As we approach the end of 2020, the extent to which the Nigerian economy has been damaged by the pandemic has become clearer. An update on the economy posted on Reuters noted that the economy contacted 6.1% in the second quarter alone, risking a recession in the third and facing total shrinkage of roughly 8.9% on the year. These numbers may not be particularly surprising given the events of the year, but they still put financial struggles into sharper relief.
Nevertheless, the focus has begun to turn toward recovery. Our look at the ‘Full Text of President Buhari’s 2021 Budget Speech’ conveyed as much, with Buhari acknowledging the extent of the country’s struggles, but establishing a note of cautious confidence moving forward. Projecting GDP growth in 2021 and hinting at various forms of support for struggling citizens, Buhari suggested in a way that better times are ahead.
Whether or not this is ultimately the case will depend on government action, international markets (most notably for oil), and the pandemic itself. But on an individual level, it may be time to start talking about investment again. With the caveat that many individuals are not in a position to invest much at this stage, those with the means to may want to start looking into where they can put their money in the hopes of riding gains in a gradual, long-term recovery. And we have some ideas about where the most appealing opportunities might be.
Cryptocurrency investment has become popular in many parts of Africa, in part because it involves such an easily accessible market. A mobile phone and an internet connection is all one needs to get started in cryptos, and there’s been some evidence of Nigerians — and particularly younger Nigerians — getting into the market of late. There are also two more important factors at play. One comes from a Bloomberg report on cryptocurrency regulation, indicating that the government is taking steps to make crypto exchanges more secure and reliable throughout the country. The other is that cryptocurrencies have actually performed quite well throughout the pandemic. They’re still challenges to trading, but there’s opportunity in the market.
The forex market, or global currency exchange, is another one that can be appealing to Nigerians for some of the same reasons that cryptocurrency can. The market is accessible, and while it wouldn’t make sense to say it’s “done well” during the pandemic, it is fair to say it hasn’t crashed. Forex is about exchange, and the difference between currencies, such that even if a given currency loses value one can still enjoy productive trading. To that point, FXCM’s look at opportunities in forex makes it clear that you can “trade up or down just as easily.” That is to say, currencies can be bought or sold according to the expectation that they’ll go up or down, respectively. As with cryptocurrency, successful trading is a challenge (and requires quite a lot of attention). But the idea of being able to profit off of declining assets can certainly appeal when so much of the world is in economic turmoil.
Gold investment may not seem like quite as modern an opportunity as forex (which can now be done via app and updated trading platforms) or cryptocurrency (which is still quite new). But the gold market has been generating headlines for months now due to how well it has maintained itself amidst the COVID-19 breakout. All one needs to invest in gold is an account with a reputable online gold broker, and from that point the asset can be traded much like any other. But the point in this case is that it happens to be an asset that’s shown particular strength in 2020, and may still be a strategic option given the economic uncertainty the world will still be facing heading into 2021.
Plenty of additional investment opportunities are available as well. Nigerians looking to rebuild wealth emerging from the pandemic in 2021 can buy into stock markets, explore real estate options, trade commodities and more. For the reasons expressed above though, cryptocurrency, forex trading, and gold all look to be particularly interesting opportunities — even if they still pose risks and challenges.