• Offshore investment could leave young generation financially bankrupt
• ISA 2025 fails to fully address trading risks, experts warn
• FG urged to establish ties with key foreign regulators to combat cross-border fraud
• Bamboo, others fueling global retail investment surge
Despite an estimated N7 trillion already lost to fraudulent schemes, an increasing number of Nigerian youths continue to pour their money into foreign investment apps, shunning the N85 trillion Nigerian stock market.
Experts warned that the growing trend exposes young investors to unprecedented risks, as many of the offshore platforms operate beneath the protective reach of Nigerian law.
Driven by the desire for instant transactions and the flexibility that traditional exchanges like the Nigerian Exchange Group (NGX) do not offer, tech-savvy investors are flocking to apps granting access to the United States, China as well as cryptocurrency markets.
The trend underscores a widening digital divide between Nigeria’s domestic capital market and the new, borderless financial world for which younger Nigerians have shown preference.
Experts cautioned that unless critical issues surrounding cross-border investments, fintech oversight and whistleblower protections are urgently addressed, Nigeria could suffer a financial catastrophe.
Many young investors, enticed by the promise of quick profits, are stepping into a high-risk environment that could leave a generation financially bankrupt, they warned.
The experts argued that Nigeria’s capital market must evolve quickly in the face of a rapidly digitising world or risk losing an entire generation of investors to unregulated and often unsafe, digital platforms.
Although the new Investments and Securities Act (ISA) 2025 represents a major milestone in modernising Nigeria’s capital market laws, experts say it does not sufficiently address the intricate challenges of cross-border securities trading or establish solid frameworks for regulatory cooperation with foreign authorities.
As a result, foreign platforms offering securities or cryptocurrency schemes to Nigerians often escape SEC supervision, especially if they have no physical presence in the country.
This growing reliance on foreign investment platforms is creating dangerous loopholes. Despite extensive investor education campaigns by the SEC, many Nigerians continue to patronise the platforms, some of which are not different from Ponzi schemes.
The appeal of being able to buy and sell assets at the snap of a finger, a feature still unavailable on local exchanges, is irresistible to many young investors.
The consequences have already been devastating. Numerous cases have emerged of Nigerians losing their life savings to failed platforms and fraudulent ventures.
Apps such as Trove, Bamboo, Risevest, Chaka and Passfolio, as well as global cryptocurrency exchanges like Binance and Kraken, offer Nigerians direct access to foreign assets, sometimes through partnerships with foreign brokers and custodians.
Unfortunately, the arrangement places Nigerian users outside the safeguards of local regulations and far from the protections offered by entities such as the U.S. Securities Investor Protection Corporation (SIPC) or the U.K.’s Financial Services Compensation Scheme (FSCS).
The increasing popularity of cross-border investment opportunities is laying bare the deep regulatory void. If a foreign platform’s custodian collapses, Nigerian investors have little or no legal remedy.
Cybersecurity lapses and poor customer service are additional risks they must bear alone. The experts agree that unless Nigeria acts decisively, these losses will not only continue but may worsen as digital finance becomes even more entrenched.
A professor of finance and capital market at Nasarawa State University, Uche Uwaleke, emphasised the urgent need for Nigeria to establish bilateral or multilateral memoranda of understanding (MoUs) with key foreign regulators to improve oversight of digital trading and combat cross-border fraud.
He proposed that the SEC should mandate the registration of any foreign investment app seeking to serve Nigerian users.
Enforcement measures could include ordering Internet service providers (ISPs) to block access to non-compliant platforms and urging app stores to restrict app downloads within Nigeria while directing banks and payment processors to halt transactions linked to unauthorised platforms.
Uwaleke also pointed out that ISA 2025, though progressive, leaves gaps in its regulation of emerging financial technologies such as robo-advisors and algorithmic trading platforms.
Crucial areas such as fiduciary obligations of robo-advisors and mandatory disclosures on algorithmic risks remain unaddressed.
This could allow regulatory arbitrage between the SEC and the Central Bank of Nigeria (CBN), weakening the oversight needed for consumer protection.
To close these gaps, he advocated for the creation of a harmonised fintech regulatory framework, proposing a legally codified Fintech Regulatory Sandbox.
