Pension assets to hit N11trn in three years

By: Bukola Idowu, Agency Report

Nigeria’s pension industry is expected to triple its assets over the next three years to N11trillion ($70 billion) as the government targets small businesses to try to get more people into pension schemes, the industry regulator said on Wednesday.

According to the Head of Research at the National Pension Commission (PENCOM), Umaru Farouk Aminu, the commission was looking at how to attract more employees of small enterprises to the schemes.

He said 50 million people were employed in small businesses with up to four employees, everything from barber’s shops to small accountancy firms.

"We expect to triple (pension assets) in two or three years time by targeting small business sector," Aminu told Reuters in a telephone interview.

The country’s pension assets have grown from about $10 billion in the last eight years, split between four million retirement savings accounts. Aminu said pension assets stood at $23.5 billion at the end of September.

He said contributions currently were mainly from half of Nigeria’s 12 million people working for the government or big companies but there were untapped opportunities in the much bigger small business sector and some big challenges too.

"It is an unwieldy sector with no regular income and it’s difficult to track with no statistics on these people," Aminu said adding that many do not have bank accounts.

He said half of Nigeria’s population of roughly 160 million were under the age of 20 years and so many were not of working age or unemployed.

The growth in pensions would also give a boost to fund flows into equities and bonds in the country and could also help improve liquidity on the stock market.

Regulations currently allow Nigerian fund managers to invest half of their portfolio in equities, 35 per cent in the money market and the rest in government bonds.

The increase in pension assets should ease liquidity problems that have dogged one of Africa’s biggest stock markets since the financial crisis in late 2008, analysts say. Large foreign funds tend to stay away because daily turnover in individual stocks rarely exceeds more than $1 million, too small for many funds.

Source: Leadership