Nigerian entrepreneurs have been advised to consider viable business ideas that will require little to zero capital to start. The advice was given by Professor Yomi Fawehinmi, a former lecturer at the University of Lagos, who spoke during the Nairametrics 2020 Economic Outlook Hangout in Lagos.
Before outlining the businesses, the former lecturer and MSME expert strongly advised potential business owners to desist from engaging in businesses they know nothing about. According to him, doing this helps to guard against risks in the course of doing such businesses.
Some business ideas for 2020
Fawehinmi said that entrepreneurs should consider starting lending businesses. This is because lending is going to be a big business in 2020 as many people would be needing a lot of money for different things. He, however, stressed the need for secured lending because that is the only way to ensure guaranteed returns and not investing in stocks.
Businesses about baby products: The Professor pointed out that the fact that Nigerians will always give birth to children presents an endless opportunity for entrepreneurs. Therefore, they should consider selling things like pampers, children’s clothes, and even baby foods. People that engage in these sort of businesses never run out of customers.
Start a health-related business: This is important because Nigerians will always have medical needs, he said. Even childbearing requires the services of health professionals. However, Professor Fawehinmi advised those interested in this line of business to consider starting drugstores or maternity homes over starting hospitals. This is because drugstores and maternities are not only more cost-effective to start, they are also easier money makers for their owners.
An education business: Education is also a good business venture potential entrepreneur should really consider in 2020. According to the Professor, this might not necessarily require building classroom blocks. Instead, it might just be all about focusing on businesses that are affiliated to education.
For example, a business that is all about reselling used textbooks will do just well in Lagos, the Professor said. He noted that when children graduate from one class to the other, the textbooks they used in their previous classes typically go to waste even though they are still valuable. It is, therefore, left for astute entrepreneurs to find a way to monetise these textbooks by collecting and reselling them to families who may prefer to buy them at lower prices.
Professional services such as barbershops and hair salons will always make for a good business, Professor Faweyinmi said. The same thing applies to the food business. However, he noted that food transportation is far more profitable in the food value chain; even more profitable than farming itself.
To explain this, he gave the example of poultry farming and egg transportation. To engage in this business, all a businessman needs is to have a car. Visit localities in Ibadan and Ogun State where poultry farming thrives and buy crates of eggs for as low as N300 each. Transport them back to Lagos and sell for N700 per crate.
The professor once again emphasised the importance of knowing a few things about any business you wish to go into. For those who may really be considering the food transportation business, he said it is necessary for them to know that there are times best for transporting certain farm produce. Live chicken is best transported at night for instance. This helps to prevent the heat from killing the animals during the hot afternoon.
The Professor also advised that entrepreneurs should find ways to solve people’s emotional problems and then monetise it. One of the best ways to do this is by starting a church. That’s right, churches are indeed a business, and Nigerians are willing to pay for the services rendered by these pastors.
Still on the need to ensure people’s emotional wellbeing and how to monetise it, Cheta Nwanze (who was also a panelist at the event) recommended that entrepreneurs should consider starting alcohol business. According to him, alcohol sells in a depressed economy because many people like to drink in order to numb their emotions. He also suggested starting viewing centres because Nigerians will always love football. Also, it is high time more entrepreneurs begin to establish alternative power businesses in a bid to solve Nigeria’s electricity challenges.
Start smart businesses
In all these, it is important for entrepreneurs to find ways of starting their businesses without necessarily incurring a lot of costs. According to Professor Fawehinmi, there are lots of smart ways to do this. He gave the example of a young entrepreneur in Palm Groove, Lagos who successfully went into the cinema business with zero CAPEX cost.
According to him, the businessman did not even need to go through the hassle of obtaining a license to operate a cinema because the owners of the cinema he uses already did that. All this entrepreneur had to do was to convince customers to come to watch films late in the night when regular cinema-goers would have gone home.
What should the government do to facilitate SMEs?
While answering this question, Professor Fawehinmi said the government should provide adequate social amenities, especially at the local levels. Focusing specifically on farmers, the Professor explained that one of the reasons foodstuff is expensive in big cities is due to the costs associated with transporting them from the farms.
