Financial and economic experts have predicted fantanstic returns for investors in strategic sectors of the economy, this year.
This cheery news is predicated on a robust growth of the Gross Domestic Product, which advanced 1.4 per cent, year-on-year, in the third quarter of 2017, accelerating from an upwardly revised 0.72 per cent growth in the previous period.
Despite the seemingly intractable lull and uncertainties surrounding bigger economies, Nigeria’s economy seems to have gained the confidence of the international community, especially the International Monetary Fund.
This stems from the performance of the economy in 2017, which grew at 8.97 per cent of the GDP. This year’s projection of 13.97 per cent, when compared to the global economic growth projection of 3.5 per cent, still gives investors in the country fantastic returns, upon a 2018 projection.
Economic experts, banking on a possible carry-over of last year’s robust growth rate of the economy, are convinced that the new year is a gold mine for discerning investors.
The question therefore is: which sectors hold the highest prospects of return on investments? With a population of about 200 million, there is an acute shortage of essential products and services, which represent veritable investment platforms all across major sectors of the economy.
HOT SECTORS
Investment analysts believe that the agriculture sector offers high prospects in terms of return on investment, being the sector with the largest contribution of 40 per cent to the country’s GDP.
Agriculture achieved double-digit growth of 30 per cent as at the end of the second quarter of 2017 and about 40 per cent, in Q3. The harvest patterns are clearly the indicators.
Though, The Point had reported earlier that increased harvest in the sector pulled down the prices of food items like tomatoes and pepper early December 2017, agricultural potential is barely being tapped and this explains the inability of the country to meet the ever increasing demand for agricultural produce.
Although the agricultural sector remains a dominant employer of labour, serious investment is needed across the board to enhance production and increase the contribution of the sector to the GDP.
According to the experts, investment is required in crop production to aid food security, food processing and preservation, livestock and fisheries production, inputs’ supply and machinery, and commodity trading and transportation.
The Country Manager, HarvestPlus Nigeria, Dr. Paul Ilona, predicted that the sector would be investors’ delight and his prediction is not unconnected with the diversification of the economy and other initiatives implemented by the Federal Government since 2015, to boost agriculture and agro-allied industrial activities, which focus on the business of agriculture as against traditional production.
He said, “Most operators are not smart farmers, as they use obsolete equipment. Some can’t afford modern tools, while others are simply ignorant. There are investment opportunities in the modernisation of processes (machinery).
“The success of the rice and yam initiative, on which the Ministry of Agriculture partnered some states, will expectedly trigger massive investments in production and exportation. More corporate investors are also expected to be key players in cocoa, sugar, poultry, grain and cassava production, utilising new high-yield seedlings developed by the Ministry of Agriculture.”
The President, African Development Bank, Dr. Akinwumi Adesina, said, “Nigeria needs more investment in rural infrastructure, rural roads, and storage facilities to help farmers. This is very important to boost agricultural production in the country.
“We must continue to run public policies that get access to seeds and fertilisers for farmers at scale. When I mean scale, I mean at scale of millions and millions of farmers.
“And I think the use of the electronic wallet system, which we started when I was Minister of Agriculture, provides a very good platform to continue to do that because that same technology today is being used in other parts of the world.”
WATER
Owing to the lack of access to potable water, experts projected that the value of booming water industry might rise from about N2.5 trillion to N4 trillion in 2018, as more Nigerians are expected to rely on bottled or sachet water after the Federal Government had failed to provide one.
With an annual spending of N3trillion on bottled and sachet water by Nigerians, as reported last week, experts have said if no urgent solution is found to the current water crisis, the spending may hit N35trillion over the next 10 years.
A sociologist, Mr. Rotimi Afolabi, explained that the several operators in the water industry explored the WaterAid Nigeria ratings, which placed the nation third on the list of the Water, Sanitation and Hygiene top 10 countries, having no access to safe drinking water, to make fortunes.
According to him, if Nigerians currently spend N3trillion annually on bottled and sachet water, they will spend N30trillion on water in 10 years; that is, if the country’s current population remains stagnant, which is not possible.
He said, “We will record about three per cent increase in population every year for 10 years; at least about N6trillion will be added to the current spending on water to make N36trillion. That means investors in the sector will make more money.
“Our huge spending on bottled and sachet water is self-evident. It sounds absurd but this is sadly the reality. As I speak with you, I have taken two bottles of water today. Investors are exploring government’s negligence.”
MOBILE MONEY
Within the financial sector, the mobile money sub-sector is touted as a lucrative arm to invest in 2018.
The Managing Director, Mobile Tech, Mr. Oluwande Williams, explained that whoever came up with solutions that would solve real life problems such as improving payment systems, reducing Automated Teller Machines’ queues, cyber security and improving financial inclusion, would make a pile of money in 2018.
Concerned about embarrassing queues in front of ATMs and the trouble in completing Point-of-Sales transactions, Williams insisted that banks and Fintechs required more funds to deepen investments aimed at bringing digital channels to customers and finding ways of improving payments.
According to a report by Nigeria Inter-Bank Settlement System Plc, the number of ATMs in Nigeria is about 22,000 units and commercial banks have a deficit of about 70 per cent.
He said, “The CBN’s target for ATM in Nigeria is 60,000 units. This speaks to a need to scale up e-payment system by the CBN and doing that means more money for discerning investors.
“Having queues for cash-out at ATMs or at Mobile Agents is not financial inclusion. The last mile of payment in the value chain needs to be catered for. Whoever is able to solve those little things that people go to the ATMs for, will win in 2018.”
Another expert, Mr. Gbenga Omole, said, “2018 is a year for the digital space. I see more customers embracing digital banking as people become more impatient with the old ways of financial banking.
“Companies that improve user experience rather than just nice applications and solutions, by removing friction in the payment process, will gain the high-net worth individuals, the burgeoning middle class and the millennias as loyal customers and that also means more money.”
REAL ESTATE
Though the real estate sector has been winning the hearts of its investors for decades, stakeholders are optimistic that it has better prospects in 2018.
Due to the expected massive infrastructure upgrade across the country, the Nigerian market will continue to be one of the growing sectors.
Fair improvement witnessed in the power sector in both developed and developing areas and new roads in many communities will throw up fresh investment opportunities in the sector, as the value of properties has skyrocketed.
The Chairman, Nigerian Institute of Building, Abuja chapter, Mr. James Oghagha, explained that the sector was one any investor should focus on.
While noting that turnover of investment in the real estate was higher than other sectors, he said that some areas and locations were veritable grounds for such investment.
Some of the areas, according to him, are Lagos, Port Harcourt, Rivers; Bayelsa and Abuja, among others, as the demand for property in the areas are higher, leading to projections that investors will earn high returns on building residential structures as well as office accommodation.
“Builders should understand that residential property is in high demand in the country, owing to the fact that demand far exceeds supply. Before now, Port Harcourt was a no-go area, especially for expatriates, owing to the activities of militants. But now, people are returning to the area and houses and offices are in hot demand,” he enthused.
