Enterprise start-ups: Issues and options

Think about a good looking Thursday night spent by the poolside, within the midst of vibrant Nigerian professionals, rubbing minds collectively on find out how to make investments proper. That’s precisely what occurred on Thursday, February 27th, 2020, because of First Metropolis Monument Financial institution (FCMB) Nigeria.

The night started with the arrival of friends on the Protea Resort by Marriot in Lagos Island. A time to fulfill and greet allowed the friends to mingle and community, lengthy earlier than the primary occasion started. After which at about 7 pm, FCMB Nigeria’s Govt Director in command of Retail Banking, Mr Olu Akanmu, took the microphone and formally welcomed all people. He mentioned:

“One factor that’s on each comparatively prosperous individual’s thoughts is find out how to legitimately protect their wealth. And that’s what we’re all gathered right here to speak about.”

To assist dissect that material, the financial institution had invited Nairametrics’ very personal Founder, Ugochukwu “Ugodre” Obichukwu as a visitor speaker. Following his introduction to the viewers, Ugodre delved proper into the subject, albeit in essentially the most interactive approach.

Mr Olu Akanmu, FCMB Director in command of Retail Banking

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What troubles you essentially the most in regards to the Nigerian financial system?

That’s the query Ugodre posed to members of the viewers. As anticipated, there have been various responses to this query. Some folks mentioned they frightened most about inflation. Others talked about devaluation, unstable electrical energy, unpredictable authorities insurance policies, and coverage somersault. In fact, there have been additionally considerations about find out how to multiply one’s earnings and assure returns on funding.

Inflation price might rise above 14% by year-end

These are all reputable considerations by the best way, and every of them was addressed. Starting with Nigeria’s inflation price which just lately climbed to 12.13%, Ugodre alarmed the viewers by predicting that there might even be an additional enhance within the coming quarters. This is because of plenty of components which embody:

  • Nigeria’s land border closure;
  • the latest enhance in VAT which is continuous to push costs of products up;
  • the excessive risk that the federal government will cease offering subsidy for electrical energy, thereby inflicting NERC to extend electrical energy tariff. If this occurs, the inflation price will rise additional as a result of folks’s price of residing will enhance;
  • there may be additionally a risk that gas subsidy could finally be eliminated. If this occurs, it has the potential to exacerbate inflation;
  • one thing else that would set off inflation is taxes. As it’s possible you’ll effectively know, the federal government has just lately been very aggressive in that regard; and
  • he concluded by predicting once more that 2020 may finish with Nigeria’s inflation price effectively above 14%.

Don’t panic over inflation, except…

On whether or not the Central Financial institution of Nigeria goes to devalue the naira, Ugodre said that that is very unlikely. Nonetheless, there are some caveats. He mentioned that Nigerians ought to maintain their eyes targeted on Nigeria’s exterior reserves. If the exterior reserves drop beneath $30 billion, then there isn’t any gainsaying the truth that devaluation will develop into inevitable.

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[READ: CBN issues N847.4 billion treasury bills for Q1 202 ]

Extra so, if oil costs drop beneath $40 per barrel, then there’s a significant issue and the CBN could haven’t any alternative however to devalue. Final week, Brent Crude traded beneath $50 per barrel as Nairametrics reported. And that is no because of the Coronavirus pandemic which has wrought each well being and financial hazards the world over.

Shifting on to the considerations about authorities insurance policies, Ugodre said that Nigerians ought to count on extra regulatory onslaught. This prediction was based mostly on latest happenings within the regulatory setting.

In the meantime, so far as returns on funding are involved, Ugodre informed the viewers that it relies upon totally on the trade one is investing in. He mentioned:

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“Some folks imagine that the banking sector is nice. However the CBN has been squeezing them just lately. So, they too could quickly be having points with returns on funding. The breweries trade is already struggling, with all the highest three brewers reporting adverse performances of their annual financials. Perhaps the telecoms sector might be able to assure returns on funding.”

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The place else do you have to make investments your cash?

Actual Property: Ugodre additionally talked about the actual property sector as a possible space that may assure funding returns. This he mentioned with a lot optimism as a result of the actual property sector is among the greatest locations to spend money on when the financial system is shaky. That is regardless of the truth that the Nigerian actual sector is usually neglected by traders, a state of affairs that has led to it not being fairly as developed/organised as what obtains in most superior international locations. This has, sadly, resulted in “a lot worth being locked in” he mentioned.

