With inflation averaging 32% in 2024 and the rebased exercise placing it at 24.48% in January 2025, Nigerians are feeling the pinch as their purchasing power declines, plunging many into poverty.
Rising food, transport, and housing costs make it imperative to protect income against further depreciation this year.
Here are 10 strategies Nigerians can use to hedge their income against inflation in 2025:
Invest in Treasury Bills and government bonds
Treasury bills (T-bills) and Federal Government Bonds provide a risk-free return that helps preserve income value. The one-year T-bill yield, though fell to a one-year low of 22.58% due to the rebased CPI and uncertainty around interest rates, it still surpases bank deposit rates. The FGN Savings Bond offers interest rates above 15%, making it an inflation hedge.
Investment analysts advised prospective investors to consider long-term bonds with inflation-adjusted returns to maintain purchasing power.
Read also: Where to invest N10 million in 2025
Diversify into foreign currency holdings
With the naira depreciating by over 40% against the dollar in 2024, holding foreign currency (FX) can serve as a hedge against further devaluing of your assets. USD, GBP, and EUR-based savings accounts help preserve value.
Analysts say investing in dollar-denominated assets (Eurobonds, US stocks, or domiciliary accounts) is a solid hedge and offered tips as using fintech apps that offer FX wallets to diversify income into stronger currencies.
Invest in stocks with strong dividend yields
Investing in stocks that outperform inflation is a proven strategy. The NGX All Share Index rose by 37.65 % in 2024, outpacing inflation that reached a 28-year high. Dividend-paying stocks like Dangote Cement, MTN Nigeria, and Zenith Bank provide returns above 30%.
Analysts offered tips as focusing on blue-chip companies with a history of consistent dividends.
Buy gold and other precious metals
Gold is a time-tested hedge against inflation and currency devaluation. Gold prices surged by over 25% in 2024 amid global economic uncertainty. Digital gold platforms allow Nigerians to invest without holding physical gold. You may consider fractional gold investments via apps like Paxful and Goldman Sachs-backed platforms.
Read also: Here’re five reasons to invest in Nigeria’s real estate
Invest in real estate and rental properties
Real estate is a strong inflation hedge, as property values and rental income rise with inflation. For instance, Lagos real estate appreciated by over 30% in 2024, outperforming inflation.
Short-term rentals (Airbnb) and co-living spaces offer high return on investment (ROI). Investors may focus on emerging locations like Epe, Ibeju-Lekki, and Abuja’s suburbs for higher appreciation rates.
Start a side hustle or expand income streams
A single income source is risky in a high-inflation economy like Nigeria, hence, having multiple sources of income could be a cushion to rising prices. Freelancing, e-commerce, and digital skills (copywriting, coding, graphics design) are lucrative and may be considered.
The gig economy contributed significantly to Nigeria’s GDP in 2024, highlighting its potential. Try to monetise your skills via platforms like Upwork, Fiverr, and Toptal.
Invest in agriculture and agro-processing
Agriculture offers inflation-proof returns, as food prices keep rising with a very low percentage of Nigerians diving into the sector. Nigeria’s high food inflation at 26 percent after rebasing makes farm produce valuable.
Therefore, investing in poultry, fish farming, or crop production generates steady income. As a prospective investor, you may explore crowd farming platforms like Farmcrowdy and Thrive Agric for passive income.
Leverage cryptocurrency for inflation-proof savings
Cryptocurrencies, especially stablecoins pegged to the US dollar, protect against naira depreciation. USDT and USDC allow Nigerians to store value digitally. Bitcoin surged by 150% in 2024, proving its resilience against fiat devaluation.
Experts say storing crypto on secure wallets like Trust Wallet and Ledger may help in avoiding exchange risks.
Cut unnecessary expenses and save in high-yield accounts.
Reducing discretionary spending helps counter inflation’s impact. Digital banks like Kuda, VBank, and ALAT offer up to 15% savings interest. The 50/30/20 rule (Essentials/ Wants/ Savings) ensures financial stability. Try to automate savings and use budget-tracking apps like PiggyVest and Cowrywise.
Invest in mutual funds and ETFs
Mutual funds offer diversified, low-risk exposure to inflation-resistant assets. Money market funds yielded 18%+ in 2024, outperforming savings accounts.
Exchange-Traded Funds (ETFs) tracking US stocks or commodities provide hedge benefits. You may consider Stanbic IBTC, ARM, and FBNQuest mutual funds for inflation-beating returns.
