Industries with low exposure to COVID-19

In the wake of an oil crisis, debt challenges, high inflation, and a volatile FX landscape, coupled with the exogenous shock that is the Covid-19 pandemic, investors must urgently reposition themselves in the sectors that come out relatively unscathed.

As the greatest minds in the world think of solutions to what seems like the biggest global crisis in recent times, strategies are being set, and policies are being executed. Also, vaccines are being created to solve two major issues: the COVID-19 pandemic and the hefty economic issues that have risen by virtue of it. Pre-COVID-19, Nigeria undoubtedly had its fair share of challenges; however, the pandemic has worsened an already precarious situation.

Wale Okunrinboye, Head, Investment Research at Sigma Pensions, in a detailed presentation delivered at Nairametrics’ Quarterly Economic Outlook webinar, gave an overview of the current state of affairs of the Nigerian economy. Some notable mentions include:

  • Oil prices have fallen post the historic cuts, with markets focused on demand destruction (20-30mbpd) and depleting global storage capacity.
  • Due to the collapse in oil prices, Nigeria faces an external financing gap in the region of USD10-15 billion.
  • This shortfall is at the heart of the decision to weaken the official rate from NGN305/$ to NGN360/$. Other segments have moved higher (Parallel: NGN430-450/$, Investors, and Exporters: NGN380-395/$).
  • CBN’s ability to maintain the Naira peg received a boost with the inflows from the IMF’s USD3.4 billion RFI loan, but FX reserves remain low.
  • The revised budget assumes a 40% dip in revenue projections to NGN5.1trillion (3% of GDP) but amounts to 1% decline in revenues from 2019 levels (3.6% of GDP).
  • Deficit financing is as yet unclear, but the FGN will have to borrow heavily to plug the budget hole over 2020.


With the volatile oil economy–Nigeria’s primary source of revenue–and amidst many of the businesses that have been at the receiving end of the negative effects of the pandemic, particularly in the entertainment, tourism, and international trade spaces, a recession is imminent. The International Monetary Fund (IMF) forecasts steep recession and slow recovery, with Nigeria expected to contract by about -3.5%. Pressures on FX will also weaken the Naira.

However, a myriad of opportunities also exists, particularly in the non-oil sector. Many countries across the world, including Nigeria, will have no choice than to cut down interest rates towards spurring economic activity and creating jobs. For the investor, certain industries will undoubtedly perform better than others. Given the times and based on projections, some of the more favourable sectors that will not feel the impact of the pandemic as much, includ

Agriculture and Food Production

Cheta Nwanze, Lead Partner at SBM Intelligence, also in the Nairametrics’ Quarterly Economic Outlook webinar, revealed that the sector would experience low to moderate exposure to Covid-19. The SBM Jollof Index forecasts further increase in food inflation and the Index has continued its upward trajectory since the border closure in August 2019.

He noted that currently, local Nigerian rice has risen to the pre-August 2019 levels of imported rice. With increased demand (and not enough supply – a primary cause of Nigeria’s inflation) owing to the reduction in the importation, as well as the potential investments in the sector with the goal of increasing production and employment, the sector will present a good opportunity for investors. Sub-industries like bakeries and beverage producing companies are part of this as well.)


Nigerian Communications Commission (NCC) reveals that as at Q4 2019, the telecommunication industry contributed 10.60% to Nigeria’s GDP, and the total active telephone subscribers in Nigeria as at January stood at 185.7 million. With the world forced indoors, communication as we know it has gone virtual.

Consequently, it is only expected that internet service providers, and the telecommunication industry at large, will thrive–not without its own challenges, of course. This industry, however, has a low exposure to the pandemic, making investments into the sector a good portfolio addition.

Healthcare/ Pharmaceuticals and Personal care

The CBN had disclosed its plans of supporting critical sectors of the economy with an N1.1 trillion intervention fund. Godwin Emefiele, the CBN governor, had explained that about N1 trillion of the fund would be used to support the local manufacturing sector, while also boosting import substitution. The balance of N100 billion is expected to be used to support the health authorities towards ensuring advancement in health R&D.

Other industries with low exposure to the pandemic, as explained by  Nwanze in his presentation, include chemicals, packaging, and professional services, while industries like clothing & textiles, cement & building materials, consumer electronics, education, electricity, and real estate are some of the industries expected to be moderately exposed.

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