Invest N5trn pension fund in growing real sector – Fashola

Nigeria’s minister of works, power and housing, Babatunde Fashola, at the weekend advocated the adoption of a national policy that would allow the utilisation of the huge pension fund in growing the real sector, as a means of diversifying the economy.

The Nigerian contributory pension funds managed by licensed pension fund administration currently stands at N5 trillion.

Fashola spoke in Abuja, weekend, at the Nigerian Pension Industry Strategy Implementation Roadmap Retreat, saying with the dwindling revenue from the country’s major source of income, the crude oil, there was dire need to diversify and change the face of the nation’s economy once and for all.

With an address titled “Overcoming the challenges and managing the risks and constraints that inhibit the investment of private capital and funds in Nigeria’s infrastructure landscape in order to make a visible economic impact,” Fashola said “with the right attitude to diversification utilising the huge fund representing the contribution of Nigeria’s working class, pension shows that the national economy is bigger than the challenges posed by the dwindling oil prices.”

Fashola, who noted that the country failed to utilise the oil boom period to diversify the economy, said, “today’s reality is that we are in another cycle of burst. Oil prices have crashed from over $100 per barrel and is now hovering around $30 per barrel, and there is a real chance that it will fall lower.”

The minister added that one of the options available to still achieve diversification was to utilise its available assets or “savings such as the private money belonging to pensioners.

“For over three decades, we have mouthed the need to diversify our economy in order to open up more sectors for productive activities, income, economic growth and jobs. But we failed to follow through because of oil resources. Every time the cycle burst, we scampered, and promised to diversify but we soon drop the idea because not too far on the horizon is a boom in oil prices and we go back to an old life.”

According to Fashola, the periods 1970 and 1976 represented a period of the first oil boom when the Federal Government went on spending spree and increased salaries of workers while Nigerian workers asked for free everything until 1980s, when the price of oil went down briefly and government mouthed diversification of the economy but dropped the idea again when oil price rose again, particularly between 2009 and 2014, when oil sold for over $100 per barrel for almost five years.

He advocated a rethink of the attitude of seeking everything free as, according to him, “nothing in life is free”. Fashola, who said the use of the Pension Fund for diversification would not be free, pointed out, “The pension funds, which are under the management of pension funds administrators will not go into roads, rail, housing, hospitals or universities unless we change our attitude”.

“The new pension fund has shown what can happen if people resolve to contribute and pay their way…,”he said.

Citing Health Insurance as another option for diversification, the Minister said it would give Nigerians a choice and access to the best medical service when they need it adding that it would also give them “a second highway away from public health service, which even with its best intentions cannot provide every service free”.

Quoting an online publication of “Institutional Investors”, which estimated Sub-Saharan Africa’s ten largest pension fund markets as having approximately $310 billion in assets recently, the minister said that the funds were not serving the “Real Sector” of roads, bridges, hospitals, rails, airports and fee paying universities among others.

“There is a palpably visible poverty in most of these countries, some of who gathered to seek funding support in South Africa recently at the instance of the Chinese Government who offered funding support (loans) of $60 billion for all of Africa, when 10 (ten) pension funds had $310 Billion to , he said adding that many of these countries are scurrying after multilateral agencies looking either for aid or loans, “while sitting literally on a pot of money,” he said.

The minister’s address was followed by an interactive session with the leadership of the insurance industry and the top management of the National Pension Commission (PENCOM) led by Chinelo Anohu- Amazu, its director-general.