Note that cost arises mostly because the roads leading from the farms are bad. Take for instance, a crate of eggs is relatively affordable within the localities in Oyo and Ogun States where they are produced.
Unfortunately, the roads there are mostly bad, making it impossible for farmers to transport eggs on bad roads, otherwise, they would spoil. To solve this problem, therefore, farmers resort to paying people to carry the eggs on their heads to the market. This inevitably increases the cost of eggs.
In a hyperinflation economy like Nigeria’s, these are the best investments to consider immediately
A deeper review of investments to consider amid the prevailing high inflation in Nigeria.
Let’s face it, Nigeria’s rising inflation plus lower options for high yielding investments are already driving a significant number of investors away from Africa’s leading frontier market. This is coming at a time when Nigeria’s top performing investment asset class for 2020 is currently having a year-to-date return of around -3.30%.
Recent data published by the National Bureau of Statistics (NBS) reveals Nigerian inflation rate surged to a 33-month high, as it rose further to 16.47% in January 2021 from 15.75% in December 2020. This is marks 17th consecutive month of rising inflation in the country.
Consequently, Nairametrics interviewed selected financial experts on the investment options best suitable for such macro.
That being said, it’s important to note that there are no guarantees when it comes to investing during high inflation. At best, such investments may be inflation-safe, but returns can never be guaranteed.
Debo Adejana, MD/CEO, Realty Point Limited, Chairman, REDAN South West Zone.
At 16.5% inflation rate as of January 2021, the obvious is that there are very little short-term investments that can outperform that especially in the short term. So, that being said, my traditional conservative disposition of the fact that the best investment term is the long-term.
To make returns that will consistently be higher than 16.5% in short term investments will require very good knowledge of the asset class and share dedication.
If that is clear, then by my own understanding, the following are some of the possible investment areas or strategies to adopt with real estate being my most preferred asset class anytime:
- Financial player in a JV Property Development Scheme. This helps to save time and gives faster turnover of investment fund.
- Buying distressed property now, renovate, rent-out for 2years of more just to hold if necessary and sell after.
- Crowd owning/funding property deals
- Guaranteed rent discounting
- International property investment for positive cash flow and to enjoy foreign exchange appreciation
All the above can be done as a large ticket investor or little fractional holder using a well-structured and regulated vehicle.
Darlington-Morsi Onyemaka, Co-founder, Quba Exchange
Inflation means that prices for things are rising, and as such the same amount of money buys less over a certain period of time. This in itself is especially not good for cash savings as the best way to manage inflation is by investing in instruments that give you a return higher than the current rate of inflation or at least one that keeps up with it.
The best kinds of assets to invest in during inflation are tangible assets that have fundamental values and as such, their worth measures up together with inflation. These assets include real estate, growth stocks, and commodities like food, crude oil, and gold (especially gold).
On the flip side, one should avoid long-term fixed-income investments. This is because the value of the underlying security falls as investors tend to focus on higher-yielding alternatives when the interest rates of that instrument start rising.
Thelma Ugonna Ohiri-Anyanwu, CFA
Inflation is the increase in prices of goods over a period of time, where a specific amount of currency will be able to buy less than before.
In as much as inflation erodes the value of funds, this should not deter one from investing as some investment’s types are great hedge against inflation and helps to preserve capital. Some of such investments are Gold, REITs, real estate, commodities and a well-balanced stock portfolio.
Silas OZOYA, Founder/CEO SUBA Capital
Inflation in many ways affect the general health of a countries economy and her citizens literally and the only way out of inflation is continuous and increased investments in local production, expansion of existing local businesses and enacting fiscal policies that would strengthen the currency of such country.
To mitigate this, increased and persistent investment from all angles in Agriculture, local processing, and increased export would do a positive dent on our inflation rate and keep us far away from recession through job creation, wealth growth, food, and cash crop production at scale.
Nigerian’s home and abroad should consider investments that support economic growth through investments in Agriculture and agro-allied ventures.
Agriculture from my experience is one of the very few sectors that puts food on the table, employs people, and grows the value of your money against inflation all in one value chain.
