Chuks Udo Okonta
Accessing pension fund for infrastructural financing can be likened to the biblical saying that "it is easier for a camel to go through the eye of a needle..." this is owing to the stringent measures put in place to protect the fund.
Although pension operators believe the fund is money held in trust for workers, industry observers believe the stringent rules are capable of denying the public benefits accruable from good infrastructure and by extension continue to impact the pension scheme negatively as poor infrastructure put great burden on employers making it difficult for them to fulfill their obligations as required by the Pension Reform Act.
Section 5.2.3 of the Regulation on Investment of Pension Fund Assets outlines the investment criteria for pension fund investments in Infrastructure, as follows: the Infrastructure project shall be: Not less than N5billion in value and must be awarded to a concessionaire with a good track record through an open and transparent bidding process in accordance with the due process requirements set out in the Infrastructure Concession and Regulatory Commission (ICRC) Act and any regulation made pursuant thereto and certified by the Infrastructure Concession and Regulatory Commission (ICRC) and approved by the Federal Executive Council (FEC).
The regulation states that fund can only be invested in core infrastructure projects, whose business plans and financial projections indicate that they are viable as well as economically and financially rewarding for investment by pension funds.
It said the bonds or debt instruments issued to finance the infrastructure project shall in addition, have robust credit enhancements for example, Guarantees by the Federal Government or eligible bank! Development finance institution or MDFOs; Multilateral Development Finance Organisation for example, International Finance Corporation (IFC), African Development Bank (AfDB) and so on.
Continuing it said the value of the Infrastructure Fund shall not be less than N5billion, while the Infrastructure Fund shall have well defined and publicized investment objectives and strategy as well as disclosures of pricing of underlying assets, including any other necessary information. All annual financial statements of the Fund shall be audited by reputable firms of chartered accountants.
" Also, the Infrastructure Fund shall have satisfactory pre-defined liquidity/exit routes, and be managed by experienced Fund managers, versed in infrastructure financing and registered with the SEC as Fund Managers.
"A minimum of the 75 per cent of the Infrastructure Fund shall be invested in projects within Nigeria.The National Pension Commission and the licensed PFAs would ensure that the pension funds are only deployed into infrastructure projects that are safe and generate stable streams of revenue to adequately repay institutional investors, such as PFAs," it said.
Observers are of the belief that using part of the over N4.6 trillion pension assets to finance economic infrastructure will help jump-start the economic making it possible employers especially the envisaged informal sector to contribute and plan their future.
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