Non-pension Funds in Nigeria Recorded a net Asset Value of N4trn in 2023

The Nigerian Funds Market has grown significantly on the back of increasing retail investor awareness, the entry of new players, rising interest rates, and an expanding and diversified product base, with notable emphasis on alternative assets.

According to data from the Securities and Exchange Commission (SEC) which regulates the non-pension funds market in Nigeria, the net asset value (NAV) of listed mutual funds and alternative funds registered at NGN2.2 trillion (USD2.5 billion) and NGN105.2 billion (USD123.9 million) respectively in 2023.

Ratings firm GCR estimate of privately managed funds in the same year was over NGN 2 trillion. Therefore, the Nigeria non-pension funds market had a NAV of over NGN4 trillion (USD4.7 billion) in 2023, according to our estimates.

Stanbic IBTC Asset Management Limited and SFS Capital collectively manage the majority of all investments in Nigerian mutual funds as of Dec 2023.

The Central Bank of Nigeria’s (CBN) contractionary monetary policies aimed at curbing inflationary pressures and achieving exchange rate stability have elevated interest rates and yields on government securities.

This is expected to support growth in the Nigerian funds market, especially fixed-income funds. The high inflation rate also makes alternative assets such as infrastructure funds an attractive asset class.

While the CBN embarks on a contractionary monetary policy stance, GCR does not foresee a quick moderation in the inflation rate, largely because of structural challenges that contribute to rising inflation and the transition channels that need to be strengthened.

The increasing desire to invest should result in a considerable level of growth in the funds market over the next 12-18 months. However, growth will be balanced against expected fair value movements (realised and unrealised) in the reporting of some financial assets as yields are higher.

”We also expect fluctuations in dollar-dominated mutual funds owing to the current volatility in the exchange rate,” GCR said.