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The continued fall in the value of the naira relative to its global counterparts has made savings in US dollars, investments in US dollars and earnings in US dollars attractive to Nigerians and citizens of other emerging economies dependent on imports.
In the past 18 months, the naira has been devalued four times, from N306 / US $ 1 to the current Central Bank of Nigeria exchange rate of N410 / US $ 1. However, Nigeria’s economic structure coupled with limited foreign income generation has created a chronic dollar shortage that has made it impossible to access the N410 US dollar for most Nigerians and businesses operating in the country.
This means that most Nigerians are forced to frequent the parallel market, commonly known as the black market, to exchange their hard-earned Naira or foreign currency at much higher rates. A situation that has eroded the profitability of companies, raised the inflation rate, slowed job creation and weighed on consumer spending.
Currency experts have said that the real exchange rate of the Naira to the US dollar is above N550 and is inevitable given the mono-product nature of Africa’s largest economy. This means that Naira will continue to fall and thereafter will affect your future ROI and trading decisions.
Therefore, King of investors gathered how to overcome the uncertainties of the Naira by saving, investing and earning in US dollars while living in Nigeria.
How to save money in US dollars in Nigeria
There are several ways for Nigerians to save money in US dollars, one of them is to open a home bank account in US dollars (note that you can also open euro, pounds sterling) in any depository bank in the country, exchange your Naira for US dollars on the black market and save the exchanged US dollar to your home bank account.
Although this is a conventional method, it is stressful and exposes all kinds of risk as the black market is unregulated and generally open.
However, the advent of financial technology (fintech) companies has helped to ease the process and now one can save US dollars without going to the black market or leaving the comfort of one’s home.
Learn more about the Securities and Exchange Commission regulatory issues with investment platforms.
Each of the platforms quotes the Naira-US Dollar exchange rate for buying (exchanging Naira to US Dollar) and selling (exchanging US Dollar to Naira) on a daily basis. With this, a potential depositor can determine the exchange rate he wishes to deposit.
Here’s how to register on one of the platforms
Download their mobile app and click register. Fill out the registration form and send your ID for verification. Once approved, click on dollar deposit and you will be redirected to the Naira-US dollar exchange rate and ask to transfer Naira from your Nigerian bank account to a designated bank account. The rate shown will be used to credit your US dollar account. The process is the same if you opt out.
Now here is the logic, you can leave your money in US dollar and wait for the naira to fall further against the US dollar to take advantage of the exchange differential or start investing in US dollar on the platform you are depositing your dollar on. American. To start investing and earning in US dollars, keep reading.
How to invest in US dollars in Nigeria
Each of these platforms has a partnership with a US regulated securities broker that allows them to offer foreign stocks to Nigerians. They also offer Nigerian stocks, which means potential investors can easily trade global and local stocks on their phones.
Therefore, you can learn to trade foreign stocks with as little as $ 20 while simultaneously saving to give yourself the opportunity to profit from both your investment and the declining naira. The good thing about these platforms is that you can do all of this with your smartphone. To find out how to trade foreign stocks, contact us.
Few other platforms, Cowrywise, Afrinvest, Stanbic IBTC, offer investment opportunities in US dollars.
cowries – Investment in mutual funds in dollars
Investors can now invest in Cowrywise Dollar mutual funds called United Capital Nigerian Eurobond Fund. “You are probably wondering why it is called a Eurobond fund when it is a dollar based investment option. We’re here to break it down for you“said Cowrywise.
Eurobond funds are a type of bond. This type of bond is issued in the currency of the host country. A good example is that the Nigerian government can issue a dollar denominated bond to allow foreign investors access to it as well.
Now you are probably wondering what a link is. A surety is an agreement between two different parties. Another good example is that it’s like having a friend who borrows you and pays you back with a fixed interest rate. This means that a government bond is simply the government borrowing money from the public with the agreement to repay it with a certain interest rate.
How to set up a Nigerian Eurobond investment plan
- Download the latest version of the Cowrywise app from the Playstore or the Appstore.
- Register and create a free account. You can log in after that.
- Tap “Stocks” and then tap “Invest in Mutual Funds.”
- Select “Nigerian Eurobond Fund” in which to invest.
Funds in Afrinvest dollars
the Funds in Afrinvest dollars is an open-ended mutual fund that Afrinvest invests in dollar denominated securities registered in Nigeria.
The objective of the Fund is to generate income and capital appreciation in the short to medium term for investors with dollars available and designed to generate returns significantly higher than those obtainable from the average home account at local banks. Entry and exit are free for investors subject to the Fund price in effect.
What are the advantages of investing in the Fund?
- Capital appreciation
- Competitive returns
- Diversified portfolio; and
- Regular and regular income stream.
Minimum investment capital
The issue price is $ 100 per unit but there is a minimum initial subscription of 10 units or US $ 1,000. The minimum holding period is 180 days. This means that your investment must remain intact during this period.
Please note that Afrinvest pays interest twice a year and investors are required to convert their funds into USD before accessing the platform.
The projected yield is 6 to 7.5% per year.
To subscribe, click on one of the links below to get the subscription form. Send the completed form to [email protected]
Stanbic IBTC Dollar Fund
The Stanbic IBTC Dollar Fund is similar to Afrinvest Dollar Fund.
Stanbic IBTC offers currency diversification, income generation and stable growth in USD. The leading financial institution seeks to achieve this by investing at least 70% of investors’ funds in high quality Eurobonds, a maximum of 25% in short-term USD deposits and a maximum of 10% in equities in USD approved and registered by the Securities and Exchange Commission of Nigeria.
Here is the highlight of the Stanbic IBTC Dollar Fund
- The Stanbic IBTC Dollar Fund (SIDF) was launched in January 2017
- The Fund invests a minimum of 70% of its portfolio in high quality Eurobonds, a maximum of 25% in short-term deposits in USD and a maximum of 10% in equities in USD
- Minimum holding period of 180 days
- The penalty in the event of redemption within the minimum holding period is 20% on accrued income
- The minimum investment amount is $ 1,000 while the additional investment is $ 500
- It is an open fund
- The risk profile is “moderately conservative”
- The expense rate is 3.5%
- Management fees are 1.5%