Nigeria's pension industry survey

Nigeria's pension industry has shown strong growth despite the macroeconomic headwinds experienced in 2016. According to a report by Agusto & Co., the industry's assets under management grew by 16 percent, one percent higher than the growth recorded in 2015. Analyst Chuks Onyemachi from Agusto & Co. highlighted the key factors driving this growth and shared insights on the industry's future prospects. The report reveals that the growth in the pension industry was primarily driven by increased investments in fixed income securities, particularly in federal government securities. This trend is expected to continue in 2017, with the industry projected to grow by around 16 percent. The strong performance of the equity market has also led to an increase in exposure to equities by pension fund administrators (PFAs). The implementation of a multi-fund structure has allowed PFAs to diversify their investments and manage volatility. Despite the positive outlook for the industry, challenges such as low awareness of the transfer window service persist. The transfer window, which is set to open in H1 2018, aims to enhance account holders' ability to switch PFAs. However, limited awareness among account holders has hindered the uptake of this service. To address this, PFAs are expected to ramp up marketing efforts and emphasize the benefits of transferring accounts. The dominance of a few key players in the industry, with three PFAs controlling over 50 percent of the market, raises regulatory concerns. While consolidation could facilitate easier oversight, it also raises questions about competition and market dynamics. Despite these challenges, Nigeria's pension industry remains largely untapped, with significant room for growth. With a population of over 180 million and assets under management valued at $20.2 billion, the industry has the potential to expand further and meet the needs of a growing client base.