From Adanna Nnamani, Abuja
The Securities and Exchange Commission (SEC) has announced that its Collective Investment Schemes (CIS) increased to over N3 trillion in 2024.
According to a statement from the SEC, its Director General, Dr Emomotimi Agama, disclosed this during an interaction with reporters in Abuja on Wednesday.
He explained that collective investment schemes are part of the market system that allows people to diversify their risk through various avenues, rather than investing directly in companies.
According to him, “In the collective investment schemes, you get a bucket of shares and ask people to invest. Therefore, if you are investing through a collective investment scheme, you probably will be investing in 10 companies via one route, as opposed to investing directly in any single company.
“It reduces your risk, diversifies your potential, and, of course, addresses the ups and downs in the market whenever they occur. It is, for us, a very good area for Nigerians to invest in because when you do not understand it, do not go into it. With a collective investment scheme, you do not need to understand it because someone is there to understand it for you and invest on your behalf, understanding the vagaries of the market, its dynamics, and how it runs.”
The SEC DG disclosed that, beyond CIS, the capital market has aided economic development through the recapitalisation exercise of banks by the Central Bank of Nigeria.
According to him, “As you are all aware, banks are a very important element in our development and economic sphere. Last year, 2024, the Central Bank came up with a regulation to increase capital for all banks. Many people thought it was too daunting a task for the capital market. However, where else will the banks, who already loan money short term, get money from other than the capital market?
“But, of course, the capital market came to the rescue. For all of the issuance that happened in the market last year, we were able to raise more than N2 trillion, precisely about N2.2 trillion for the banks, which means the capital market is actually the element that helps to galvanise growth and development.”
Agama further noted that, in addition to banks, various other institutions have sought to raise capital from the capital market. He said that during the review period, there were significant developments in the market, including numerous government bond issuances aimed at infrastructure development. He emphasised that no economy can truly thrive without a solid infrastructure foundation.
“And the only place you can get long-term capital for infrastructural development is the capital market. There has always been this mistake of people going to the money market to loan money for long-term projects. It is a recipe for failure.
“The only place you can get the kind of money needed for long-term projections to achieve the goals of government and institutions is the capital market.”
He stressed the importance of Nigerians understanding the functions and benefits of the capital market. He highlighted that the current management has implemented several initiatives to enhance the market’s appeal to Nigerians.
“One of the initial stumbling blocks was that processes were too long, making it difficult for intending applicants to plan. We have changed all that. Now, in the capital market, time to market is 14 days, which means that if you come to the capital market with all your documents in order, within 14 days you get approval to raise long-term capital. This was never the case. At one point, it took about one year, one and a half years, or even two years, but we have significantly reduced that timeline.
“We are using technology to achieve this, which is why we have introduced E-offering platforms. These platforms allow Nigerians, using their phones, to make investments without necessarily going to a bank or any other place. For us, we are very confident that the measures we have implemented in the capital market in the last nine months since we assumed office have transformed the market. This is just the beginning, and there is much more to be done.”
Agama disclosed that, with the passage of the Investments and Securities Bill 2024, currently awaiting presidential assent, the capital market would further drive the nation’s economy.
“That bill is robust; it contains everything on market regulation and development you can imagine, both for the current time and looking into the future. Therefore, we strongly believe that once the National Assembly concludes the process and sends it to the President for assent, he will approve it. The bill is a vehicle for national development. We want to mainstream the capital market into national development,” he added.