In a recent interview, Monday Usiade, director of market development at Debt Management Office told the media that ordinary Nigerians deserve to participate in the country’s financial markets. His comments came during a government programme to encourage mass market uptake of fixed-income investment products.
Fixed-income investments like treasury bills, government and corporate bonds, certificates of deposit, and certain mutual funds can offer investors a steady stream of income (they receive a fixed amount of interest at regular intervals) and generally carry a lower risk than stocks.
The government is right to encourage more everyday people to invest in its formal financial markets. Research indicates that increasing the number of retail (individual, non-professional) investors can make the markets more stable overall.
A recent study by the Karlsruhe Institute suggests that retail investors provide stability when the market is in turmoil. They provide liquidity to stocks and lower the risk of price crashes.
Fixed-income investments offer a viable route to wealth creation for the average person. They often have a low minimum entry threshold (some as low as N5,000), are fairly low risk, and pay predictable returns. This makes them suitable for less affluent and less experienced investors. They are also increasingly easily accessible; besides the Federal Government’s fixed income instruments, investment companies offer a variety of fixed income products.
Nnenna Onyewuchi, co-founder and chief growth officer of Halo Financial Services, noted, ‘When people talk about financial inclusion, they are usually thinking about the unbanked. But there’s another level. Right now, tens of millions of Nigerians are missing out on the opportunity to build wealth through investing.”
“In Nigeria today, less than three percent of the population invests in the formal financial markets. Most Nigerians think it is beyond their reach. They think you must have money to invest, that it’s for big, big people. But of course, investing is a way to make money. And you can start with quite small amounts,” she said.
There are many reasons Nigerians are not investing in the financial markets. People have valid worries about losing money due to market fluctuations. This is compounded by a limited understanding of how most investment products work.
Access can also be a problem for people in the lower socioeconomic classes; many do not feel comfortable walking into the offices of a traditional investment house nor are they tech-savvy enough to take advantage of the fintech platforms that are springing up.
Halo Financial Services is one fintech working to make investing more comprehensible and accessible to Nigerians from every walk of life. Halo offers a range of fixed-Income products, both naira and dollar-denominated, to suit people of every age, gender, and economic level.
According to Chidimma Onyeokoro, co-founder and CEO, “a core focus for us is bringing more people into the world of investing. With Halo, we want to create a path to wealth for more Nigerians. The more people learn about investing and participate, the stronger the overall market will be. And that in turn will create opportunities for more investors to make money. Everyone wins.”
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Halo also offers investors multiple ways to transact. Nnenna Onyewuchi further explained, “a market woman may have the money and desire to invest in a mutual fund, but not be comfortable doing it on her phone. Or going to an office where someone will be speaking plenty of English. She wants to see and talk to someone who is on her level.”
“A more educated person, working entry-level in an office, may have the same amount of money to invest as the market woman, but is comfortable using an app to self-serve. We want them both as customers.’ For mass-market consumers who want a face-to-face approach, Halo Direct offers access via a nationwide agent network. These agents are known, trusted people within the community that can open accounts, make contributions, and make payouts without the customer leaving their comfort zone. For the more tech-savvy there is an app, Halo Invest.”
Halo’s community-driven approach is another way Halo is making investment more accessible to the average Nigerian. Halo allows groups of people, from as few as five, to invest together, allowing them to invest in products with high starting minimums that might otherwise be out of reach.
In addition to investments, Halo offers banking, savings, payments, and credit products. Halo also offers insurance and other financial services through partners. Halo’s operations are overseen by two regulators because they own two companies. Halo Asset Management is fully licensed by the SEC and Halo MFB (Enrich MFB) is fully licensed by CBN. As a result, Halo has the most stringent standards of corporate governance and risk management. So, customers can be fully assured of the safety of their funds.
Halo is lowering the barriers to retail investing through financial literacy education, offering products at the right price points, and ensuring customers have access where and how they are most comfortable. In this way, Halo hopes to increase retail investors’ participation in the financial markets so that average Nigerians and the wider market can benefit and grow.
