By Chukwuma Umeorah
The Nigerian Senate has passed the Investments and Securities Bill (ISB) 2024, a legislative framework designed to enhance capital market regulation, bolster investor confidence, and attract foreign investments.
The bill, which repeals the Investments and Securities Act of 2007, aims to align Nigeria’s capital market with global standards while protecting investors from fraudulent practices. Senate President Godswill Akpabio, announcing the bill’s passage, highlighted its role in reducing investment risks and fostering economic growth. “A lot of people would be happy to infuse funds into the capital market when they know a lot of the risk has been minimised,” Akpabio said.
The ISB 2024 introduces stricter penalties for Ponzi and pyramid scheme operators, imposing fines of at least ₦20 million, imprisonment for up to 10 years, or both. Speaking on this provision, the Director General of the Securities and Exchange Commission (SEC), Emomotimi Agama, stated, “This bill explicitly prohibits Ponzi and pyramid schemes, fortifying protections for investors against illegal fund managers.”
The bill also expands the Investor Protection Fund (IPF) to cover losses from brokerage firm deregistration, beyond its current remit of negligence or bankruptcy. Agama emphasised its significance, saying, “This bill’s passage would be pivotal in setting Nigeria on the path to a world-class capital market.”
Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso, described the ISB 2024 as transformative, addressing systemic risk management, derivatives, financial market infrastructure, and the regulation of Ponzi schemes. “The bill seeks to repeal the existing Investments and Securities Act 2007 and to establish a new market infrastructure and wide-ranging system of regulation for investments and securities businesses in Nigeria,” Izunaso explained.
He further noted the bill’s objectives to modernise Nigeria’s capital market framework, ensuring transparency, reducing systemic risks, and safeguarding investors. “The overriding purpose of the proposed legislation is to strengthen the capacity of the Commission for the effective performance of its statutory mandate, as well as reposition that vital sector of the economy for national economic transformation,” he added.
Additionally, the legislation introduces regulatory frameworks for Commodity Exchanges and Warehouse Receipts to revitalise Nigeria’s commodities sector and ensure economic diversification.