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This project is on Influence of collective investment activities on low income earners. The National Financial Inclusion Strategy (NFIS) was promulgated in the last quarter of 2012. It is a general financial inclusion programme of the Central Bank of Nigeria (CBN), whose strategic objective is to curb financial exclusion in the country by setting a clear a genda to significantly increase access to, and use of formal financial products and services from 36.3 per cent in 2010 to 70 per cent in 2020. To achieve this feat therefore, the programme set up certain targets to be strategically met in terms of financial literacy, savings, microfinance bank branches, payments, automated teller machine (ATMs), point of sale (POS), pensions, insurance and credit. These are to be pursued from 2012 to 2015 and subsequently to 2020; from which according to the programme financial inclusion in the country would be increased up to at least 70 per cent by the year 2020.

The problem of financial exclusion in the world is a situation that countries, especially the developing ones-like Nigeria can no longer ignore or treat with levity. A situation where a set of people for reasons outside their control, find it difficult or even impossible to access financial services as they may desire, call for both policy and academic attention. A report by the Enhancing Financial Innovation and Access (EFInA, 2010) indicates that the financially excluded people in Nigeria stood at 39.2 million representing 46.3 per cent of the country’s adult population. Also, a total of 2.9 billion adults across the globe were reported to be financially excluded according to the same source. This underscores the enormous need for financial inclusion, first among the vulnerable groups (rural dwellers for instance) and in the country as a whole. This is what Nwankwo and Nwankwo (2014) argued that financial inclusion is critical to the attainment of poverty reduction, removal of barriers to economic participation of rural dwellers: women, youths and those at the bottom of poverty. A crucial part of financial intermediation, which over the years has accepted the high, middle and low income earner into the financial market, is the Collective Investment Scheme. In 2018, the vision of the Fund Managers Association of Nigeria is to develop a multi-trillion naira Collective Investment Scheme Industry in Nigeria. The collective investment scheme (CIS) is an entity organized as an investment company, mutual fund or unit trust type that invests in securities, money market instruments and other liquid financial assets. The funds are raised through the offering of units. The entity operates on the principle of risk spreading at the request of shareholders or the holders of shares buy back its shares at a price based on the net value of its assets (Trifonova, 2014).

According to Kimani & Kisaka (2016), collective investment schemes are a crucial segment of the financial sector. They are specialized market players licensed to mobilize savings in financial assets and to enhance access to capital markets by small investors. As noted by the Kenyan Capital Market Act Cap 485 A and also the Capital Markets (Collective Investment Schemes) Regulations, 2001 stipulate that Unit trusts are the small investor’s answer to achieving wide investment diversification without the need of prohibitive sums of money. According to the Security and Exchange Commission (SEC), the Investments and Securities Act (ISA) No. 29 of 2007 (Section 153) defines the Collective Investment Scheme as “a scheme in whatever form, including an open-ended investment company, in pursuance of which members of the public are invited or permitted to invest money or other assets in a portfolio, and in terms of which; two or more investors contribute money or other assets to and hold a participatory interest, the investors share the risk and benefit of investment in proportion to their participatory interest in a portfolio of a scheme or on any other basis determined in the deed, but not a collective investment scheme authorised by any other Act”.

In its development strategy, Nigeria strives to become a regional financial hub with vibrant, efficient and globally competitive financial system to drive savings and investments. This, it is believed, will lead to a high and sustainable, but also broad-based economic growth. There is growing recognition in the current body of knowledge that increasing access to financial services has both private and social benefits. In addition to enhancing efficiency and stability therefore, Vision 2030 identifies the need to increase access to affordable financial services and products for a wider section of Nigerians, particularly poor, low-income households and micro-, small- and medium- scale enterprises (MSMEs). Poor and low-income households in informal urban settlements, small and micro-level businesses, rural areas, and women are therefore prioritized in the new vision for financial sector development (Finaccess, 2009).

Collective Investment Scheme facilitates the transformation of social capital into economic capital aimed at creating a framework within which communities could form schemes and mobilize savings from within themselves (Bebbington, 1999). The members of the schemes utilize their saved incomes to prudently invest in productive ventures in various sectors such as small-scale businesses and agricultural production. To be effective, Collective Investment Scheme creates entrepreneurship culture among members of primary schemes in micro businesses and agribusiness, thus making the rural poor more productive in generating income and eventually more likely to save. Wealth creation and poverty reduction have been proposed as effective antidotes to poverty. While the former may be described as preventive, the latter is more curative. Investment is a key player in wealth creation and one of the channels through which wealth can be created is mutual fund investment.

Collective Investment Schemes also provide diversification, divisibility, low transaction costs, access to a broader array of assets and professional management for the individual investor, factors that have propelled their popularity in the past decades, according to Saraoglu and Detlzer (2002).The Mission of Collective Investment Schemes is to sustainably empower ordinary Nigerian through member-owned investment schemes. In order to achieve its mission, activities are drawn based on the long-term objectives such as building culture of saving and investment amongst indigenous Nigerian to create opportunities for urban and rural communities to access financial and market services; to create an entrepreneurial culture and develop small businesses management skills among beneficiaries (Frank, 2013).


As evidenced in most African countries, creating viable financial institutions in rural Nigeria is challenging. The majority of the rural population lives below the poverty line. The overall macroeconomic condition is not conducive to such development. Poverty affects rural Nigeria more than urban areas. The key constraints on capital are the absence of mobilization of local savings and lack of access to credit. There is low rate of access to credits, between 9% and 16%, attributed to inadequate number of microfinance service providers and underdeveloped infrastructure, which result in the high cost of credit service delivery (Tsegaye, 2003).

