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Investment Tips

What to do when interest rates are low in 2020

It is no longer news that interest rates are falling across all tenors in Nigeria and the world over. Some countries in the West are already seeing negative interest rates. Yield hungry investors and retirees who depend on interest yields on their retirement accounts are scratching their heads thinking of what to do. So, with interest rates heading south, what should you do?



interest rates, investment bias, What to do when interest rates are low

It is no longer news that interest rates are falling across all tenors in Nigeria and the world over. Some countries in the West are already seeing negative interest rates. Yield hungry investors and retirees who depend on interest yields on their retirement accounts are scratching their heads thinking of what to do. So, with interest rates heading south, what should you do?

Get into dividend-paying stocks

Though not everyone has the guts or the risk appetite or tolerance to venture into the equity market, at times, hard times call for hard decisions. Although, it is not necessarily good to buy stocks based on their high dividend yield alone, buying stocks that consistently pay dividends with relatively high yield would not be a bad idea to weather the storm of low-interest rates.

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Get into high coupon long-maturity bonds

Though interest rate is falling, it does not reduce the coupon rates payable on bonds that are already in existence. By buying such bonds, you are buying into receiving interest income based on the coupons on the bonds, rather than current interest rate. The only issue is that you will buy such bonds at a relatively higher price because since the coupon on the bond is greater than the prevailing interest rate or yield, the bond will sell at a premium.

There is an inverse relationship between interest rate and bond prices, such that as interest rate falls, bond prices increase. Another downside to this strategy is that the issuers of the currently existing high coupon bonds may refinance the bonds by retiring them prematurely and replacing them with low coupon bonds of same maturity. Therein lies the reinvestment risk of bond investments.

[READ ALSO: CBN boosts cotton production with N19bn loan  (Opens in a new browser tab)]

You can easily find high coupon bonds in the Nigerian market if you look closely. Examples of high coupon bonds in the Nigerian bond market include the DUFIL Foods bond with coupon of 18.25% and maturing in 2025. Union Bank, Flour Mills, Wema Bank and Sterling Bank, all have bonds with coupons in the upward of 15% and maturities of 2 to 5 years from now. Owning a bond investment that pays 18.25% per annum in a market where the prevailing interest rate is about 9.5% for a 5-year tenor, is a windfall.

Get into foreign securities

Another strategy that can help with managing the falling interest rate regime is diving into foreign securities. I did a piece not too long ago comparing investments in Ghana Treasury Bills and Nigeria’s, and it was obvious that if the exchange rate between the Ghana Cedi and the Nigerian Naira does not change drastically, there could be gain in venturing into Ghana’s Treasury Bills. Do some research on other African markets like Kenya, Mauritius, or Tanzania and find out where you can fit in and make some gains. Be mindful of the transaction costs and other regulatory requirements.

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interest rates

Do your due diligence

The internet makes it easier now to engage in cross-border capital market transactions. Make sure you do your due diligence including understanding the various countries regulations on money laundry, capital gain taxes, trading commissions and fees and a host of others.

Be Warned that nothing in this article should be taken as an investment advise and you may not rely on it for your investment decisions as the author is not licensed to provide investment advice.

[READ ALSO: FG closes border to protect economic interests – Customs (Opens in a new browser tab)]

Uchenna Ndimele is the President of Quantitative Financial Analytics Ltd. and (both Quantitative Financial Analytics company website) is a leader in supplying mutual fund information, analysis, and commentary on African mutual funds. We provide reliable fund data; and ratings information that will add value to fund managers, the media, individual investors and investment clubs.

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Investment Tips

How to thrive as a small business in today’s era of globalization

Small businesses play a critical role in developing the entire economy of any country, hence the need to activate the interests of potential clients.



The "new normal" in business and economy

The globalization of the world economy is a reality in which companies in all countries have been living for two decades. According to statistics, more than 50% of all innovative developments appear precisely in small businesses, and globalization, in this case, involves the investment in small businesses and their development by larger entrepreneurs and investors.

Small business and globalization

Today, small business development is based on the following factors:

  • Availability of a state support program
  • Venture investment
  • Business incubators

Emphasis is on the formation of substantial assistance and support for the development of small businesses in the first place. At the same time, a significant emphasis is also placed on providing honourable working conditions. In some zones, even very loyal conditions have been created for the normalized work of entrepreneurs since there is a definite need to improve the economic performance of this or that region.

Thus, globalization is the process of implementing a variety of assistance, which is aimed directly at creating standardized conditions for the work of entrepreneurs. Naturally, at the moment, the sphere of activity of small businesses in the field of innovative developments is actively developing. In this case, individual private investors take an active part in globalization, offering various programs for investing money.

