The devaluation of the naira has led to a significant decline of 45.18% in the dollar value of pension funds in Nigeria. Data obtained from the National Pension Commission’s website revealed that the net asset value of pension funds was N17.35 trillion as of September, equivalent to $19.83 billion when converted using the official exchange rate of 874.71/$ on Wednesday.
Before the devaluation in mid-June, the pension funds were valued at N16.76 trillion in June, corresponding to $36.17 billion in dollar terms using the exchange rate of 463.38/$ on June 9. The devaluation occurred when the Central Bank of Nigeria unified the country’s exchange rates, collapsing segments of the foreign exchange market into the Investors and Exporters window, renamed the Nigerian Autonomous Foreign Exchange Rate Fixing window.
Despite efforts by the government to strengthen the naira, it has been struggling against the dollar. The Central Bank of Nigeria initiated measures to clear forex backlogs in banks this month to boost investor confidence. The forex rate harmonization was a result of President Bola Tinubu’s call to unify the country’s exchange rate.
The devaluation, coupled with accelerating inflation, has eroded the value of pension funds. Inflation stood at 22.79% in June and increased to 26.72% in September. Abdulqadir Dahiru, the Head of the Corporate Communications Department at PenCom, acknowledged the impact of devaluation on pension funds and the broader economy. He highlighted that inflation and devaluation affect everyone and emphasized that pension funds are invested in various instruments, providing some resilience amid economic challenges.
