The Securities and Exchange Commission has said that less than five per cent of adult Nigerians invest in the Nigerian capital market.
The Director General of SEC, Lamido Yuguda, said this on Wednesday at the inaugural Investment Forum of United Capital Asset Management in Lagos’ themed ‘Deepening Financial Inclusion Through Participation in Collective Investment Schemes: A Collaborative Approach’.
Yuguda, who was represented by Executive Director of Operations, SEC, Dayo Obisan, said that with the improvement in the financial inclusion figures for Nigeria, it had become important to look at how many customers were onboarded into the capital market.
The latest EFInA Access to Finance Survey report stated that the formal financial inclusion in Nigeria had grown from 56 per cent in 2020 to 64 per cent in 2023.
Yuguda said that despite improvement in financial inclusion, the involvement of Nigerians in the capital market remained low.
He noted, “It is important to note that despite all the progress made so far, less than five per cent less of Nigerian adults currently invest in the capital markets, highlighting the ongoing need for concerted efforts in this work.
“As noted by the IMF in 2023, financial inclusion in Nigeria has experienced significant growth as evidenced by the consistent incorporation of residents into the banking sector.
“However, this surge in bank account ownership is predominantly attributed to the inclusion of those who have utilised the non-bank/informal financial sector despite the successes overall inclusion rates still so passed official targets, primarily due to low financial literacy.”
The SEC boss added that the commission had implemented several initiatives to complement the central bank’s effort to boost financial inclusion.
He said, “We are focusing on improving the capital market and enhancing access to finance for increased financial inclusion. These include the capital market literacy master plan, and the dividend mandate management system, with robust public enlightenment campaigns and efforts to deepen the monetary structure market. Together, these measures aim to enhance financial knowledge and instill investor confidence.”
Commenting on the theme of the forum, the acting Chief Executive Officer of the Nigeria Exchange Limited, Jude Chiemeka, said that there was room for more retail investors in the market.
He declared, “We need to think about the empowerment of our teeming youth. So, we need to create products, an avenue to encourage savings and investment that we very much need to pull ourselves out of poverty.
“So, if you look at the figures, the active number of investors in the market is about 86,000. If you juxtapose that with the billions of people who have accounts, there is a lot of work to be done.”
Spotlighting Islamic finance as a way to achieve success, Chiemeka said, “One of the areas that we’re really looking at is Islamic finance. I think a very easy way is to increase financial inclusion and drive participation in the local market.
“We’re also looking at ESG becoming a mainstay with green bonds, green financing, which can bring a whole set of investors into the market.”
Highlighting some of the challenges that had hampered the CIS sector, the CEO of United Capital Assets Management, Odiri Oginni, in her presentation said that lack of trust and awareness were major, factors which can be dealt with through collaborations and partnerships.
“But one thing and one solution that I believe is critical to solve this problem and address this gap is collaboration and collaboration is something to explore in the CIS industry. And that’s the focus of this forum.
“Which is why the question at the back of our mind is how can CIS providers, leverage strategic partnerships and collaboration to reach the underserved population?” she asked.
A Partner at PwC on Capital Markets and Accounting Advisory, Omobolanle Adekoya, in her presentation titled ‘The Way Forward: Bridging Access Through Mutual Funds,’ stated some of the ways that the financial inclusion gap in the CIS sector could be bridged.
She said, “We need to look at things around the development of customised multi-asset solutions for millennials.”
She stressed the need to encourage young Nigerians to start saving from 14 and 15 to enable them to grow wealth.
The SEC revealed that the value of CIS funds in Nigeria as of October 2023 stood at N2.1tn.
