By Anastasia John E.
The Securities and Exchange Commission (SEC) has reported a significant surge in Collective Investment Schemes (CIS), with their value exceeding N3 trillion in 2024.
SEC Director-General, Dr. Emomotimi Agama, revealed this during an interaction with reporters in Abuja. He explained that CIS offers investors a valuable avenue for diversification and risk mitigation, allowing them to invest in a diversified portfolio of assets through a single investment vehicle.
“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,” Dr. Agama stated. “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.”
He emphasized that CIS provides an accessible investment option for individuals who may lack the expertise or resources for independent investment decisions. “When you do not understand it, do not go into it,” he advised. “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.”
Dr. Agama further highlighted the crucial role of the capital market in supporting economic growth, citing the recent bank recapitalization exercise as a prime example. “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?” he pointed out. “The Capital Market came to the rescue, raising more than N2.2 trillion for the banks, demonstrating its pivotal role in galvanizing growth and development.”
Beyond supporting the banking sector, the capital market played a vital role in financing infrastructure development through government bond issuances. Dr. Agama emphasized the importance of long-term capital for infrastructure projects, stating, “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 the government, the goals of the institution is the Capital Market.”
