Traditional assets such as Fixed Income, Treasury bills (T-bills) and bonds are likely to give investors negative returns this year, 2022.
This is according to Adetoun Dosunmu, the Head, Fixed Income, Currencies and Treasury, FBNQuest Merchant Bank while a panelist at the Nairametrics Economic Outlook webinar, themed, “Your Money, The Economy and Government Policies”, which was held on Saturday 29th of January, 2021.
“If you’re going to do the traditional fixed income, treasury bills, you will have a negative return because those returns will not give you a hedge against inflation,” Dosunmu said.
Discussing inflation which is being recorded across the world and what business owners can do to mitigate or hedge against it, she explained that inflation will definitely go up, given that if taxation is increased both on Federal and State levels, the effect would filter back to the individual customer.
She added that since Nigeria is an open dependent country and as such everything we consume is more or less imported, there is a high tendency that the final consumer would feel the impact of increasing inflation reported around the world.
“All that tax will filter back into consumers, and into cost of goods, so, we are not immune from what is going on globally. We are an open dependent economy, everything that we consume in Nigeria is imported in one way or the other,” she said.
Speaking on investment classes, which have the capacity to hedge against inflation, she said, “The beautiful thing about Africa growing is that we have a lot of young population that is willing to take risks, so, you see them investing in very risky outlets, asset classes. Some of them are doing crypto. So those are the [investment classes] that are more or less not tied to inflation”.
In addition, she explained that this is an election-running year, hence, when there is an election in Africa, there’s a lot of cash that goes around and this would fuel inflation.
