SEC’s Collective Investment Schemes Hit N3 Trillion in 2024 – DG Dr. Emomotimi Agama
The Director General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama, has announced that the value of Collective Investment Schemes (CIS) in Nigeria has surged to over N3 trillion in 2024. Dr. Agama made this disclosure during an interaction with journalists in Abuja, emphasizing the growing importance of CIS in promoting diversified investments and mitigating risk in the capital market
Collective Investment Schemes (CIS) are vehicles that allow investors to pool their funds into a shared investment portfolio. Rather than directly purchasing shares or investing in individual companies, investors can access a diversified collection of assets managed by professionals. Dr. Agama highlighted that CIS serves as a safer, less risky investment option for Nigerians.
“In a collective investment scheme, you essentially get a bucket of shares, meaning you’re investing in multiple companies through a single route,” he explained. This diversification helps investors reduce their exposure to risk since their investments are spread across various companies rather than being concentrated in one.
For many Nigerians who are unfamiliar with the complexities of the stock market, CIS offers a straightforward and reliable way to invest. Dr. Agama pointed out that one of the key benefits of CIS is that investors don’t need to fully understand the nuances of market dynamics. “Someone is there to understand the market and invest on your behalf, leveraging their knowledge of the market’s vagaries and dynamics,” he added.
Beyond CIS, Dr. Agama emphasized the critical role the Nigerian capital market plays in supporting the country’s economic development. He referenced the recapitalization exercise for banks initiated by the Central Bank of Nigeria (CBN) in 2024 as a prime example. The CBN had mandated Nigerian banks to raise their capital base to meet regulatory requirements, which sparked concerns about the feasibility of achieving such a daunting goal.
According to Dr. Agama, the capital market became the key enabler that allowed banks to meet these requirements. “Where else would banks, which primarily lend money on a short-term basis, be able to raise the funds they needed except from the capital market?” he asked rhetorically. He revealed that over N2.2 trillion was raised from the capital market in 2024 alone to support the recapitalization of banks, reaffirming its pivotal role in sustaining economic growth.
“The recapitalization exercise proved that the capital market is not just a hub for trading but a key driver for galvanizing economic growth and development,” Dr. Agama said. He added that apart from banks, other institutions also tapped into the capital market to raise funds for their operations.
Government Bonds and Infrastructure Development
Another major development within the Nigerian capital market in 2024 was the issuance of several government bonds aimed at financing infrastructural projects. Dr. Agama stressed the importance of infrastructure as a critical foundation for economic growth. He explained that no economy can achieve meaningful development without significant investment in infrastructure, and the capital market is the most reliable source of long-term funding for such projects.
“There’s a misconception that long-term projects can be funded by short-term loans from the money market. This approach is a recipe for failure,” he said, emphasizing that only the capital market can provide the kind of long-term financing needed for infrastructural growth.
The government bonds issued within the year targeted key infrastructure areas, contributing significantly to national development goals. Dr. Agama explained that this trend highlights the capital market’s indispensable role in providing the funds required for achieving both government and institutional objectives.
Dr. Agama’s remarks underscore the transformative role of the Nigerian capital market in supporting diversified investment opportunities, stabilizing the financial system, and driving national development. The growth of Collective Investment Schemes to over N3 trillion in 2024 reflects increased investor confidence and awareness, while the market’s ability to raise funds for banks, institutions, and infrastructure projects further reinforces its relevance as a cornerstone of Nigeria’s economic progress.
