How To Invest 200k In Nigeria For Higher Returns

There are many ways to invest money in Nigeria, and there are many ways not to invest money in Nigeria.

If you have the sum of 200k Naira lying idle in your Nigerian bank account, and you want to invest it for reasonable returns, what comes to your mind?

Majority of Nigerians would first think of banks. After all, that is where they keep their money and even though there are many issues with handing your money over to Nigerian banks, one can’t deny that they are the most trusted customer-facing financial institution in Nigeria.

So, what are the options an investor has with a capital of 200k in Nigeria?

Savings Investment and Fixed Deposit

The first option for a typical Nigerian investor would be putting that money in a savings investment or fixed deposit account with a fixed interest. These types of accounts would probably give around 8 – 12% interest per annum. While this may be considered a safe and liquid investment, the low returns may discourage investors who have capital that is less than 1 million Naira.

For this type of investment, investors with a capital of 200k would average a return of 10% per annum, that is, just 20k return in a full calendar year.


Majority of the time, when I talk to people about investing, the first thing they refer to is buying stocks, aka shares.

Most people just buy stocks and forget it. They buy in hope that one day, the stock would appreciate and they would make a profit.

But is that really a strategy for investing? Hoping and praying that your stocks appreciate?

Well, new investors are getting smarter by the day. Nowadays, most stocks investors don’t just invest and pray. They find the index of the best performing stocks and invest their money there. But not only that, they review their stock portfolio and make changes to reflect the market movements.

This way, stock investors could make more than 10% returns per annum or even more if they are savvy enough.

HYIP and MLM Schemes

On the other hand, a few investors would think of investing in more risky portfolios such as the many MLM and HYIP schemes we now have in Nigeria thanks to the shrinking economy. These schemes promise mouthwatering returns as high as 30% interest per month. That is a whopping 360% return per annum. That is, if you invest 200k, you would be getting 60k as interest every single month of the year, making it a total of 720k as interest per year. And you’d still get back your capital of 200k.

But you and I know that such systems are unsustainable, with the majority of these schemes known to be scams. In fact, many unsophisticated investors in Nigeria have lost their money this way, playing on the high street of high investment returns.

Liquid Funds

For many sophisticated investors, their choice would be to invest in liquid funds, popularly known as money market funds. These types of investments are liquid, safe, and provide reasonable returns. Investors can invest in liquid funds in two ways.

For investors who want some skin in the game, they would usually put together a list of liquid investment opportunities they want to invest their funds in, and then diversify their funds in them. These liquid investment funds include a diversified investment portfolio of cryptocurrency, high-performing stocks, fixed deposits and government bonds.

For investors who are busy and don’t have the time to monitor their portfolio, it’s usually easier to hand over their capital to money market fund managers. These fund managers would usually invest in a diversified portfolio as above, but they are more vast in the market and react quicker to market changes than investors who choose to manage their portfolio themselves.

On the average, these liquid funds would return about 20% interest per year. Sometimes, even more. If the investor is managing the fund themselves, then they would usually get a higher percentage. Otherwise, the fund manager would have to take a cut for offering their expertise.

A Different Kind of Investor

While the aforementioned investment opportunities are good enough for the average investor, there is a different kind of investor who wants to go beyond the average market ROI, to get more returns for their capital.

These kinds of investors do not only want to have their investment portfolios written on paper or on the screens of their computers. They want to invest in a brick and mortar business where they can meet with real people and monitor the day-to-day progress of their investments.

They do not just want skin the game, they want ownership. They do not just want ROI, they want cashflow. For this kind of investor, the ROI doesn’t have an expiry date. They continue to earn on their investment as long as the business continues to operate, and until they decide to exit the business.

The success or failure of this type of investment would usually depend on the kind of structure put in place not only to hedge the investment, but to ensure legitimate use of capital.

So, while you might have heard of investors investing their money in Nigerian businesses listed on the stock exchange, it is also possible to invest in lucrative Nigerian businesses that are not listed on the stock exchange.

Here is a typical example:

In October 2013, I stumbled upon a post on Nairaland, in which the poster stated his intent to invest in any promising web-based business. Seeing that as an opportunity to grow NGFR, I quickly pitched him my original idea (which was to build a high traffic blog through the power of keyword research). I stated how much I’d put into the project already, and how much traffic the blog was generating at the time. I also told him my plans to grow the blog, and how his investment can help achieve the goals.

Fortunately, the guy (I-Jay is his nickname) became interested in my blog. We fixed an appointment, and he paid me a visit at my place in Lagos. We agreed to hire freelance writers to create content around all the keywords I’d generated. We also discussed other ideas on how to grow the blog.

The following week, I-Jay released about 30% of the money I requested from him, and we outsourced the first batch of articles (about 120 in all). We planned publishing the articles gradually over the next two months, and then pay for more if necessary.

Let me tell you a bit about I-Jay: He’s a cool guy who works as a database administrator with a software development firm in Lagos. He’s fun to be with and very understanding. He’s just two or three years older than I am, so we interact like friends. And we got along easily and quickly.

Fast forward November 2014, the blog started generating income, fetching us $128. And since then, the figures have been increasing every month ($291 in December 2014, $361 in January 2015, and $434 in February 2015). Now, I’m loving it. And I-Jay is loving it, too.

We’re moving forward. Without I-Jay coming into the picture, I doubt it if the blog would have moved forward one inch.

