2022 is still pretty new and a lot of people are busy mapping out their investment plans. Unfortunately, there are not a lot of viable investment options, no thanks to the adverse effects of the pandemic which continues to pressure most economies in Africa. But this notwithstanding, COVID-19 has also presented some discounted assets for investors to consider, according to Olumide Adesina, an analyst at Quantum Economics.
With COVID-19 obstructing the global economy especially in 2020 and moderating in 2021, viable investment options are rather limited. However, there are still a number of discounted assets for investors to consider in Africa. For one, I think banks stand out, particularly tier-1 Nigerian banks. Despite relative weak interest rate earnings in the past two years, the African banking industry continues to hold a prominent position in 2022 due to its history of strong performance in rising rates environments… You will be able to build a substantial store of wealth by investing steadily in these banks over a long period, making wise choices and reinvesting bank dividends,” Olumide said during a call with Business Insider Africa.
He went further to highlight a number of other investment options to consider in 2022. So, we’ve narrowed them all down to five, as you can see below.
Five investment options to consider in 2022
1. Invest in African tech startups: It is obvious that African tech startups are burgeoning right now. And there is no better time to position your investments to grow with them than right now. So, if you are still thinking of where to invest, think African tech startups, particularly the fintech ones in Lagos, Cape Town and Nairobi. They are doing amazingly well. Foreign investors know this, which is why they pumped in nearly $5 billion in African tech last year.
Another area critical for investment is the technology space. We’ve seen so many value assets coming up in that space. You can’t ignore the fact that the likes of Chipper Cash, Flutterwave, Paystack and others have created further footprints in the global tech ecosystem. So, foreign investors are seriously keen on that sector to really invest. So, people that have exposure to secondary markets can take the opportunity,” Olumide said.
2. Invest in Bonds and Treasury Bills: These have always been the go-to investment options for most investors in Africa due to their low-risk nature. So, go ahead and invest in your series 1 savings bonds, treasury bills, corporate bonds, etc.
“As a result of the tapering and global dovish shift, Sub-Saharan Africa’s Eurobonds should benefit from weaker market sentiments and create excellent investment opportunities. The yields on Nigerian, Ghanaian and Angolan Eurobonds are expected to be double-digits in 2022. And any investment that yields double-digits returns in dollars is definitely a bargain,” Olumide said.
3. Invest in the stock markets: Earlier, we quoted Olumide Adesina recommending investments in African bank stocks. That’s definitely something you should consider doing. There are nearly 30 stock exchanges across the continent. And they all have some high-performing stocks listed on them. So, buy shares in African companies. Buy bank shares, telecom shares, and of course the shares of cement companies.
“You cannot also ignore the cement giants that are seriously keyed into the infrastructure sector. You see that many countries, including Africa’s biggest economy Nigeria, is focusing more on building/upgrading their infrastructure. That will definitely benefit the cement companies and their stocks,” Olumide added.
4. Invest in crypto assets and NFTs: Cryptocurrency has become a major investment option for most people around Africa and elsewhere. Note, however, that while these assets can make you a lot of money, they are also very high-risk in nature. So you should be very careful with them. Olumide advised that “crypto assets (including NFTs) have a reputation for exponential growth. But you should limit your exposure to them because of their inherent risk and pending regulations.”
5. Invest in Agriculture: Another easy investments you could make is in agriculture. Humans will always need food. So, any business that specialise in food production is guaranteed to make returns. So, consider investing in agriculture either directly, or through companies that specialise in doing that; preferably agritech startups.
Now, as you go about your investments this new year, it’s important to reiterate that you should avoid putting all your money in high risk assets such as crypto and Forex. It can be tempting to do this due to the potential for huge returns. Unfortunately, the risks are real.
Instead, spread out your portfolios such that you have a little bit of stocks, a little bit of bonds, a little bit of crypto/Forex, a little bit of a high -yield savings plan, etc. That way, if something negative should happen to one asset class, you have something to fall back on.