KEY POINTS
- The Senate’s bill targets Ponzi operators with ₦20m fines and jail terms.
- Modern financial reforms aim to strengthen Nigeria’s capital markets.
- Enhanced investor protections will rebuild trust and deter fraud.
The Nigerian Senate is considering the introduction of stricter penalties for operators of Ponzi schemes, aiming to protect citizens from fraudulent investment practices. According to the Securities and Exchange Commission (SEC), the proposed Investments and Securities Bill (ISB) 2024, currently before the National Assembly, seeks to explicitly ban Ponzi and pyramid schemes.
According to a report by The Sun, the bill proposes that promoters of such illegal schemes, upon conviction, face a minimum fine of ₦20 million, a prison term of up to 10 years, or both.
In his remarks during a public hearing on the bill held Thursday in Abuja, Senate President Godswill Akpabio, represented by Senator Binos Yaroe, described the ISB 2024 as a significant step toward modernizing Nigeria’s financial markets. He highlighted the bill’s potential to enhance transparency, boost investor confidence, and foster sustainable economic growth.
“This bill is not just legislation; it is a transformative tool for our economic future,” Akpabio stated. “The discussions today reflect our commitment to safeguarding citizens’ interests while ensuring our markets thrive in a competitive global economy.”
A modernized framework for capital market regulation
The Investments and Securities Bill aims to repeal the Investments and Securities Act of 2007, replacing it with updated provisions that address emerging trends, such as the rise of digital assets. Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso, emphasized that the Nigerian capital market is central to economic development, channeling resources into productive sectors like corporate enterprises and government projects.
Izunaso noted that, with the rapid growth of fintech and digital assets, the capital market must adapt. “The ISA 2007 has served us for over 15 years. However, the evolving financial landscape demands a holistic review to strengthen the market’s legal framework, remove ambiguities, and enhance its global competitiveness.”
Focus on investor protection and commodities regulation
SEC Director-General Dr. Emomotimi Agama outlined critical provisions in the bill, including enhanced investor protection measures. One notable update is the expanded scope of the Investor Protection Fund (IPF), which would compensate investors for losses stemming from the revocation or cancellation of a broker’s registration.
“This revision broadens the IPF’s coverage beyond cases of bankruptcy or negligence, offering more robust support for affected investors,” Agama explained.
Additionally, the bill introduces new sections addressing the regulation of commodity exchanges and warehouse receipts. These provisions aim to unlock the potential of Nigeria’s commodities ecosystem, ensuring its alignment with global standards.
Strengthening the fight against ponzi schemes
The SEC underscored the need for stringent penalties to deter fraudulent schemes. Dr. Agama stressed that Ponzi operators undermine economic stability and exploit vulnerable citizens. The new bill aims to provide the legal tools needed to tackle these schemes effectively.
“Nigeria needs a world-class capital market to drive economic diversification. The passage of this bill is a pivotal step toward achieving that goal,” Agama concluded.
The Investments and Securities Bill 2024 represents a critical milestone in Nigeria’s economic reform agenda, aiming to modernize its financial systems and ensure investor confidence in a rapidly evolving global market.