From this story, you can see that it is possible to approach a Nigerian business for investment, and you would have also noticed that certain criteria such as expertise and trust needs to be in place to make the investment work.

So, how do you start investing in Nigerian business if you have only 200k as capital?

Investing in a Nigerian Business

The truth is that 200k may be too little to invest in a Nigerian business, but it is a good start to test the waters. You can invest in a small business with potential to grow a sector of the economy and bring huge profits in the future.

You just have to have the eye to spot a good deal and put the right structure to make the business thrive.

So, what are the steps to investing your 200k in a Nigerian business?

Find an Industry of interest

First you need to find an industry of interest. Which area of the economy do you want to invest in? Where does your fancy lie?

I always have a bias for food production businesses. I just feel that they are an essential need and well, I love to eat good food, and would love to invest in businesses that help me eat more healthy.

Small businesses especially, with big potential.

So, you have to find what makes you tick and where you would like to see your money working for you. This is the first necessary step.

Find your scale of opportunity

After you’ve identified the industry where you want to invest, it is important to find the right scale of opportunity.

If you have only 200k to invest, you have to find an opportunity of the size of that amount. You can’t invest 200k in a business that buys and sells luxury cars. That would be too little for scale. Instead, you can invest in a small car repair station.

However, if 200k is just your first commitment, and you are looking to invest more pending the business performance after the first capital injection, then you can choose to invest in a business of higher scale.

The most important thing here is to find a business that you are comfortable in investing in, and one that you know your capital can actually make an impact and help the business grow.

Talk to Many Different Businesses

To find the best investment opportunity, you don’t have to be one dimensional.

You have to talk to many different businesses in your industry of interest. You have to talk to different business owners and entrepreneurs to be able to know who you can work with.

Your relationship with your business partner is a very important part of the equation and would be a big decider of how the business performs going forward.

So, you have to find the time to go out there and talk to people. That is why you are a different kind of investor than the one who hands his capital to fund managers.

A good way to start is to take a stroll around your area and talk to businesses you are interested in. Tell them you are an investor and looking for a good opportunity to invest. They would readily open up to you.

Choose a partner you can work with

The truth is that Nigeria is a very complex county with people of diverse culture and upbringing. You have to be intentional about who you want to partner with if you don’t want to lose your investment.

That’s right. You can lose all your investment if you’re not careful enough. The truth is, many businesses in Nigeria are scams in disguise, with business owners who are not completely invested in their own businesses. If you make the mistake of handing your money over to a dishonest partner without due diligence, then you should be ready to kiss your capital goodbye.

As you can see in the real-life example provided above, both partners had a good relationship and were willing to work together, and that translated into a successful partnership.

If you have any religious or ethnic bias, always ensure that they are considered before you invest a single kobo of your money.

Create an MOA

Once you have chosen a partner you can work with, it’s now time to detail and agree on the terms of your partnership via a Memorandum of Association (MOA).

This is the most important document you’ll ever need if you want to invest in a Nigerian business. This is because the legality of your partnership and the shares of the business will be contained in the MOA.

If the business is already registered with the CAC before you invested, then the MOA of the business or company will have to be reviewed.

You have to decide how much of the business you own, how the monthly profit of the business is shared or utilized, who makes key decisions, and what criteria do you need to fulfill to exit the business.

You will need to get a lawyer for the most part to ensure every detail of the business is contained in the MOA.

Better still, if the company isn’t registered, then you can have a fresh start with your business partner by creating a new MOA and register the company as a partnership.

Hedge your Funds

As an investor, the most important thing to look out for isn’t profit.

It is control.

You don’t want to make bad decisions and lose your capital in your chase for profit or ROI. Rather, you want to have good enough control on your investment, with freedom to liquidate at any time you wish.

A true investor is one who has sufficient control over their investment.

So, it is important to put things in place to hedge your investment in a Nigerian business.

Make it very difficult to lose your funds by employing the right people, technology and systems that will keep your money working for you.

For example, if you invested in a Nigerian auto repair station, how do you ensure that every sale is accounted for? Since you would definitely not be on ground every single time, how do you prevent your partner from stealing from you?

I bet you, majority of the time, in a business like this, your partner would try to steal from you. So, how do you control that?

In my case, I would create a system in the business that accounts for every sale.

Firstly, I would employ a CCTV camera manned by a competent operator. This would account for the number of vehicles that come into the station per day.

Next, I would put a system that ensures that all invoices are written by the mechanic responsible for each particular repair, but the payment is received by an accountant.

So, let’s say a car comes in for routine servicing. The mechanic in charge services the vehicle and then writes an invoice which has a carbon copy for that service. The car owner then takes the invoice to the accountant and makes payment.

At the end of the day, the mechanics in charge of that day and the accountant would reconcile the books to ensure that the invoices and the payments made correspond.


It is important to know that true investors do not entertain any anxiety over making returns on their investment.

Despite the fact that you want to keep your investment growing and above the raging inflation, the goal is to ensure you do not lose your money.

Investing 200k is a good start, but you must ensure that you invest at the right scale. Don’t be too ambitious and throw your money into the HYIP whirlwind. It is better to own 50% of a fast growing business with huge potential than 0.5% of a saturated stock of a company you don’t even know where it exists.

Whatever route you choose, your investment portfolio needs to be as liquid as possible so you can quickly cut your losses or take advantage of new profit waves. You need that sort of flexibility to be able to divest and keep your funds growing.




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