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In this article, we’ll talk about investments that can be passive. That is, if you select the right options, and are invested for longer periods, you’re likely to reap significant returns without a lot of effort. We invite you to read this, and then decide which of the assets we discuss here is suitable for you.
Treasury Bills
Treasury bills are a means for the government to raise money from the public. They are financial instruments issued by the Central Bank on behalf of the Federal Government. The bills are a short-term investment, with a tenor of between 90 and 364 days. This asset type is offered at a discount to the public. At the end of the tenor, the government repays the original sum paid by the investor, along with the discounted amount (which is the investor’s gain). Annual “returns” (i.e. discount rate) on Treasury Bills in 2024 averaged about 20%. Note that the discount rate for Treasury Bills declined towards the end of the year, and is expected to continue on this path in early 2025.Stocks
Stocks are a share of ownership in companies. In other words, if you own a company’s stock, you own a piece (or “share”) of that company. The monetary value of this equity stake (i.e. “share price”) can fluctuate in the short term. But if it’s from a business with stable growth and strong market performance, its value will likely increase over the long term. The Return on Investment (ROI) from stocks come either from an increase in share price or a dividend payment from the company whose shares one holds. Many stocks in the Nigerian equity markets posted impressive returns in 2024. Some companies, such as TransCorp, Conoil, Tantalizers, and RT Briscoe, had share price appreciations of between 300% and 400%. These numbers are admittedly exceptional. The Nigerian Stock Exchange’s All Share Index, which measures the market’s performance, increased 37.65%—good enough to beat inflation.ETF
An Exchange Traded Fund (ETF) is a basket of assets—stocks, bonds, or commodities –that can be bought and sold just as a stock. For example, an ETF may be a composite of all the stocks in a stock market; of the top-performing stocks in that market; or stocks in a specific industry (e.g. banking, industry, tech, etc.). Or it may track a commodity like gold or oil. Stock ETFs are great because they tend to be less volatile than individual stocks. Some top-performing ETFs in Nigeria’s stock market from 2024 include Vetiva Industrial ETF (70% return), SIAML Pension ETF (88%), and NewGold Exchange Trade Fund (116%). Again, these returns are outsized, and may not be matched in 2025. Nevertheless, ETFs are expected to remain a strong investment shortly.REIT
Real Estate Investment Trusts (REITs) are companies that own, finance, or operate income-generating property (residential or commercial). REITs are really a way to invest in real estate without directly managing property. Persons who hold REITs earn a share of income yielded by the properties in those REITs’ portfolios. Recent returns from REITs in the Nigerian market have been modest, considering current inflation rates. For example, the UPDC REIT climbed 23.5% in the past one year. On the other hand, the Union Homes REIT has surged over 20% in just the first two months of 2025.Sign up for the Connect Nigeria daily newsletter
Mutual Funds
Mutual Funds are a pool of funds collected from investors, invested in a composition of stocks, bonds and other commodities, and overseen by professional fund managers. Types of mutual funds include money market funds, stock funds, bond funds, and target date funds. In 2024, mutual fund yields averaged about 20%, with more than 20 of them delivering returns higher than that. Top performers in the past year include the CardinalStone Money Market Fund, Meristem Money Market Fund, and Anchoria Money Market Fund.Commercial Papers
Commercial Papers are a debt instrument. That is, corporations use them to raise money from the public to finance short-term debt obligations (payroll, inventory, accounts payable, etc.). Because these debts are not backed by collateral, they usually offer higher interest rates to lenders (investors) than many collateral-backed loans. Commercial papers typically have a fixed maturity, which is between 15 and 270 days. In Nigeria, annualized returns on commercial paper investments average between 15% and 30%. Among the top issuers in 2024 (by volume) were Dangote Sugar Refinery, Dangote Cement, and Flour Mills of Nigeria.Commodities
“Commodities” in this context are the most traded items on the international markets. They include precious metals (e.g. gold and silver), industrial metals (e.g. copper and lead), crude oil, and agricultural produce (wheat, maize, cocoa, etc.). You don’t need to have these items in their physical form to trade them. Instead, you may buy a “stake” in them (derivative), like you’d purchase stocks, and sell those stakes at a later date for a profit. The year 2024 was a good year for gold, as its price rose 27% in the international commodities markets. Because it’s a good hedge against declines in stock markets, you may consider owning gold (or gold ETFs) just to offset losses in those markets if or when stock prices fall significantly.Bonds
Bonds are debt instruments, just like treasury bills and commercial papers. They are offered to investors for a price, and investors get repaid that price plus interest by the time of the investment’s maturity. But unlike the other two debt financing options we previously listed, bonds tend to be longer-term investments, with some maturities extending beyond 10 years. Also, bonds may be issued either by the government or businesses. At the time this article was written, interest on long-term Federal Government savings bonds hovered around the 14% to 15% mark. This may seem low compared to the other options on our list, but it’s worth remembering that FGN bonds are the safest investment on offer in Nigeria, and are generally regarded as “risk-free”.Final Words
We have explored 8 types of investments that Nigerians can take advantage of. These passive investments were difficult to access. But thanks to digital investment platforms, it’s now much easier to invest in them. For example, if you’re interested in treasury bills or commercial papers, you could get them on I-invest. If your preference is stocks, bonds, ETFs, or REITs, they’re available on Chaka, Bamboo, and Trove. As for mutual funds, you’ll find a selection of those on Cowrywise. If commodities are your thing, you could try AFEX (for local agricultural commodities), or Exness (for international commodities in general).Register to attend the CN Business Mixer
Note that there are risks attached to investing and that past performance does not guarantee future returns. Here’s a common rule: the higher the possible returns, the greater the risk of losing capital. But if you are careful about researching potential investments before channelling funds into them, you’ll stand a good chance of reaping decent rewards in the long run.
Got a suggestion? Contact us: editor@connectnigeria.com
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