Observe that yields within the Nigerian actual property are usually throughout the charges of 6-8%, he mentioned. Apparently, the worth on a bit of actual property solely retains going up over time. He additionally suggested potential traders to be strategic in selecting actual property in areas with vital industrial worth.

Treasury Payments versus FGN Bonds: Return on funding within the Nigerian Treasury Payments market will not be fairly as excessive and profitable because it was a few years in the past. Ugodre defined why. In keeping with him, CBN’s resolution to limit people from taking part in OMO gross sales compelled many individuals into the treasury payments market. Consequently, charges dropped, thereby making treasury payments a much less attention-grabbing funding possibility. Then again, FGN Bonds is an efficient funding possibility in that it at the moment ensures increased returns than treasury payments.

The inventory market: That is additionally one other comparatively good funding possibility, though it will also be disappointingly dangerous. Whatever the associates related to it, Ugodre suggested the viewers to spend money on inventory as a result of that is in all probability the very best time to take action. Nonetheless, he clarified that traders shouldn’t make investments all of their cash in inventory as there may be at all times the necessity to diversify one’s portfolio. Furthermore, it’s also vital to make sure that traders keep away from what he known as “danfo shares”.

Cryptocurrency can be one other funding possibility that may assure excessive returns as a lot as 60%. The one draw back is that it isn’t regulated in Nigeria, primarily as a result of authorities regulators such because the CBN and the Securities and Change Fee don’t help it.

Traders can even rigorously think about agrotech schemes which can be claiming to supply excessive returns, Ugodre said that Mutual funds additionally make for good investments, primarily as a result of it’s good for passive traders who do not need the time or the technical know-how to continuously maintain a tab on their investments. He additionally inspired everybody to not solely proceed to spend money on themselves however to at all times recognise alternatives round them and spend money on these alternatives, together with investing in folks and startups. He mentioned:

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“One factor that I’ve realized from what the federal government is doing is that the federal government is principally telling us to spend money on companies as an alternative of pursuing treasury payments. So, in case you are any person who has a deep pocket, go searching you for family who could also be needing somebody to spend money on their enterprise concepts.”

In the meantime, FCMB Group may help Nigerians to actualise their funding potentials

On the finish of Ugodre’s keynote deal with, the Chief Advertising Officer of FCMB Pensions, Osarhieme Osaghae, took the stage to speak about how he and his crew may help Nigerians to raised handle their pension contributions to be able to guarantee a very good retirement.


He, due to this fact, urged all FCMB clients whose pension accounts usually are not at the moment being managed by FCMB Pensions, to plan in direction of transferring their pensions to FCMB Pensions. In keeping with him, the Pension Fee will, by July 1st, 2020, make it doable for pension fund contributors to have the ability to switch their accounts from one Pension Funds Administrator to the opposite. Nigerians ought to make the most of that and transfer to FCMB Pensions, the one PFA that’s bank-backed, he mentioned.

A few of the friends on the occasion

Shifting on, the Managing Director of FCMB Property Administration, James Ilori, additionally took the stage to share some vital recommendations on find out how to make investments effectively to be able to retire comfortably. A few of these ideas may be seen in Steven R. Covey’s e book “5 Habits of Extremely Efficient Folks”, in addition to George .S. Clason’s “The Richest Man in Babylon”. See the information beneath:

  • At all times have your funding finish purpose discovered from the onset. This allows you to decide whether or not your funding ought to be short-term, medium-term, or long-term.
  • At all times put aside small quantities regularly. That is vital to do as a result of on the finish of the day, the small quantities which were put aside compounds to type some huge cash sooner or later.
  • In step with the second tip, Ilori spoke about INEST, an FCMB Asset Administration product that permits Nigerians to take a position as little as N500 regularly. Over time, the compounding impact together with the curiosity ensures traders some degree of monetary safety sooner or later.

Observe that FCMB Property Administration additionally gives mutual fund companies, portfolio administration for each native and foreign exchange, credit-linked funding plans, and extra.

The night of funding talks ended on a pleasing observe, with mild meals served and extra networking among the many invited friends.

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