Investment in Capital Goods in Nigeria

Welcome to BizPremi, Let’s talk about investing/Investment in Capital Goods in Nigeria. How they help or contribute, to the economy of Nigeria.

In today’s Nigerian Economy, we could possibly say that there is positive changes in the economy with massive interests in agriculture, manufacturing, technology and energy systems.

What makes this possible, is the Investment in Capital Goods. This capital goods, forms the basics of industrial growth in Nigeria, by driving productions, from machinery equipment to industries and factories.

Recently, Nigeria has been diversifying her economy, going beyond just oil, by increasing the capitals going into technology, machinery and infrastructures.

What Are Capital Goods?

Let’s understand the term; Capital goods. They are the tools, machinery, buildings and industries used in producing goods and services. You might ask, what then is Consumer goods. These two, are very different.

Capital goods, are used in the production process, as explained above, while consumer goods are just consumed. That is, a food product or item like rice, yam, or cassava, are eaten. They are consumed directly making them consumer goods. But the machines or tools used either to harvest them, process them into finished goods. This goods are called capital goods. The capital goods, determine the ability and capacity of industries to expand more, and compete globally especially where the demand for locally produced goods is high.

Why is The Investment In Capital Goods In Nigeria Important

There are many advantages to why investing in capital goods in Nigeria. Let’s talk on 5 major benefits.

1. Increase In Industrialization

When industries or companies are provided or equipped with modern tools, machinery and technology, Nigeria can expand in local manufacturing hence reducing reliance on imports to function. This can push Nigeria’s economy to compete with other big countries. Reducing importation, and exporting more is the best thing any economy can have.

2. Improvement On Productivity

When farmers or industries that specializes in agricultural practices, are provided with modern tools and technology, there is higher efficiencies. Less time, more produce. What literally takes 5 days, can be done in few hours. That’s how important modern technology is at this time.

3. Economic Diversification

Proper investment in capital goods, ensures that non oil sectors also grows bigger. Therefore, ensuring a more stable and sustainable economic growth.

4. Creation Of Jobs

Should there be new tools and equipment provided, there is an opportunity for the creation of jobs. As there is need for both skilled and unskilled workers, capable of undergoing training, for them to be able to handle the new machines and equipment.

5. Global Competition

With proper and adequate investments in the economy, Nigerian businesses, can meet certain international standards, enter new markets and of course, compete globally.

What Is The Current State Of Capital Goods Investment In Nigeria

A lot of Nigerian businesses, are beginning to adopt the ideas of owning or having a mechanized farming equipment, building tools, and modern manufacturing plants.

Private Companies, and startup businesses are investing highly on technology, such as having data centers and logistics systems.

Nigeria attracts more foreign investors in sections like; agriculture, renewable energy systems, and telecommunications.

The Nigerian government has also put out initiatives, such as rail modernization. You can visit the Ikeja and Oshodi train station , to better understand.  Rail expansion and more power sources.

The Challenges Faced With Capital Goods Investment

• Since, most machines and equipment are imported, they are more expensive due to exchange rate, shipping and clearing costs. Therefore, there is high cost of importation.
• Inadequate supply of electricity, to power the machines and equipment effectively.
• Exchange rate and instability also makes planning difficult for both local and foreign investors.

However, with all this challenges, there is still progress. The economy can’t start producing everything. With proper approach, Nigeria economy will become stable.

What’s The opportunity For Investors In Capital Goods Investment?

Even with the above challenges, there is still an opportunity for investors due to the large population and market structure in Nigeria. creating room for profits in investing on capital goods. These opportunities includes:

• The growing demand for tractors, irrigation systems and storage facilities, despite high import costs
• Since there are inadequate supply of energy, there are needs for renewable energy systems such as; solar panels, wind turbines and so on. this is a great opportunity.
• There is opportunity in states like Lagos, Ogun where they are declared as industrial centers. I can’t count how many industries are alone in Ogun state.
• A lot of persons now, are building companies, houses and infrastructures. Ability, to provide them with advanced building technology is highly profitable.
• There is also high demand on data centers, and IT solutions.

Final Digestion

Investment in Capital Goods in Nigeria, cannot be talked so little on. As this strengthens industries, making Nigeria economy stable, by providing modern equipment and tools. The opportunities, for the investment in capital goods, is far better than the challenges. Even in the challenges, there are opportunities. So if you are a local or a foreigner, investing in capital goods in Nigeria, is a smart and profitable move. So if you are asking yourself, should i invest in capital goods in Nigeria, My response to you, Yes You Should.

With love from Adegbola Valentine. Hoping to see you soon.