GBENGA OLANIYAN, the CEO of Estate Links, led a Nigeria trade delegation that was in The Gambia recently to explore investment opportunities in the West African country. In this interview with CHUKA UROKO in Banjul, the Gambian capital, Olaniyan explains why Nigerian investors should invest in the country’s economy, especially in real estate where the rental market is very active and the yield is way ahead of what obtains in Nigeria. He also speaks on other relevant issues. Excerpts:
Why do you encourage Nigerian investors to invest in The Gambia given the country’s small market and undeveloped economy?
There are two things that informed this decision. I see a lot of people who look at coming to invest in Gambia as a one-way thing. I have been coming to this country since 2008 and I have actually invested in its economy. What I am thinking of is that if we must do direct foreign investment, let us as much as possible, keep it within Africa. Gambia provides a mid point where you have a vibrant tourism industry and tourists come around and rent properties.
So far, the investment I have been involved in here has done excellently well and that is real estate. Some members of this team are already looking at other opportunities. Someone is already looking at opportunities in manufacturing. Actually, there are some opportunities one could be looking at here.
But at the same time, in a small country like this that works, where electricity is almost uninterrupted, so many things are right. There are so many things we can learn from here and take back home. For me as a regular visitor to this place, the small bungalows we saw at the Dalaba Estate struck me as something one could invest in back home. These are lower–middle income housing here which could be regarded as low income housing in Nigeria.
Besides economy, another major issue that concerns a potential investor is the political environment. Not long ago, there were political issues in this country. What has changed?
Interestingly, my first investment here was when the country was under a dictatorship. If things could work well then, you can just imagine what is possible now. I can assure you that things have been a lot freer and easier. What I believe the country has got right is the way they are telling the world that they are pro-external investment. But that is understandable in a country that has over 25 percent of its GDP coming from tourism. They must be pro-foreigners. They must keep to that otherwise they will begin to see a quarter of their GDP fritter away. I do not think they can afford a policy that is anti-foreign investment.
You have invested here. What has been your experience that those coming after you could latch on?
From landlord’s perspective, I can assure you that they are well protected here. You don’t find a situation where a non-paying tenant continues to stay in a property for three months. Rents are quite regular. Rents are paid on monthly basis and this enables affordability and convenience in payment. People hardly owe one month rent and that helps an investor to do his projections.
Comparing the rental and sales markets here and those of Nigeria, what difference can be seen?
I see a kind of trade off. If a developer is building to sell, it is more rewarding in Nigeria than what you get here because the developers here are satisfied with small margins. Though the construction cost has dropped a little bit in Nigeria since after recession, it is still way ahead of what obtains in The Gambia.
The rental market is more active and rewarding here than in Nigeria. For an average of 5 percent rental yield in Nigeria, you can get a return of 8 percent in Gambia. In Nigeria, a N40 million property gives about N2 million a year just as a N100 million property gives you N5 million a year whereas in Gambia, it is more at 8 percent yield.
Construction cost is lower here than Nigeria. Why?
Yes, construction cost is less even though labour is not cheaper. This is because, here, they have access to cheap materials and they use a lot of local materials. Another reason is that import regime here favours some imported items especially construction materials. Additionally, construction cost is lower here because the developer gets money at 9 percent which is a deliberate government policy decision.
