Infracredit, Crusader Sterling see huge potential driving infrastructure growth with pensions

Experts at Businessday’s conference held on Tuesday spoke glowingly on the potential of the pension industry to innovate and impact change needed in the country’s infrastructure space.

They believe that this could be more if the industry coverage is expanded to explore populations in the informal sector, which is expected will push total pension assets under management to around N20 trillion in the next few years.

Nigeria’s pension industry has N11.35 trillion in assets but that’s only 7 percent of GDP which is lower than the Sub-saharan Africa average of 15 percent. This shows the untapped potential of the sector.

There were only 9.10 million Retirement Savings Account (RSA) holders at the end October 2020, according to data by Pencom. That’s less than a quarter of Nigeria’s workforce.

Chibuike Azubuike, CEO, Infracredit who was a panel discussant on the theme: ‘Viable Investment Options for Nigeria Pension Funds- Opportunities and Challenges’, reviewed the objective of setting up Infracredit in 2017, that it was meant to drive allocating of funding from domestic capital in pension and insurance sectors for infrastructure asset classes.

Azubuike said a lot has been achieved with its equity debt raised from the pension industry few years ago, pointing out that pension industry has the capacity to drive innovation and impact change in infrastructures space.

There is huge potential in leveraging pension’s funds to allocate funding to an asset class that ordinarily did not have the trust and confidence of domestic investors, but stated however that governance and best practice was key in driving pension funds, and for achieving sustainable growth in the economy.

Azubuike said we will access more funding soon, but it will be driven by available projects.

Azubuike said further that infrastructural development in Nigeria can deliver three key pillars of the sustainable development goal, which are economy, environment and social sustainability.

“Nigeria invests about 30 percent of GDP in infrastructure compared to 70 percent in peer countries. We need at least 2 trillion to 3 trillion annually over the next 30 years to increase infrastructural development. But the focus should be more on governance, type of asset and sustainability. The government must also play its role by creating an enabling environment, he said

Adeniyi Falade, managing director, Crusader Sterling Pensions who reviewed key achievements of the pension scheme since inception 16 years ago, said more could be achieved if the micropension space is rejiged to work.

Falade said if the scheme could be reworked and remodeled then, that will be the game changer that will bring the funds under management to tune of over N20 trillion in the next few years.

According to him, out of 85 million workforce, only a little over 9 million is captured meaning that a lot of potential is untapped as over 70 percent of the population is in the informal sector.

He said that some of the identified inadequacies including lack of trust, irregular contributions need to be dealt with by all stakeholders. And have to bring the trust by bringing a new approach, he said.