Nigerian passport is one of the lowest-ranking passports in the World, with visa-free access to just 1.5 percent of the world’s GDP, significantly limiting its holders, Henley & Partners has said.

“The South African passport with access to over 100 visa-free destinations can only facilitate visa-free travel to 17 percent of global GDP. For Nigerian citizens, the prospects are even grimmer at 1.5 percent share of global GDP,” Chidinma Okebalama, senior consultant at the residence and citizenship Investment Company said during a webinar Wednesday.

Okebalama said that the economic mobility of African citizens is significantly constrained by the limitations imposed by their passports and that Nigeria has lost access to 14 countries in the last ten years.

According to Helen and Partners, Nigeria’s passport ranks 92nd in the world with access to only 45 visa-free destinations.

Okebalama said that Nigerians can overcome the economic mobility constraints by getting residents and citizenships by investing in countries like Austria, Malta, and others.

Also, Rajat Sharma, Co-Founder and Chief Investment Officer of VAR Capital mentioned three ways investors can hedge against currency devaluation in emerging markets.

He said that currencies in emerging markets suffer from volatility and economic mismanagement often leading to devaluations that can substantially erode wealth.

“For example, the recent depreciation of the Naira means that a holder of N1000 can now buy 0.62 USD compared to 2.23 USD in January 2023,”

Three ways to hedge against currency devaluation risk in emerging markets;

Invest in dollar-denominated securities

Sharma said that while emerging market securities perform well during periods of domestic strength, they carry significant downside and currency risks during economic downturns.

“ Holding USD-denominated equities shields individuals from the high volatility of emerging market currencies,” he said.

Buy export-driven equities

He said that export-driven firms benefit from currency crises, receiving revenue in foreign currency while incurring costs of local currency, and boosting profits.

“In the depreciatory environment in Nigeria, exporting companies, such as oil companies that receive foreign currencies have become better off; they are less exposed to local currency fluctuations compared to companies that earn only Naira,” Sharma said.

Investing in Commodities

He also mentioned that investing in commodities helps to hedge against currency risk because they tend to be priced in dollars. Such commodities include Gold, Oil, etc.

“To hedge against inflation, buy stock of companies which are inflation proof like staple food companies,” Sharma said. (BusinessDay)

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