Managed by a cross-agency committee chaired by the SEC Director-General, the structure would enable safer innovation within Nigeria’s growing digital finance sector.
Another key vulnerability flagged by Uwaleke is the weakness of whistleblower protections under the new Act. Without robust legal safeguards and reward systems, insiders with knowledge of fraudulent activities are unlikely to come forward.
The result is a delayed detection of malpractices that can wreak havoc before regulators even notice.
Uwaleke also called for the establishment of a capital markets whistleblower framework, including secure reporting channels and attractive financial incentives, to encourage early warnings of wrongdoing.
Bamboo Co-founder, Yanmo Omorogbe, attributed the rapid growth of retail trading activities in global equity markets to the emergence of low-cost, accessible digital investment platforms like Bamboo.
At a panel at the AMEDA 2025 held in Lagos at the weekend, she emphasised that the surge in retail participation, particularly in the U.S. equity market, is not merely a fleeting global trend but a direct outcome of digital transformation and the democratisation of investing through platforms that lower traditional barriers.
According to Omorogbe, just two years ago, retail investors accounted for around 15 per cent of total equity market trading volume in the U.S., translating to approximately $1.5 billion in daily transactions.
This significant retail inflow, she explained, was largely facilitated by digital platforms offering cost-effective and user-friendly investment opportunities. “Many attributed it to a temporary global trend, but in truth, it was the advent of low-cost retail platforms like Bamboo that made broad-based market participation a reality,” she said.
This wave of retail investment is not confined to the United States alone. Omorogbe noted that Europe has witnessed a substantial increase in the number of ordinary citizens participating in equity markets.
In Belgium, for instance, retail investor penetration rose by 50 per cent between 2019 and 2021.
Meanwhile, in Asia, India has experienced an even more dramatic retail investment boom. The number of retail investors on India’s National Stock Exchange grew from just four million a decade ago to over 87 million as of January 2024.
Omorogbe underscored that these remarkable shifts are driven by the accessibility and affordability that digital platforms offer. “The rise in low-cost retail investment platforms has changed the landscape entirely. Platforms like Bamboo are at the heart of this movement,” she said.
Highlighting Bamboo’s impact on Nigeria’s investment culture, Omorogbe revealed that the majority of Bamboo users are first-time investors, many of whom had never previously considered participating in the stock market.
By offering direct access to both Nigerian and U.S. stocks through a simple mobile interface, Bamboo has opened new doors for Nigerians to invest globally without the traditional hurdles of high fees, complicated processes, or limited information.
The challenges facing Nigeria’s domestic market are compounded by its dwindling attractiveness to young investors.
Indeed, the number of young people who buy stocks has plummeted in the last decade. Figures show that only a very small percentage of this demography actively participates in stock market activities, despite years of stability recorded by the Nigerian Exchange.
The recent inflationary trends and persistent currency devaluation have worsened the situation, further compounding the woes of investors in traded equities. Additionally, the painful memories of the heavy losses their parents incurred during the 2008 financial crisis continue to haunt many young Nigerians, discouraging their participation in the formal stock market.
Against this backdrop, it has become imperative for traditional investment opportunities to be made more attractive to young investors.
Increasing the interests and returns accruable to investments like stocks, treasury bills, and bonds could serve as a powerful incentive for millennials and Generation Z to reconsider domestic financial instruments over risky foreign platforms.
Making the capital market more rewarding would be a key step towards reversing the disinterest currently seen among Nigeria’s younger population.
Professor Sherriffdeen Tella, an economist at Olabisi Onabanjo University, noted that Nigerian youths have developed a preference for quick returns, often opting for foreign digital assets and high-risk Ponzi schemes over the slow, steady gains associated with stock market investments.
According to him, the typical Nigerian investor tends to prioritize short-term profits over long-term financial planning, a trend more pronounced among younger generations.
Tella further argued that many young people are dissuaded by the complexity and perceived opacity of stock market operations.
Unlike banking products that are aggressively marketed and easy to understand, stock market investment requires more in-depth knowledge, which discourages participation.
He urged the SEC and market operators to ramp up public enlightenment efforts, making the capital market more accessible and attractive to younger investors.
Tella also stated that a clearer communication of the benefits, alongside improved returns on traditional investments such as treasury bills and bonds, could help lure youths back into the formal investment ecosystem.
