To him, the capital market will witness a more steady and definite growth in 2017. “With the rules and regulations now in place and the delisting of some moribund companies, I see the situation improving gradually almost on a daily basis. I do not foresee any crash,” he said.
He, however, cautioned investors to examine the risks involved before taking decisions.
REAL ESTATE
The real estate sector has traditionally been investors’ delight, but operators in the sector believe 2017 holds better prospects for investors, due to the expected massive infrastructure upgrade across the country.
A fellow of the Nigerian Institute of Estate Surveyors and Valuers, Mr. Abiodun Biobaku, confirmed that the property market in Nigeria “is one business that investors focus on.” While noting that turnover of investment in the real estate is higher than other sectors, the surveyor said that some areas or locations, especially commercial cities, were veritable grounds for such investment.
“Builders should understand that residential property is in high demand in the country, owing to the fact that demand far exceeds supply. Investors will do better building flats that are partly or fully furnished, blocks of flats and not very large commercial offices for small businesses so as to attract both foreign and local professionals,” Biobaku advised.
Another expert in the real estate sector, Mrs. Funmilola Adeniji, said that investment in property remained the best way to secure capital. She explained that if one buys a property, the money remains intact, yielding good returns, and if anything happens to the property, once it is insured, the owner would recoup his money.
‘INVESTORS SKEPTICAL’
However, investigations by The Point revealed that some Nigerians, both at home and in the Diaspora, were not convinced that the economy was set for any good investment.
Their fears are fuelled by the massive demand for infrastructure, instability of interest rate, excess liquidity and policy inconsistencies, among others. A Nigerian investor based in Ontario, Canada, Mrs. Elizabeth Meyungbo, stated that government would be spending N1.6 trillion of the budget to service the rising domestic and foreign debts this year.
Besides, she reasoned that the huge remuneration of political office holders would take a large chunk of the government’s income, thereby reducing the funding for infrastructure, which is the bedrock of investment in the economy.
“I will take my time till the end of the second quarter, hoping that by then, more fund will be pumped into providing basic infrastructure across the country,” she said.
The Nigerian government is known to be the biggest spender in the economy, and it is, therefore, not surprising that government naturally sets the tone for investors. An Ankara, Turkey-based Nigerian, Mrs Anne Okafor, told The Point that she would adopt a ‘wait and see’ posture before plunging headlong into investing in the economy, arguing that all would depend on the government and its policies.
She said, “But if government delayed payment for contracts done in 2017, like it did in 2016, foreign investors’ confidence would be eroded and that would cause a major setback for the economy it had promised to restore.
