Market Trends Watch; Nigeria’s Pre-Election Year

Market Trends Watch; Nigeria’s Pre-Election Year

As the 2019 Nigerian general election draws nearer, the political sphere becomes very active, naturally, the economy feels its ripple effects either positive or negatively. However, there has been lots of speculations as well as doubts on making any form of investment, ranging from government bonds to treasury bills, shares even real estate investment, considering the state of the nation on how it would pan out and when to cash out.

Inflation has been on a good note, although having receded in the last 8 months, is still put at the rate of 11.14% by August after a consecutive 18-month decline from 18.75% in March 2017. Food inflation was high at above 20% but now around 12.4%, matching the Government’s target for 2018 Budget put at 12.4%.

This is however unpredictable as every pre-election year, Nigeria witnesses a spike in inflation. How are you positioning yourself and assets to profit from this trend?

Between 2014 and Q1:2016, the global economy was driven by low oil prices regime which affected the performance of the real estate and construction sector negatively. Between the last quarter of 2016 and the first quarter of 2018, oil prices rose significantly in the international market with the effect seen directly on the real estate sector of the Nigerian economy

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Nigeria officially exited the recession in Q2: 2017 with a boost in crude oil production and sales at above $70 per barrel.

Right now, Treasury Bills can only give a max ROI of 11% which is even only accessible if you buy directly from the Central Bank of Nigeria.

Real estate, on the other hand, is way more viable in an economy just out of recession and on the rise to the peak over the next 6 years with a 100% guarantee since 90% of Nigerian real estate aren’t hedged on mortgages which could be defaulted.

You would be amazed to know that many money market instruments will yield only half of what some real estate investment schemes will offer you in only 12months (if you, you know). Although with reasonably higher risks, the profitability and consequent interests make it negligible.

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Jeffrey Uzoka

Experienced Investment Advisor in Luxury Real Estate, Estate Development. A graduate of Electrical and Electronics Engineering, from Igbinedion University, Okada, Nigeria

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