Lack of clarity over the objective of Collective Investment scheme among the local authorities and politicians has created an environment of uncertainty that has led to collapse of many Collective Investment scheme. This is coupled with the fact that the development of microfinance institutions (MFIs) in Nigeria is in its infancy stage. The existing formal or informal financial institutions do not yet serve the rural poor. The few microfinance institutions, which have been introduced by government with support from development partners, and some NGOs have also been concentrated in urban and semi-urban areas. The savings and credit schemes and micro-credit institutions have not reached the rural poor for reasons such as high risk, high cost of service and a narrow market (Kishindo, 2000). The country’s two major commercial banks closed virtually all mobile banking units and many rural branches in response to liberalization and nationalization.

In an informal study by the researcher, it was found out that there exist many people who are willing to commit part of their income to invest but are not sure how to go about it. There are other people who earn regular income and capable of saving part of their income for investment yet they do not have the motivation to do so. There are yet other group of people, who have the excess money to invest, are aware about various investment vehicle but do not have the time to approach investment companies to strike a deal. It is against this background that I decided to have an extensive research to find out if investment in collective investment schemes can enhance wealth creation amongst low income earners.

There are no in-depth studies on the assessment of impact of collective investment initiative activities on households’ income and credit. Therefore, this study will fill the gap and make a contribution to policy recommendations as regards the rural financial services development, credit institutions accessibility to rural poor and introduction of savings groups among the rural poor.  The government intends to expand program and already supports some rural people through the Local Development Fund that is being disbursed into these Collective Investment groups through the district councils. For this case, the study is aim at studying the impact of collective investment scheme on low income earners in Nigeria.


The underlying objective of the study will be to assess the influence of collective investment activities on low income earners. This has been done first by exploring the theory behind investment portfolio, and specifically the collective investment portfolio, to establish how it significantly contributes to wealth creation amongst low income earners.

The specific objectives of the study are as follows:

  1. To identify the extent to which collective investment scheme has gained popularity amongst low-income earners’ in Nigeria
  2. To determine the impact of collective Investment activities on incomes for low income earners’
  • To find out the strategies of improving low income earners’ income.


The study will address the following questions:

  1. What is the extent to which collective investment scheme has gained popularity amongst low-income earners’in Nigeria within Yaba local council development area in Lagos state?
  2. What is the impact of collective investment activities on income of low income earners?
  3. What are the strategies of improving low income earners income?

The study test the following null hypotheses

Ho1; There is no significant relationship between low income earners’ knowledge and awareness of collective investment schemes and their participation in Collective Investment Scheme

Ho2; There is no significant difference between Collective Investment Scheme and Income of low income earners


The study will be focused on the Influence of collective investment scheme on low income earners. The confines of the research will however be restricted to households, members and non-members of the Collective Investment Scheme in Yaba local council development area (LCDA) of Lagos Mainland Local Government Area, Lagos Nigeria. Yaba was chosen because it inhabits people from varied backgrounds. Respondents from the formal and informal sectors can easily be accessed. Geographically, the LCDA consists of urban and rural communities, therefore results from the study would show a true picture of what exist in reality and it will be convenient due the cost of moving from one location to another. Yaba was also selected because the researcher is conversant with the location.

Again, the specified age bracket (18 to 50) is chosen because that range represents the active workforce; whose investment can cover relatively longer periods before attaining the compulsory retiring age of sixty (60) for Nigerian workers.


The practical way of providing financial services to the rural poor is through rejuvenating and creating more of community-based investment vehicles that focus on the participation of the poor, especially poor women. According to the MASAF findings (Tsegaye, 2003), the poor are eager and determined to save if the opportunity is made available. They can be organized and take leadership. They require more guidance, training and financial development assistance than the urban and semi-urban MFI clients do, but they offer the advantage that they can easily be mobilized into groups that are able to give loans to people in their own communities and recover the money with interest. Such intervention requires long-term institutional and financial support. Small, poor communities cannot become sustainable in a short period due to their small size, low absorptive capacity, high illiteracy and lack of exposure to the MFIs best practices (Kishindo, 2001).

The findings will also assist the communities in the study area to know their stand in terms of the extent to which the collective investment schemes operating in their area, contribute towards the promotion of saving culture among the communities through the investments idle funds  which are always used up in social and cultural practices such as funerals, naming ceremonies, marriage ceremonies and fund raising activities in religious organizations, thereby putting pressure in the resources of the low income earners. To avoid being referred to as not sociable, some people grudgingly accept invitation to such function and are forced to make donations which were not budgeted for and sometimes pledge to make cash donations at a later date. This whittles away the resources of such people. The communities will be able to establish whether participation in collective investment schemes increases their savings, hence income levels.

There are many institutional and organizational arrangements that encourage delivery of financial products to promote investments in rural communities.  As a good number of Nigerians are financially illiterates, the study’s focus and its findings will assist to sensitize the communities whether these collective investment schemes are having good practices to move rural communities out of poverty. This will finally call for deliberate government policy and strategies to mobilize savings including from rural poor households in the study area to increase resources for investment building on the study findings as the basis.

The finding of the study are to create awareness of availability of investment vehicles through which people can pursue to create wealth and hence reduce poverty in the economy. Without conscious efforts by the employed and even the unemployed alike, it would be difficult to get money to invest.

The findings would help readers to cultivate the habit of creating surplus funds for investment purposes. It would also be useful to investment managers to improve upon their services as it would help them know what investment and potential investors require from their managers.

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