Collective Investment Schemes Surpass ₦3 Trillion In 2024

The Securities and Exchange Commission (SEC) has announced a significant milestone in Nigeria’s financial market, revealing that Collective Investment Schemes (CIS) reached over ₦3 trillion in 2024. This was disclosed by the SEC Director General, Dr. Emomotimi Agama, during a recent media briefing in Abuja.

What Are Collective Investment Schemes?

Collective Investment Schemes provide a structured avenue for individuals to diversify their investment risks without directly engaging with individual companies. Explaining the concept, Dr. Agama noted,

“With collective investment schemes, you gain exposure to a diverse range of shares in one go. Instead of investing directly in a single company, you spread your investment across multiple companies through a single platform.”

This investment method minimizes risks, offers diversification, and cushions investors from market fluctuations.

“Even if you lack a deep understanding of the market, you can rely on experts managing the scheme to navigate the complexities and make informed investment decisions,” he added.

Capital Market’s Role in Economic Development

Dr. Agama highlighted the pivotal role of the Nigerian capital market in driving economic growth, particularly through its support of the Central Bank of Nigeria’s (CBN) recapitalization directive for banks.

In 2024, the CBN mandated an increase in the capital requirements for Nigerian banks, a move many initially considered challenging. However, the capital market stepped in to provide the necessary funding, raising approximately ₦2.2 trillion to help banks meet these requirements.

“The capital market has proven to be a critical driver of growth and development by providing the needed long-term funds,” Dr. Agama emphasized.

Government Bonds and Infrastructure Financing

Beyond bank recapitalization, the capital market has also facilitated numerous government bond issuances aimed at funding critical infrastructure projects. Dr. Agama stressed the importance of long-term capital for infrastructure development, cautioning against relying on short-term money market loans for long-term projects.

“Infrastructure is essential for any economy to grow, and the capital market remains the best source of funding for long-term projects,” he said.

Conclusion

The Nigerian capital market continues to play a transformative role in the nation’s economic landscape. From supporting collective investment schemes to raising funds for banks and infrastructure projects, its impact is evident. Investors are encouraged to leverage these opportunities to grow their wealth while contributing to Nigeria’s economic development.