The National Pension Commission on Wednesday said that out of the N1.16tn pension fund assets available for investment in infrastructure, only N1.36bn had so far been invested in infrastructure bonds.
This, according to the commission, leaves about N1.159tn idle and unable to be invested in the provision of critical infrastructural projects.
The Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, gave this figure during a presentation to the House Committee on Pensions at the public hearing on the need to invest pension funds to meet Nigeria’s infrastructural challenges.
In her presentation, a copy of which was made available to our correspondent, the DG said the inability to get instruments to invest the amount had been a problem.
Anohu-Amazu said while the regulations allowed for investment of pension fund assets in infrastructure through infrastructure bonds, the commission had yet to find viable instruments through which to channel the funds.
She said, “The investment regulations allow for investment in infrastructure through infrastructure bonds and infrastructure funds. However, despite the availability of about N1.16tn for infrastructure financing, only N1.36bn had been taken as of December 31, 2015, leaving about N1.159tn untapped.
“This is largely due to the non-availability of investment instruments that qualify for pension investment as stipulated in the investment regulations issued by the commission.”
The DG stated that the country’s infrastructure deficit, which currently stands at about N23tn, was a matter of concern to the government as it would be difficult to address with budgetary allocations alone.
She explained that while the Federal Government’s budget offered limited funds for infrastructure development due to competing demands, the long-term financing market was also underdeveloped, shallow and offered limited capital for deployment to develop infrastructure.
Anohu-Amazu said, “Capital provided by pension funds, which are long-term obligations, are best suited to address the need for long-term financing instruments that have maturities commensurate with the long-term nature of infrastructure projects.
“Indeed, several countries in Europe, North and Latin America as well as Africa have successfully utilised part of the accumulated pension funds by investing in new infrastructure projects or renewing dilapidated ones.
“It is, therefore, understandable that given the infrastructure deficit in Nigeria, pension funds need to be mobilised for investment in such projects.”
On how much has been contributed into the pension funds, the Pencom DG said the value of the assets stood at about N5.3tn.
The funds, according to her, have been invested in various approved assets classes within the limits allowed by the investment regulations.
For instance, she said 66 per cent of the pension assets were invested in Federal Government securities, while investment in equities and money market securities were moderate at 11.05 per cent and 10.58 per cent, respectively.