The general public, high net worth individuals, and Nigerians abroad should consider holding at least 20% of their asset portfolio in Agriculture and agro-allied investments.
Angela Aya, Head, Institutional Sales at Alonati
There are a lot of investment opportunities for both the wealthy and not so rich investors in Nigeria, investors desiring to get an income or return on investment. Some are the FGN Savings Bonds, Stocks, Real Estate, Gold, Cryptocurrency, Agriculture etc. However, below are some investments that offer inflation protection:
Investment in real estate has been profitable and remains lucrative especially in Nigerian urban cities.
This investment however requires medium to high capital. Nigeria is still a developing Country in the world and the need for housing to match the Country’s increasing population size remains critical, as urban-rural migration continues to increase due to the neglect of development of the rural areas by the States and Federal Government.
The value of land and property has continued to rise and will continue to appreciate due to the margin between demand and supply as the need for residential and commercial buildings in major cities remains high.
Investing in gold has remained an agelong golden income space. The value of gold has continued to appreciate over the years because of the importance attached to it all around the world.
Gold remains an important symbol of wealth and affluence, and can be purchased as bars, coins or jewelries and resold at a higher price over time.
A disciplined investor can hedge against inflation risks by investing in the following asset classes that often outperform during high inflationary climates.
- Debo Adejina – Real Estate,
- Darlington-Morsi Onyemaka – real estate, growth stocks, and commodities like food, crude oil, and gold (especially gold).
- Thelma Ugonna Ohiri-Anyanwu, CFA – Gold, REITs, real estate, commodities and a well-balanced stock portfolio.
- Silas OZOYA – Agriculture and agro-allied ventures.
- Angela Aya – Real Estate & Gold.
Retail franchise investment next gold mine for Nigerian investors- CIG
Retail franchise investment curbs unemployment and create buffer for people looking for side hustle
The Choice International Group (CIG) has tasked both unemployed and employed Nigerians to embrace retail franchise investment, as the initiative would curb unemployment in the nation and create buffer for people looking for side hustle.
In line with a recent FBDS Study, there are over 450,000 Nigerian career professionals with minimum investible funds of N1 million, looking out for investment opportunities.
In the majority, these funds are looking for franchise type opportunities for ease of venturing and minimal failure risk.
As far as CIG chairperson, Diana Chen, is concerned, such investor should look no further but consider the group’s retail franchise investment opportunity, which offers Nigerian community mouth-watering offer of owning Gree & Lontor retail stores.
According to him, Gree is the world’s residential air-conditioner manufacturer, while Lontor provides high-quality, energy-saving and convenient rechargeable home appliances and lighting products for global consumers.
He said, “Both brands have been built by the CIG into a world-class electronic retail chain in Nigeria opening no less than 20 brand shops in Lagos and Oyo over the last 18 months.
“The sales performance of its existing stores in the country makes Gree & Lontor one of the most profitable businesses in Nigeria with yields of an average return on investment of 50% and above per annum.
“CIG is offering investors the opportunity to own any of six regional logistics centres, or any number of Gree & Lontor brand shops in viable locations across Nigeria.
“It is the decision of the company to open up these opportunities to the investing public through a Franchise Retail partnership.”
He added that the company has mapped out two investment models it says are simple, transparent, and hassle-free.
“The first model involves only six regional logistics centres located across the geopolitical zones in Nigeria.
“Whoever invests in this will require a capital outlay of $1 million, and become a mega distributor partner of the Gree & Lontor brand, and service a network of brand shops.
“The second investment model involves the Gree & Lontor brand shops – retail franchise stores that require an initial capital outlay of N20 million.
“The investor will secure a store size of 120-150sqm at any choice location, shopping mall, plazas, high streets and even residential neighbourhoods.”
What they are saying
Nigeria is a growth market for franchising and franchise development services.
Gbenga Ajayi, an Entrepreneurship analyst, said, “The retail industry comes second to the food industry among sectors with best franchising opportunities.
“As with other emerging markets, one of the challenges of franchising in Nigeria remains the strengthening of intellectual-property regimes so that franchise companies can transmit knowledge and franchise system concepts with the confidence that such know-how will be protected.
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