(Reuters) – The view of Lagos from the top of the Eko Hotel must be familiar to many of the fund managers and strategists who jet in to Nigeria periodically, scouting for investment opportunities.
In the distance, rows of bright lights reflect on the water like the skyline of any oceanside city. Elsewhere, dots of yellow flicker like fishing boats on the waves.
But Nigeria is full of paradox and the view is no exception.
The “skyscrapers” are in fact the living quarters of towering container ships importing everything from toothpicks to cement. The “fishing boats” are bars and shacks on the beach, their lightbulbs powered by erratic diesel generators.
From the roof-top bar, some read the vista as a story of great potential — Africa’s most populous country, swollen with oil wealth, an untapped market with massive infrastructure needs and all the financing opportunity that brings.
Others see a cautionary tale — a nation so hobbled by corruption and mismanagement it struggles to turn on its own lights, despite more than half a century of oil production.
Either way, with a fast-growing population of more than 140 million and the ninth-largest proven oil reserves in the world, emerging markets investors can no longer afford to ignore it.
“I can remember years ago … nobody would come to Africa with me,” Jonathan Auerbach, co-founder of New York-based stock broker Auerbach Grayson, said during a recent trip to Nigeria with more than a dozen fund managers from around the world.
“Investing in Nigeria today is like buying a lottery ticket with a very high percentage chance of winning,” he said, adding that at less than $40 billion, Nigeria’s stock market was valued at less than half U.S. investment bank Goldman Sachs (GS.N).
“You know what that tells me — Nigeria is so cheap.”