The Pension Funds Administrators, PFAs, have invested N300.98bn of the total assets under the Contributory Pension Scheme in the infrastructure and real estate properties as of the end of November.
The National Pension Commission (PenCom) disclosed this in its unaudited report on pension fund portfolio, which was obtained by Biz Watch Nigeria on Thursday.
This amount represented 2.45 per cent of the total pension fund available on the contributory pension scheme.
According to the report, the total funds under the CPS stood at N12.29tn during the period under review.
Out of the total investment, N85.31bn was invested in Real Estate Investment Trusts (REITS); N158.6bn in real estate; and N57.07bn in infrastructure funds,
Other investment portfolios where the operators invested the funds are, government securities, private equity funds, mutual funds, commercial papers, bank investment and other assets.
Out of all the investment categories, government securities are regarded as risk-free investment and are usually issued by the Central Bank of Nigeria on behalf of the Federal Government of Nigeria.
READ ALSO: Insurance Companies Should Embrace Automated Marketing – NAICOM
PenCom said any infrastructure project where funds from the Contributory Pension Scheme (CPS) would be invested must satisfy its stipulated criteria.
The agency noted that pension funds remained a potential source of private financing to fund infrastructure in Nigeria, but that the funds could only be invested indirectly through structured instruments, such as bonds and funds.
The Head, Investment Supervision Department, PenCom, Ehimeme Ohioma, made this known recently during his presentation on ‘Pension funds for Economic Development: Investing pension funds in infrastructure.’
He said, “It must be commercially viable and self-financing – generate cash flows to repay itself overtime; and bid/concession processes must be open and transparent.”
“Investment in infrastructure would be beneficial to Nigeria and its citizens as adequate infrastructure development would improve the standard, create and sustain employment, promote entrepreneurship, enhance returns on pension fund investments as well as increase the pool of pension savings for economic development.
The current stock of infrastructure was inadequate to support the present and future socio-economic needs of the country, including the imperative to diversify the economy away from oil.
According to him, there must be availability of bankable (commercially viable) projects; full repayment guarantee by the Federal Government, especially in the early stages of projects financing; and strong political will and consistency in formulation of policies to retain investors’ confidence.
He added that there must be open and transparent transaction procedures and processes, in terms of bidding process, contractors’ selection, pricing, among others.
