How to Invest In Nigeria Through The US Stock Market.
Being an African, I have always wanted a way to invest in West Africa in a way that will come with the security of a US capital protection. Let’s face it, most Americans would never trust their money to a Nigerian bank. The country has unfortunately created a reputation for itself as a major hub for some of the most intricate scams. Nevertheless, investing in frontier countries like Nigeria offers incredible opportunities for large returns if done the right way.
Let me tell you about a safe way to trade Africa’s largest economy, Nigeria! This opportunity is available to you through what is called the MSCI Nigeria ETF (NGE). The NGE invests in among the largest and most liquid companies in Nigeria. This ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Nigeria Select 25/50 Index. The MSCI All Nigeria Select 25/50 Index is designed to represent the performance of the Broad Nigeria Equity Universe.
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No matter how you look at this, NGE is by far the safest and most prudent way to invest in Nigeria right now. It is available for any investor to buy into the fund simply by searching the “NGE” ticker in their brokers platform.
As with any investment, you could lose all or part of your investment in the Fund, and the Fund’s performance could trail that of other investments. There is no guarantee that the Fund will achieve its investment objective. From here, let’s talk about the dangers of investing in Nigeria and in Africa in general.
Investment in African securities involves heightened risks including, among others, expropriation and/ or nationalization of assets, confiscatory taxation, political instability, including authoritarian and/or military involvement in governmental decision-making, armed conflict, the impact on the economy as a result of civil war, and social instability as a result of religious, ethnic and/or socioeconomic unrest and, in certain countries, genocidal warfare. Certain countries in Africa generally have less developed capital markets than traditional emerging market countries, and, consequently, the risks of investing in foreign securities are magnified in such countries.
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Nigeria is a frontier market country. Frontier markets are those emerging markets that are considered to be among the smallest, least mature and least liquid, and as a result, may be more likely to experience inflation, political turmoil and rapid changes in economic conditions than more developed and traditional emerging markets. Investments in frontier markets may be subject to a greater risk of loss than investments in more developed and traditional emerging markets.
Frontier markets often have less uniformity in accounting and reporting requirements, unreliable securities valuations and greater risk associated with custody of securities. Economic, political, liquidity and currency risks may be more pronounced with respect to investments in frontier markets than in emerging markets.
Lassal Inungu