Name
Global FinTech Guide
Country _ Name
Nigeria
SectionTitle
Asset and portfolio management
Body
FinTechs belonging to this category offer asset and portfolio management services via an internet platform or software programs and usually manage and dispose of the assets of their customers long or short term according to their specifications without actually holding the property or the possession of those assets. FinTechs, which provide information about and access to overnight or time deposit accounts at national and foreign banks and which execute the transactions to these accounts, also belong to this category. Some FinTechs however only act on request of the customer.

Aside from that some FinTechs offer software or internet solutions enabling users to manage and plan their personal finances on their own by providing graphics, overviews and compilations of their financial data and sometimes indicating financial risks or opportunities, but without actually managing the assets.

Introduction

Attitude of the country towards modern asset and portfolio management services

The Securities and Exchange Commission (the “SEC”) exercises regulatory oversight in matters of asset and portfolio management. A fund/portfolio manager’s licence granted by the SEC, is required for any business which manages any collective investment schemes (“CIS”) or investment portfolios on behalf of clients or retail investors (including stocks, bonds, etc.) or invites public members to invest for Return on Investment (“ROI”) in whatever aspects of commerce.

The SEC has been taking regulatory action against real estate companies and agric-investment companies who advertise their investment products with a promise of ROI without any regulatory licence. According to SEC, businesses involved in asset/portfolio management need regulatory approval and supervision to avoid cases of massive fraud by unlicensed investment companies, which can lead to huge monetary loss.

The process for obtaining a fund/portfolio management license is seamless. While the application for registration of the company is submitted to the CAC, the application for operational license is to be submitted to and processed by the SEC.


Legal affairs

Obligations and requirements to provide asset and portfolio management, or ancillary services described above

To operate as an asset manager, a company must have a minimum paid up share capital of N150,000,000 (approx. $97,993). Further, considering that the mutual funds industry is a high-risk industry, every applicant is required to take out a Fidelity Insurance Bond covering at least 20% of the minimum paid up capital.

There is also a requirement for the applicant company to register a minimum of three (3) individuals (also known as sponsored individuals) and the directors with the SEC. The applicant company is also required to submit some corporate documents duly certified by the CAC such as certificate of incorporation, memorandum and articles of association (which clearly shows that the company is registered to do an asset and portfolio management business. Other requirements include license fee, office requirements, etc. (See Rule 91 of SEC Nigeria Consolidated Rules and Regulations 2013 (as amended) (“SEC Rules 2013”)

Additional comments regarding the legal situation for asset and portfolio management services or what FinTech’s must be aware of in this business area

FinTechs belonging to this category are also required to ensure that the data provided by their users and stakeholders are protected and secured in line with the applicable data protection statutes in Nigeria. FinTechs are also required to maintain and be guided by robust KYC/AML Policies. This is to mitigate against financial fraud including financing terrorist activities. The KYC/AML policy of every FinTech Company must be in line with requirements provided by existing laws, regulations, and international best practices.


Economic conditions

Market size for asset and portfolio management services and biggest companies in this business area

Currently, there isn’t readily available data stating the exact market size of asset and portfolio management services for Nigeria. However, a report by Coronation Asset Management in 2022 shows that although there was a decline in the industry in 2021, Nigeria’s assets under management in mutual funds rose to $3.64 trillion in the first five months of 2022. The industry is largely dominated by the big five (controlling about 75% of the assets under management (“AUM”) in Nigeria). As of October 2020, Stanbic IBTC Asset Management Limited had a total AUM of N649 billion (approx. $424 million), FBN Capital Asset Management Limited had AUM of N272.2 billion (approx. $177.8 million), UBA Asset Management Company had AUM of N150.2 billion (approx. $98.1 million), Asset and Resources Management Limited had AUM of N106.3 billion (approx. $69.5 million) and Chapel Hill Denham Management Limited’s AUM stood at N61.9 billion (approx. $40.4 million)
The emergence of Fintech companies like Risevest, Cowrywise, Bamboo and Chaka indicates a rising demand for digital wealth management platforms. These companies cater to a tech-savvy generation seeking easier access to investment opportunities. For instance, (i) Risevest and Bamboo offer Nigerians the ability to invest in global assets denominated in US dollars directly from their mobile phones; (ii) Cowrywise allow users to invest in various asset classes, including stocks, bonds, and real estate, with a focus on Naira-denominated investments; and (iii) Chaka facilitates share investing in US companies and Exchange Trust Fund(s).

Additional comments regarding the economic situation for asset and portfolio management services or what FinTech’s must be aware of in this business area

The economic situation for asset and portfolio management services in Nigeria is characterized by market volatility stemming from factors like political uncertainty, currency devaluation, foreign exchange liquidity, alongside an evolving regulatory environment overseen by the SEC and the CBN. Despite these challenges, there is a growing demand for wealth management services, driven by an expanding affluent class. Technology adoption, particularly in FinTech, is increasing, offering innovative solutions to cater to tech-savvy investors.



Authors

NameOrganisationEmail
Ebimobowei JikenghanG Elias[email protected]06346
Eberechukwu Ezike [email protected]0 

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