The federal government and corporate organisations raised about N4.978 trillion from the nation’s capital market in 2016 and 2017, according to data from the Securities and Exchange Commission (SEC).
The market proved to be a veritable source of finance in the two years providing those funding through bonds and equities.
However, the federal government accounted for the largest amount of N2.859 trillion or 57 per cent, which were raised via bonds issuances. Corporate bodies accounted for the balance that was sourced via equities and bond issuances.
A further breakdown of the figures showed that a total of N1.991 trillion was raised in 2016, which rose to N2.987 trillion in 2017.
Meanwhile, analysts at FSDH Research have said that mutual fund investment can create wealth for investors, saying such funds pooled together can be used to finance critical infrastructure and expand business operations.
A mutual fund is a pool of funds brought together by a professional fund manager from several investors to invest in selected underlying securities
According to FSDH, money that is pooled together through mutual funds can be channelled to address critical infrastructure either directly or indirectly.
“This would promote the competitiveness of the economy, enabling businesses to expand operations and employ more people, and would assist government at all levels in generating more tax revenue,” it said.
However, FSDH Research warned that mutual funds need more support than is currently available to enable potential investors to fulfil their wealth creation and developmental roles.
“In addition to liquidity, mutual funds offer a range of benefits to investors including portfolio diversification and lower transaction costs. The existence of a Trustee and Custodian to a mutual fund ensures the safety of investments, as the Trustee ensures that the fund is managed in line with approved investment guidelines, and the Custodian holds the fund assets,” they said.
The analysts said that mutual fund assets in Nigeria have grown significantly in the last five years, saying that this is an indication of the growing interest in this class of investment.
FSDH Research noted that there is significant room for growth in mutual fund assets as we estimate the ratio of mutual funds to the country’s Gross Domestic Product (GDP) at 0.51 per cent.
But FSDH Research said its findings showed that government, regulators and the operators in investment management need to give the mutual fund additional support.
“ Government could offer tax incentives to investors who are committed to a regular investment plan in mutual funds. It should also create an enabling environment that will lead to job creation in the country in order to increase savings and investable funds. Regulators could promote innovative legislation to increase investment in mutual funds and expand investment channels to increase returns on the funds invested. The Fund Managers Association of Nigeria (FMAN) should continue to create public awareness on the benefits of mutual funds in order to generate interest from the investing public,” it said.