Pension Fund Administrators (PFAs) have channeled a total of N672.1 billion into various projects throughout the country as of September this year, according to information obtained by The Nation. These investments were made in accordance with the guidelines established by the National Pension Commission (PenCom).
A detailed breakdown of these funds shows that N261.79 billion was directed towards real estate investments, with N136.03 billion committed to infrastructure projects. An additional N154.76 billion was allocated to SUKUK Bonds, a crucial financial instrument that supports infrastructure development.
The PFAs also invested N98.55 billion in Green Bonds, reflecting a commitment to environmentally sustainable initiatives, and N20.97 billion went into Real Estate Investment Trusts (REITs), aligning with the strategy to bolster infrastructure financing.
Mrs. Aisha Dahir-Umar, the Director-General of PenCom, emphasized that these investments are intended to boost infrastructure development with pension funds playing a vital role. She pointed out that the Contributory Pension Scheme (CPS) has provided crucial support for the advancement of essential projects and has established pension funds as a viable alternative source of infrastructure funding.
Under the Pension Reform Act of 2014 (PRA 2014) and revised regulations on the investment of pension assets issued by PenCom, pension funds are permitted to invest in infrastructure assets. This includes various financial instruments and vehicles such as Infrastructure Funds, Real Estate Investment Trusts (REITs), Private Equity Funds, and SUKUK bonds.
The revised regulations also enable pension funds to invest in government-issued infrastructure bonds and SUKUK bonds, which contributes to financing infrastructure projects while offering stable returns for pension funds. The primary objectives of these investments are to ensure the safety and security of pension funds and maintain sufficient liquidity to meet pension obligations promptly.
Mrs. Dahir-Umar highlighted that pension funds have a long-term investment horizon and significant asset base, making them ideal partners for financing infrastructure projects. She also noted that, globally, countries are implementing reforms and policies to facilitate pension funds’ participation in infrastructure investments, contributing to economic growth and social progress.
However, she acknowledged that there are challenges in Nigeria, including concerns about long-term political commitment and uncertainties surrounding investment opportunities. To address these issues, PenCom is collaborating with relevant government agencies and the private sector to create a favorable environment for infrastructure investments.
In conclusion, Mrs. Dahir-Umar emphasized that the involvement of pension funds in infrastructure financing is a significant milestone in Nigeria’s journey toward economic prosperity. These investments are critical for closing the infrastructure finance gap, realizing essential projects, and fostering sustainable growth in the nation while safeguarding pension savings and delivering fair returns on investments.