Nigeria's pension assets hit ₦15trn in 2022

Data from the National Pension Commission shows that Nigeria's total pension funds assets grew by 1.5 trillion naira to 15 trillion naira in 2022 with RSA memberships reaching 9.9 million. Oguche Agudah, the CEO of Pension Funds Operators’ Association of Nigeria joins CNBC Africa to unpack this data.

Tue, 31 Jan 2023 12:28:01 GMT

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AI Generated Summary

The industry shows a commitment to investing in local debt while considering offshore opportunities, driven by regulatory requirements and market conditions.
Growing contributions pose a challenge in effectively investing pension funds, prompting a focus on traditional options like fixed income and equities, as well as expanding into alternative investments like infrastructure and real estate.
Infrastructure investments, particularly in power infrastructure, hold potential for pension funds, contingent on issuer credibility and alignment with fund risk profiles.

Nigeria's pension assets have hit a milestone in 2022, reaching ₦15 trillion, with RSA memberships nearing 10 million, according to data from the National Pension Commission. Oguche Agudah, CEO of the Pension Funds Operators' Association of Nigeria, shared insights into the investment landscape for pension funds in 2023. Agudah discussed the concerns surrounding local debt investments, which make up over 60% of pension fund assets. While there is some concern, the industry remains committed to investing in local currency debt, maintaining a balance between local and offshore markets. The CEO highlighted the growth in contributions, averaging 15% annually over the last five years. With a significant number of new contributors joining in 2022, the challenge lies in effectively investing these funds. Agudah emphasized the importance of exploring both traditional investments like fixed income and equities, as well as alternative investments such as infrastructure, private equity, and real estate. Regarding equity markets, Agudah explained that the limited stock options available for pension fund investments, coupled with the subdued performance of the economy, have influenced the cautious approach towards equities. The stringent regulatory requirements further restrict the universe of stocks available for investment by pension funds. Looking ahead to 2023, Agudah highlighted the ongoing product development efforts within the industry. Collaborations with various exchanges, issuers, and partners aim to enhance the range of investment products available to pension funds. The focus is on diversifying assets and exploring new opportunities in line with the evolving market landscape. Infrastructure investment emerged as a promising avenue for pension funds, particularly in sectors like power infrastructure. Agudah pointed out that the success of infrastructure investments hinges on issuer credibility, optimal structuring, and alignment with pension funds' risk profiles. While the potential for growth in infrastructure investments is evident, the approach will vary based on individual fund strategies and risk appetite. In conclusion, Agudah emphasized the importance of ongoing engagement and collaboration to drive innovation and expansion in the pension investment landscape. As the industry navigates challenges and explores new opportunities, strategic partnerships and product developments are set to shape the trajectory of pension fund investments in Nigeria.