Government shuns N1.06trn pension fund for infrastructure financing

By ABDUL OLALEKAN

Despite the clamour for fund by the federal and some state governments to fix infrastructural deficits in the country, States and Federal Government have yet to utilise N1.06 trillion set aside for infrastructure finance in the N5.3 trillion pension funds, Business 247 can authoritatively reveal.

The financial crisis in the country has hit the Federal Government and most states in the country very hard that they have little for funding infrastructural development. While some states have sought for funding in the domestic market, others are seeking for bailout from foreign agencies, yet N1.06 trillion is lying fallow in the domestic market yet to be deployed.

Of the N1.06 trillion available for infrastructure finance, investigation revealed that only N1.36 billion was borrowed by the two levels of government.

Confirming this development in a memorandum submitted by the National Pension Commission, (PenCom) to the House of Representatives’ Committee on Pensions at the public hearing in Abuja on the need to invest pension funds to meet Nigeria’s infrastructural challenges, PenCom attributed the development to non-availability of investment instruments that qualified for pension investment as stipulated in the Investment Regulations issued by the commission.

PenCom said currently that all pension funds’ assets were invested in various approved assets classes within the limits allowed by the Investment Regulations.

Over 66 percent of the pension assets, it said, were invested in federal government securities.

On the other hand, investment in equities and money market securities were moderate at 11.05 percent and 10.58 percent respectively, adding that no pension assets under the Contributory Pension Scheme (CPS) was un-invested or ‘lying idle’ in any bank account in Nigeria.

According to PenCom, “For the pension funds, it will generate consistent streams of income and relatively higher/above-inflation returns. For the contributor, it will provide a platform for employment creation and sustenance as well as improved standard of living for the citizens.”

It added: “In the light of the statutory and regulatory framework for investment of pension fund assets, there is an urgent need to refocus the discussion to a call for development of bankable/eligible infrastructure financing structure in Nigeria that can attract pension fund and other institutional investments.”

Thus, it said, in order to attract pension funds investment, infrastructure projects in Nigeria must be shown to be commercially viable and self-financing.

“The bid/concession processes for the projects must also be open and transparent. There must also be a cover against political risk, to be provided by the Federal Government and/or Multilateral Finance Institutions e.g. IFC/World Bank, AfDB, and so on,” it pointed out.

Speaking to Business247 on this development earlier, the Chairman, Pension Funds Operators of Nigeria (PenOp), Mr. Eguarekhide Longe, said its members were ready to invest in infrastructural bonds whenever the government decides to float them to finance key developmental projects.

He promised that the pension fund managers were ready to engage with government to expand the economic space though it is not their primary objective.  He added that, Nigerians, who contributes to the fund, deserve to live in good homes, drive on good roads, take their children to good schools, and have good healthcare.

He pointed out that the managers would be happy to finance those amenities, but that, care must be taken not to invest pension fund in a project that will not regenerate it, saying, ‘if you put pension fund in a project that does not regenerate it, the money is gone and in many cases, as we have found, the project has not been delivered because it was not properly conceived.’

“We have the money, the orientation to invest, we have spoken to government, we have meetings with the ministry of finance, where we have defined what can be done and that meeting also has investment professionals in it and we have already communicated what we inclined to do and explained the investment guidelines to the minister and investment banking community. We are not sitting on the sideline, waiting for them to come back to us. We have constantly mounts pressure on them to bring the products”. He said.

Equities gain N19bn

The Nigerian Stock Exchange All Share Index (NSE ASI) and the Market Capitalization appreciated by 0.41 per cent, while the Year-to-Date return stood at -6.56. The market recorded a gain of N19 billion in the day trading.

The All Share Index closed at 26,763.86 against the previous close of 26,655.48 while Market Capitalization closed at ₦9.192 trillion against previous close of ₦9.173 trillion.

Volume traded increased by 69.38 per cent from 396.030 million to 670.804 million, while the total value of stock traded decreased by 22.59 per cent from ₦2.658 billion to ₦2.057 billion in 3,976 deals.

The Financial Services sector led the activity chart with 590.853 million shares exchanged for ₦1.583 billion. Conglomerates came next with 48.131 million shares traded for ₦0.059 billion, Oil And Gas, Consumer Goods, Agriculture sectors followed in that order on the activity chart.

Wemabank, Diamondbnk, Transcorp, Zenithbank and UBA were the most active stocks by volume. Afriprud, UAC-PROP, Zenithbank, Continsure and Johnholt emerged the highest price gainers on the chart, while Tigerbrands, Skyebank, Champion, Flourmill and Vitafoam topped the losers chart.