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Opinion

Investing and Betting – How far apart are they and what does it mean for Africa?

J. Smallwood
June 30, 2017, midnight
91

Word count: 525

Investors and gamblers are both driven by the thrill of taking chances in order to make their money work for them. While the two disciplines may at first seem quite different, there are actually plenty of similarities between investing and betting.

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Investors and gamblers are both driven by the thrill of taking chances in order to make their money work for them. While the two disciplines may at first seem quite different, there are actually plenty of similarities between investing and betting.

Playing the Odds

Benjamin Franklin famously wrote in a letter in 1789 that, “in this world, nothing can be said to be certain, except death and taxes.” This maxim certainly holds true for investors and gamblers. Both use their money to play the odds, hoping for an impressive return. Both also use knowledge to their advantage, seeking out the best opportunities and the greatest chance of receiving more money back than they put in. However, nothing is certain. 

Of course, using knowledge to generate returns can also be about more than just making money. The French government is working with French companies to invest around €1bn in Nigeria’s gas and oil industry. The move will not only see France benefit from financial returns but also from strengthened economic and political relations with Africa.

Psychological Similarities 

Whether we’re talking about vast investments undertaken by governments and huge private companies, trades completed by individuals or wagers placed by sports fans, there are psychological similarities between investors and gamblers. Successful investors, particularly traders, need to be able to make fast, firm decisions at a moment’s notice and stand by the consequences of those decisions. They need to be disciplined about making decisions and maintain emotional control while making them.

The same is true of successful gamblers, particularly those who enjoy betting on sports, poker games, and competitions (such as mixed martial arts contests) where the odds can change in an instant. Tailoring betting to include a range of outcomes, a strategy that revolves around placing wagers on "props" or side bets (like the results of individual rounds in boxing) can lead to some excellent payouts but requires much the same firm, disciplined mindset as that of the successful investor.

What does this mean for Africa?

The blend of knowledge and decisiveness needed to invest (and bet) successfully is certainly working in Nigeria’s favour at present. Power sector investments in the oil and gas industry include not only the direct purchase of crude oil from Nigeria but also infrastructure development, storage facilities, and pipeline construction.

It’s an attractive range of options that has certainly worked to hook French interest. Denys Gauer, France’s Ambassador to Nigeria, has also reported interest from French companies in renewable energy investments in Nigeria, most notably solar and wind solutions.

Nor is it just French investors who are excited by the possibilities offered by Nigeria. A group of Indian investors has also offered to commit funds this month, pledging a $4bn investment in Nigeria’s telecommunications sector, with a particular focus on rural telephony. One can be sure that, with this level of funds, the investors have done their research thoroughly.

However, the basic premise does not change – a healthy return on an investment can never be fully guaranteed; there is always the hint of the gambler present, even when the investment runs to billions of dollars in value.

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