Distributing foreign collective investment schemes in Africa’s largest economy

Effective and pragmatic regulation has been the cornerstone for the growth of Nigeria’s asset management industry. Nigeria has recently been attracting attention for its thriving economy and large population. It is now Africa’s largest economy, with a GDP of $510 billion, and its financial sector has played a major role in the country’s growth and is positioned to continue to do so. The Nigerian Securities and Exchange Commission recently released new rules outlining requirements for the introduction of foreign collective investment schemes to Nigerian investors.

Nigeria has been at the forefront of the African growth story; nowhere is transformative growth and immense opportunity more apparent than within the continent’s most populous nation and largest economy. Once overshadowed by abject poverty and corruption, Nigeria has established a record of resilient and steady economic growth and improved political stability. The country has a fast-growing middle class, which accounts for over 23% of the 170 million population. Unsurprisingly, economists predict that Nigeria will be Africa’s leading frontier market for growth and opportunity.

The many reforms that have engendered the nation’s remarkable growth have largely included those in the financial sector, particularly the positive policy shifts in the domestic money market as first steps towards a more robust and enduring facelift for the sector. More specifically, the asset management industry has made considerable progress as it establishes itself as the country’s investments and savings magnet for the emerging middle class and institutions. Reforms in 2004 split the industry into two: traditional asset management (for example, collective investment schemes and discretionary mandates); and, pension fund administration and management. It is not possible to determine exactly when Nigeria’s asset management industry was established; however, the first ever collective investment scheme was launched in 1995 and pension reforms (with the advent of the Pensions Reform Act 2004) were established in 2005.

 

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