June 13, 2024
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By Emmanuel Akinmole

The National Pension Commission (PenCom) said as of March this year that N19.27 trillion out of the N19.67 trillion pension fund assets has been invested into different portfolios, leaving N396.30 billion uninvested cash and assets in the kitties of Pension Fund Operators (PFOs) in the country.

The commission also said that N12.20 trillion was invested in Federal Government securities.

Among other investments are the government bonds gulped N11.46 trillion; treasury bills, N407.62 billion; agency bonds, N26.26 billion; Sukuk bonds, N127.24 billion and green bonds, N176.82 billion.

Observers are worried about where the federal government hopes to get the anticipated infrastructure investments as over 80 per cent of pension fund assets have been invested in its securities.

The Finance Minister and Coordinating Minister of the Economy, Wale Edun, had yesterday told State House correspondents after a two-day Federal Executive Council (FEC) meeting presided over by President Bola Tinubu at the Presidential Villa in Abuja, that the federal government is making a move to rev up economic growth by unlocking N20 trillion from the nation’s pension funds to finance critical infrastructure projects across the country.

He said the initiative forms a key part of Tinubu’s broader reforms to stabilize the economy amid high inflation and interest rates.

To this end, he said the government would collaborate closely with private sector players to tap into the over N20 trillion pool of long-term funds available with Nigeria’s pension, life insurance, and investment funds.

The Minister said, “One of the key drivers of economic growth is investment in infrastructure, in housing, power, rail, roads, water transport, even technology.

“These are key drivers of economic growth, they increase product when you invest in them, you get increased productivity, you get economic growth, and you get job creation, which reduces poverty.

“And that is the strategy, so it’s two-pronged and we’re not pivoting towards this all-important growth and you say where were the resources coming from? Nigeria is resilient, Nigerians are resilient.

“And the fact is that even before we start looking to foreign investors, we start looking to foreign funding, there is available in Nigeria, long-term funds to fund infrastructure projects, and it’s within the pension.

“The life insurance and investment fund industry. Generally, there are offers of 20 trillion Naira available, or much of it is in short-term funding that doesn’t need to be quite sure money is long-term. People save over their lifetime for their pension.

“And so in conversation, in consultation, collaboration, and, cooperation with the private sector, we are now able to announce and with the full knowledge and support of all parties, that there will be an initiative to fund growth through investment in infrastructure, including housing provision of mortgages, long term mortgages, 25 year25-year mortgages at relatively low interest rates.

“Initially, of course, the government will standby to provide some support, particularly in this era of high interest rates but eventually as interest rates come down, there should be less room for the government through providing, for example, guarantees and so forth.”

He said this large corpus will be deployed to finance housing, power plants, rail, highways, and cutting-edge technology infrastructure.

The model envisions the government providing enablers like guarantees initially to facilitate affordable 25-year mortgages at low interest rates.

While drawing on domestic savings was the immediate focus, the initiative is expected to attract foreign investment interest over time by demonstrating Nigeria’s commitment to infrastructure development.

The Finance Minister exuded confidence, stating that: “The best minds have committed to realising this ambitious vision that leverages our resources to build a prosperous future.”

Meanwhile, the former Vice President, Atiku Abubakar, has condemned the government’s move over the proposed plan to use Nigerians’ pension fund to finance critical infrastructure projects.

In a post on X recently, Atiku asked the government to halt the plan and explore more creative ways to raise capital for infrastructure projects.

This comes after the Finance and Coordinating Minister of Economy,

Wale Edun, unveiled a strategic plan to deploy the ₦20 trillion pension fund and other locally available resources for Nigeria’s infrastructure development.

He made this known while speaking after a two-day Federal Executive Council session chaired by President Bola Tinubu at the Presidential Villa on Tuesday.

The minister described the plan as a significant step towards driving economic progress and addressing critical infrastructure needs.

However, Atiku cautioned that the plan to use part of the pension funds to finance critical infrastructure projects could lead to disastrous consequences.

He also stressed that the decision could have devastating effects on the lives of Nigerians who worked hard to save their money with the hope of enjoying their pension after retirement from service.

“My attention is drawn to a disturbing disclosure by the finance minister and coordinating minister of the economy, Wale Edun, as he addressed state house correspondents after the federal executive council (FEC) meeting at the presidential villa on Tuesday, 14 May.

“There is, according to the minister, a move by the federal government to rev up economic growth by unlocking ₦20 trillion from the nation’s pension funds and other funds to finance critical infrastructure projects across the country.

“The minister has indicated that although “the initiative is expected to attract foreign investment interest over time”, domestic savings are his ‘immediate focus’ for now.

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