Out of the $30 trillion total contributions of Collective Investment Scheme (CIS) across the globe, Nigeria’s total asset under the scheme accounted for $1 billion.
The Deputy Managing Director of ARM Investment Mangers, Mrs. Jumoke Ogundare, who made the disclosure, lamented the low level of CIS penetration in Nigeria and stressed the need for the country to increase its stake on the scheme to measure with the contribution made by its counterparts in other jurisdictions.
She pointed out that the increased contributions recorded in other countries has helped alleviate poverty in those countries, as well as improved their standard of living. Ogundare explained that investing through CIS enables investors maximize its opportunity to diversify their portfolio. She added that the scheme is managed under a well-articulated governance structure, which enables investors to access their reports and evaluate their investments periodically in a transparent manner. “Nigeria is coming behind in this scheme and we have $1 billion which is small compared $30trillion generated all over the world. CIS reduces investment risk through diversification and reduces transaction cost in the other hand. It also enables less sophisticated investors obtain the opportunity of high returns by having a registered professional mange their investments,” she added.
Meanwhile, the Chief Executive Officer, Stanbic IBTC Management Limited, Olumide Oyetan, said the total asset under management currently stands at around N186 billion, which is an increase of 300 per cent compared to a decade ago. He stated that that there are 45 collective investment scheme in Nigeria, compared to over 3000 and 130 mutual funds in India and Pakistan respectively; countries that have comparable GDP per capita to Nigeria. “Nigeria still has an abysmally low penetration of mutual funds which we believe is largely linked to the overall poor level of financial literacy in the economy.
“Weak intermediation is largely a function of volatile macro-economic conditions (especially high inflation) which discourages capital formation, underdeveloped capital market, embryonic institutional investment industry and weak incentives within the Nigerian banking system to offer relatively high yielding savings products,” he said.
