Over N3 trillion investible pension fund with the potential to unlock the nation’s economy has remained untapped, the Director-General, National Pension Commission (PenCom), Mrs Chinelo Anohu-Amazu, has said.
Mrs. Anohu-Amazu, who spoke at the 17th annual lecture of the Catholic Brothers United (CBU) in Lagos, in a presentation titled: Pension Fund as a Catalyst for Economic Development, regreted that despite the availability of about N861 billion (15 per cent) of the total N5.74 trillion total pension fund assets for infrastructure bonds, the fund has remained untapped due to the non-availability of investible instruments in the market.
She said there was only 0.03 per cent investment in infrastructure funds leaving a huge untapped financing prospect, adding that like other emerging economies, Nigeria has invested over 69 per cent of the pension fund in government securities.
She said investment in equities and money market securities were moderate at 11.54 per cent and 8.66 per cent respectively as at the second quarter of this year, she added.
Stressing the need for urgent diversification of the economy away from oil in view of current volatility in the global energy market, the PenCom chief lamented that non utilisation of the fund places the country at a competitive disadvantage internationally, particularly with paucity of long term financing, which is a critical factor.
She posited that in order to support economic development, it is fundamental that the pension fund is diversified to include investment in identifiable infrastructure, real estate and other key aspects of the real economy. The PenCom chief urged both the corporate and pension industry strategies to design initiatives and activities that would increase investment in infrastructure and other alternative assets from the four per cent in 2014 to 40 per cent by the end of 2019.
She said: “Similarly, with the recent clamour for private sector participation in infrastructural development to inspire the real sector, it is clear that private finance is essentially needed to supplement government’s finite financial resources.
“In line with global best practices, pension funds are a veritable source of private financing for infrastructure development. The Commission had over the years, through its regulation on pension investment, developed a portfolio mix that will catalyse funds from other asset classes to corporate debt securities, private equity and infrastructure bonds and funds to stimulate investments in infrastructure, agriculture, transportation, housing, power and sanitation, and real sector development.
“The Commission is currently finalising a review of the Investment Regulation so as to ensure a sustainable deployment of pension funds for infrastructure developments. “The untapped potential for pension fund investments that will unlock the diversification of the Nigeria economy is over N3 trillion.
“The untapped opportunities and the creative efforts of the pension industry has formed a niche for engaging the relevant stakeholders both from the public and private sectors, particularly the Ministry of Works, Power and Housing to build a synergy towards developing the Nigerian infrastructure as a veritable step towards economic diversification.”
On the pension industry outlook, she said the Commission, in collaboration with its industry stakeholders has sought to further advance its notable achievements and drive the deployment of the pension assets for economic development.
She said corporate and industry strategies were developed to refocus the industry towards achieving this noble objective. Both strategies are focused on delivering safer and broader investment portfolio, positive real returns and visible impact on the economy, while consistently achieving excellence in service delivery, she added.
Source: The Nation