The Securities and Exchange Commission (SEC) on Wednesday disclosed that the value of its Collective Investment Schemes increased to over N3 trillion in 2024.
The Director-General of the commission, Dr. Emomotimi Agama, who gave this hint this during an interaction with journalists in Abuja, explained that collective investment schemes were a part of the market system that allows people to diversify their risk through different options apart from direct investments in the listed entities.
He explained: “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 1 route as different from going to invest directly in any company.
“It reduces your risk, it diversifies your potential and of course takes care of the ups and downs in the market whenever it does exist and 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 Director-General added.
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Agama explained that beyond the CIS, the capital market aided in the development of the economy through the recapitalization exercise of banks in line with the Central Bank of Nigeria’s (CBN’s) monetary policy.
He clarified: “As you are all aware, the 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 galvanize growth and development”, Agama stressed.
This is even as he noted that apart from the banks, other institutions also came to raise capital from the capital market in 2024, listing other developments in the market as including the issuance of sundry government bonds issuances for infrastructure development.
The Director-General expatiated: “And the only place you can get long-term capital for infrastructure development is the Capital Market. There has always been this mistake of people going to the money market to loan money that will be used for long-term projects. It is a recipe for failure.
The only place you can get that kind of money that you need for long-term projection that you need in achieving the goals of government, the goals of the institution is the capital market”, he added.
The investment expert pointed out that it had become very critical that Nigerians get more enlightened about the functions and values of the capital market as the current SEC management continues to adopt innovative initiatives to make the capital market attractive to Nigerians and foreign investors.
He recalled: “One of the initial stumbling blocks was that processes were too long and it makes it difficult for intending applicants to plan. We have changed all that. Now for the capital market time to market is 14 days, which means that if you come to the capital market with all of your documents right, in 14 days you get an approval to raise a long-term capital, this was never the case. At one point in time, it was about one year or one and half years or two years but we cut all of that short.
“We are using technology to be able to achieve this and that is why we have what is called the E-offering platforms which allow Nigerians with the aid of their phones to be able to make investment without necessarily going to any bank or any other place to do so. For us, we are very confident that the things we have put in place in the capital market in the last nine months since we assumed office have actually transformed the market. This is just the beginning and there is so much to be done”, Agama assured.
He expressed optimism that with the passage of the Investments and Securities Bill 2024, which is currently awaiting presidential assent, the capital market would contribute more to the economy.
The SEC boss maintained: “That bill is robust, it contains everything on market regulation and development you can ever imagine in the current time and looking into the future. Therefore, we believe strongly that with the conclusion of that process with the National Assembly, it will be sent to Mr. President for assent. We are confident that the President will give his assent because it is actually a vehicle for development for this nation. We want to mainstream the capital market into national development.”
