Alternative investments are gradually gaining attention in Nigeria to diversify risk, protect against inflation, and enhance long-term returns as investors look beyond traditional assets like equities, treasury bills, and bonds.
These assets typically offer lower correlation with public markets and can serve as a hedge during periods of market volatility.
At the top of Nigeria’s alternative investment landscape are Real Estate Investment Trusts (REITs), private equity and venture capital, infrastructure funds, commodities, and private debt instruments, all of which are gradually attracting institutional and high-net-worth investors.
Alternative investments are asset classes that fall outside traditional stocks, bonds, and cash. They are typically less liquid, longer-term, and often require higher minimum capital, but they can deliver superior risk-adjusted returns when properly structured.
They are not ideal for investors who need quick liquidity or predictable short-term returns.
In Nigeria, alternative investments are regulated primarily by the Securities and Exchange Commission (SEC), with participation from the Nigerian Exchange Group (NGX), FMDQ, and private fund managers.
Alternative investments are best suited for:
1. Realestate investment trusts (REITs)
REITs allow investors to gain exposure to income-generating real estate without directly owning property.
2. Venturecapital (VC) & private equity (PE)
Venture capital and private equity represent some of the fastest-growing alternative investment segments in Nigeria, driven by the country’s expanding tech ecosystem and youthful population.
Despite the risks, VC investments have produced outsized returns for early investors in successful Nigerian startups. Fulterwave, Moove, Chowdeck, Kuda and are popular startups in Nigeria.
Notable venture capital firms in Nigeria are Future Africa, Aruwa Capital Management, EchoVC Partners, Microtraction, while the prominent private equity firms are African Capital Alliance (ACA), Verod Capital Management, Helios Investment Partners.
For HNIs, the following arfe angel investors networks that allows induividuals invest in startups – Lagos Angel Network (LAN), VC4A Nigeria, Consonance Investment Managers Angel Fund.
3. Infrastructure funds
Infrastructure investments focus on power, roads, ports, telecom towers, and renewable energy.
Infrastructure investments focus on power, roads, ports, telecom towers, and renewable energy.
Examples of infrastructure funds in Nigeria include – Chapel Hill Denham Nigeria Infrastructure Debt Fund (NIDF) (listed on NGX), ARM‑Harith Infrastructure Fund (ARMHIF), Stanbic IBTC Infrastructure Fund, Coronation Infrastructure Fund (CIF).
4. Commodities &agriculture investments
5. Private debt & structured products
These products offer higher yields than government securities, but carry credit and liquidity risks. Private debt includes.