Enhancing small business development

Since small business plays a critical role in developing the entire economy of any country, there is a dire need to activate the interests of potential clients. Business development is provoked by the fact that all conditions have been created for it, and large companies are ready to invest their funds in its development.

In recent years, there has been an intensification of interest in developing small businesses all over the world. It is becoming clear that this business can bring the state to a new level in the global economy. It is in small businesses that many exciting and truly original ideas are born. But, due to lack of funding, such ideas have no prospects for active development. For this reason, in Europe and America, this business is at the peak of development, and it receives assistance not only from the state but also from private investors and large entrepreneurs.

How to help your businesses thrive?

It is a question that only successful entrepreneurs have. An entrepreneur cannot be successful without the desire to constantly develop his business, conquer new business heights and achieve new goals. A company cannot go on a knurled one. Sooner or later, such a business will be at the bottom. Technologies change, competitors change, customers change with their needs, and if your business stands still, it will not meet new requirements. Therefore, it is imperative to grow and develop a business constantly:

  • Expand the range of products and services;
  • Improve the quality of goods and services and raise the price, as well as take customers away from competitors;
  • Attract new customers with marketing and advertising. Use translation equipment in your business to attract clients from all over the world. For example, simultaneous translation equipment will allow you to overcome the language barrier.
  • Expand your business – open new points of sale and branches;
  • Expand the market through related activities;
  • Sell Better – Train Your Sellers;
  • Combine different methods;

Risk management system

Even the smallest business depends on changes in the global economy. No doubt, this does not mean that every entrepreneur has to watch Bloomberg all day and become an expert in different fields to predict which direction oil prices will go. There are specially trained people for this. You have to go about your business. To do this, you need to have a well-structured risk management system that will allow you to effectively monitor all types of risks, including global ones.


Remember that the modern economy is just as global as small business needs. Suppose an entrepreneur wants his goods to sell equally well in New York and Milan. In that case, he will strive to enter the Italian market, and, therefore, he will carefully study those peculiarities of doing business inherent in Italy.

In the modern world, the presence of a risk management system is not just a tool for preventing the dangers and threats of a particular enterprise in a specific country. It is a mechanism for promoting a company to its own country and the markets of other countries.

Final word

Simultaneously, it is obvious that to enter the markets of other countries, which means that the organization becomes a player in the global economy, the management system as a whole and the risk management system must change depending on the situation and show flexibility and adaptability. Only if these conditions are met can we say that your company is ready to enter the global market and will be able to withstand the impact of the worldwide economy.

About author

Rachel Eleza, Growth Marketing Director at UpSuite and a part-time writer.

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Financial Literacy

How to curb Ponzi schemes in Nigeria – TGIC Founder

The economic situation and the high incidence of these fraudulent schemes show an urgent need for financial education.



The activities of Ponzi schemes operators have been on the increase in Nigeria, especially since the COVID-19 pandemic hit the nation. Several young people have fallen victim to these scams.

To curb this menace, commercial banks and other financial institutions have been tasked to support investment clubs. Tomie Balogun, Founder, The Green Investment Club (TGIC) is one of the investment experts who has called for more support to curb Ponzi schemes in the country.

She disclosed this at TGIC’s event tagged “The money movements of the young Nigerian of today.” According to her, the economic fallout from events such as the global market crash, economic recession and COVID-19 pandemic has pushed young Nigerians into the Ponzi camp.

She said, “The economic situation and the high incidence of these fraudulent schemes show an urgent need for financial education. TGIC is working to bridge the financial literacy gap among young people in Nigeria through its products and services. The club, from 35 members at its inception to over 1,700 members in three years, is targeting 10,000 members over the next five years.

“Our five-year vision is to help at least 10,000 people acquire financial education and provide them with investment advisory services. We expect this to increase savings deposits at financial institutions. The deposits will be mobilized to invest in small businesses in the economy. When these companies are supported, they will provide jobs for more people and reduce unemployment figures by at least 20%.”

She disclosed that the club found direct investment opportunities in the capital market, agribusiness, consumer lending, logistics, FinTech and real estate development sectors in Nigeria, United Kingdom and the United States.

Oladunni Olawuyi, Chief Operating Officer, Apel Asset Limited explained that investment platforms need the support of financial institutions to boost investment education.

She said, “The investment clubs help to clean up the economy of Ponzi schemes, promote financial education and diversification of investments in different economies.”

Unify exchange rate to cut production cost

Balogun tasked the Federal Government to unify the country’s exchange rate to reduce production costs. To her, multiple exchange rates lead to arbitrary fees, production costs, and higher prices for goods and services.

“The government should help SMEs and the manufacturing sector to increase their production in order to boost gross domestic product. The COVID-19 pandemic, despite the challenges, came with many investment opportunities for savvy investors,” she added.

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