How mutual funds can boost financial inclusion in Nigeria – Stakeholders

Stakeholders in the financial industry have highlighted major ways Collective Investment Schemes (CISs) also known as investment or mutual funds can increase financial inclusion in Nigeria.

The stakeholders, at the United Capital Asset Management Investment Forum, on Wednesday, listed the strategies to include collaboration, strategic partnership, education, regulation, transparency, technology and awareness.

The forum themed ‘Deepening financial inclusion through participation in collective investment schemes: a collaborative approach,’ was designed to foster a more inclusive financial landscape by democratising access to the capital market through mutual funds.

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It brought together leading experts and thought leaders to discuss emerging trends, challenges, and opportunities in the financial and investment landscape, focusing on driving more retail participation in CISs.

Speaking at the event, Odiri Oginni, managing director/CEO at United Capital Asset Management Limited, said the collaboration will address the challenges of financial inclusion, particularly within the CIS industry, which has yet to fully explore collaborative opportunities.

“One thing and the solution I believe is critical to solving this problem is collaboration, and collaboration is something we have not explored in the CIS industry,” she said.

According to data from Enhancing Financial Innovation and Access, financial inclusion in Nigeria grew from 64 percent in 2020 to 74 percent in 2023. Despite progress, approximately one in four Nigerian adults still lack access to formal financial services, underscoring the importance of ongoing efforts to promote inclusion.

Africa’s biggest economy aims to increase its financial inclusion rate to 95 percent in 2024.

A presentation by United Capital showed that the growth of CIS in Nigeria has been substantial, with assets under management increasing from N73.8 billion to N2.2 trillion over the past 12 years.

Similarly, the number of registered funds has risen from 44 to 144, demonstrating a significant increase in market participation. However, there remains a gap in CIS adoption, with only about 1.7 percent of banked adults in Nigeria holding a CIS account, indicating room for further expansion.

Dayo Obisan, executive commissioner of operations at the Securities and Exchange Commission, who represented Lamido Yauguda, the DG, said despite progress, less than five percent of Nigerian adults currently invest in the capital markets, indicating the ongoing need for concerted efforts to promote financial inclusion.

“The commission has taken steps to promote financial inclusion through investment schemes. In collaboration with the Fund Managers Association, we are engaged in targeted campaigns by national interest programs and technological initiatives to demystify the reach of underserved communities,” he said.

He added that improving the accessibility and affordability of CISs is crucial, with initiatives such as promoting micro-aggressive platforms and incentivising new investors.

Tobe Nnadozie, divisional head, of business technology and digital innovation, at CSCs Plc, highlighted the pivotal role of technology in facilitating easier access to financial services, reducing processing times, and enhancing trust in the financial system.

“The seamlessness of the banking system can be replicated in the capital market. Technology can help remove the long processing time and lack of trust,” he said.

“We need to use technology to open up the space, the liquidity of the capital market is in the hands of the few who are no longer bullish, there is a need to open up for the younger ones thereby pushing trust,” Nnadozie added.

Micheal Oyebola, founder of Money Counsellors, noted the significance of financial education, highlighting key areas such as income management, budgeting, understanding the time value of money, and distinguishing between savings and investments.

Bolanle Adekoya, partner at PwC-West Market Capital Markets Accounting Advisory, highlighted the numerous benefits of financial inclusion, including economic growth, poverty reduction, increased financial stability, social inclusion, improved financial literacy, enhanced household savings, and promotion of gender equality.