De­ploy­ing idle pen­sion funds

Daily Trust - - OPINION -

The short­age of crit­i­cal de­vel­op­ment in­fra­struc­ture in the coun­try is of­ten at­trib­uted to lack of funds. It is for this rea­son that we welcome the open­ing of a new win­dow of op­por­tu­nity for ac­cess to funds that could fi­nance the de­vel­op­ment of key in­fra­struc­ture in Nige­ria.

Di­rec­tor Gen­eral of the Na­tional Pen­sion Com­mis­sion (PenCom) Mrs. Chinelo Anohu- Amazu opened this win­dow when she said only N156 bil­lion out of N3.95 tril­lion in­vestible funds ac­cu­mu­lated from the Con­trib­u­tory Pen­sion Scheme (CPS) has thus far been uti­lized. That means as much as N3.77 tril­lion is still idle. For­tu­nately, the Pen­sion Re­form Act 2014 (PRA 2014) ac­tu­ally pro­vides for de­ploy­ing idle pen­sion funds into vi­able long term in­fras­truc­tural projects.

The PenCom di­rec­tor gen­eral was speak­ing dur­ing a visit to the Nige­ria Stock Ex­change (NSE) where she called for col­lab­o­ra­tion be­tween the com­mis­sion and the ex­change. The col­lab­o­ra­tion is ex­pected to among other spinoffs, ex­pand and deepen the NSE. Ac­cord­ing to the DG PenCom, the PRA 2014 ac­tu­ally au­tho­rizes the de­ploy­ment of idle pen­sion funds into the de­vel­op­ment of in­fra­struc­ture and hous­ing through prop­erly pack­aged bonds and other in­stru­ments. How­ever any such al­low­able in­stru­ment needs to be struc­tured and traded on the plat­form of a Stock Ex­change that is li­censed or rec­og­nized by the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC), as well as Money Mar­ket Plat­forms rec­og­nized by the Cen­tral Bank of Nige­ria, CBN.

This pro­vi­sion is in­tended to serve two pur­poses. First, it is in­tended to bridge the huge gap be­tween need and avail­abil­ity of in­fra­struc­ture and hous­ing in Nige­ria. Se­condly it is to fa­cil­i­tate the dis­burse­ment of such funds in a safe and or­ga­nized man­ner with min­i­mum risk to such funds. In the light of the fore­go­ing PenCom said it has is­sued reg­u­la­tions in re­spect of In­vest­ment of Pen­sion Funds As­sets to guide and ad­vance how such re­sources should be in­vested. It also said it would is­sue more guide­lines as the need arises. Un­til now pen­sion funds have been in­vested mostly in tra­di­tional op­tions such as Fed­eral Gov­ern­ment se­cu­ri­ties, eq­ui­ties, Money Mar­ket In­stru­ments and Cor­po­rate Debts. The im­pact of these in­vest­ment ven­tures on the public sec­tor has been lim­ited as they are mainly di­rected by pri­vate sec­tor in­ter­ests.

The sig­nif­i­cance of the dis­clo­sure by Mrs. Anohu-Amazu draws from the prom­ise of­fered the coun­try in the vi­a­bil­ity of a huge win­dow of in­vestible funds which can change the in­fras­truc­tural and hous­ing land­scape of the coun­try. Avail­able sta­tis­tics even put her fig­ure as con­ser­va­tive given that the new pen­sion sys­tem cur­rently cov­ers only five per­cent of Nige­rian work­ers. The im­pli­ca­tion is that as much as N30 tril­lion is re­al­iz­able for in­fras­truc­tural and hous­ing de­vel­op­ment if the CPS is ex­panded to in­clude work­ers in the econ­omy’s in­for­mal sec­tor. The PRA 2014 pro­vides that firms with as few as three em­ploy­ees could en­roll their work­ers in the scheme. With such an ex­pan­sive reach the CPS will cap­ture mil­lions of po­ten­tial pen­sion­ers in its bas­ket.

Be­yond the avail­abil­ity of in­vestible funds through the CPS win­dow is the is­sue of sub­ject­ing ac­cess to such funds to the rig­or­ous terms and con­di­tions of the stock ex­change and other es­tab­lished fi­nan­cial plat­forms. That sit­u­a­tion is ap­pro­pri­ate for the pro­tec­tion of pen­sion funds from un­scrupu­lous pro­cesses of dis­burse­ment. As the prop­erty of ben­e­fi­cia­ries for whom such is kept for reg­u­lated and pro­grammed re­lease at de­fined pe­ri­ods in fu­ture, pen­sion funds must en­joy strict su­per­vi­sion in their man­age­ment.

While the ini­tia­tive by PenCom is com­mend­able, the task still re­mains for it to en­gage in in­creased ad­vo­cacy with re­spect to in­duc­ing prospec­tive stake­hold­ers in in­fra­struc­ture and hous­ing de­vel­op­ment to ac­cess the funds. The stake­hold­ers un­der con­sid­er­a­tion in­clude the fed­eral, state and lo­cal gov­ern­ments who are vested with the re­spon­si­bil­ity of de­vel­op­ing in­fra­struc­ture within their statu­tory ju­ris­dic­tions. Other stake­hold­ers are hous­ing de­vel­op­ment agen­cies in the public and pri­vate sec­tors of the econ­omy. A big fi­nan­cial win­dow has opened to fi­nance key de­vel­op­ment projects in Nige­ria. We must seize upon it.

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.