Pension boosts infrastructure with N230bn on Sukuk bonds, debt fund

Pension fund allocation to infrastructure development has continued to swell with the investment of a total of N230 billion in Sukuk Bonds and the Nigeria Infrastructure Debt Fund (NIDF).

A breakdown of the investment shows that Pension Fund Administrators (PFAs) invested N127 billion in Sukuk Bonds (I-IV) for federal road projects between 2017 and 2023, while N103 billion was allocated to the Nigerian Infrastructure Debt Fund.

The roads that attracted this investment are the Kano-Maiduguri Express Way, Kaduna Eastern Bypass, Enugu-Port Harcourt Express, Ibadan Ilorin Express, Ahmadu Bello Way VI and Loko –Oweto Bridge.

Saadu Jijji, chief executive officer, Pal Pensions Limited, speaking on the impact of pension funds on infrastructure development and economic growth, said a lot of funding has been made in the sector without much noise being made about it.

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According to him, PFA are the largest investors in NIDF, the biggest infrastructure fund in Nigeria that invests in projects from power to student hostels.

Jajji said PFAs also invested in Dangote Refinery and Petrochemicals when in 2022, the Dangote Industries issued a N300 billion bond for the completion of the refinery.

“PFAs have invested in ACTIS Real Estate fund that has acquired Jabi Lake Mall and will acquire Ikeja City Mall.

Other infrastructure investments by PFAs are State Bonds, Novare Real Estate, MTN, Niger Delta Exploration and Production Plc, Lagos Free Zone and the Nigeria Mortgage Refinancing Company (NMRC) where it invested N26 billion from N100 billion guarantee.

Joy Ojakovo, vice president of the Pension Fund Operators Association of Nigeria, said the Contributory Pension Scheme (CPS) has brought many benefits to individuals and the nation and the industry needs to continue to work with stakeholders to improve the scheme.

“Nigeria’s pension industry has been the fulcrum for a lot of development that has happened in the country over the last 15 years and this fact is not lost on us as pension fund managers. We realise this and we take this responsibility very seriously.”

“Another benefit of CPS is the fact it has provided an opportunity for the accumulation of long-term capital which serves as an avenue to invest in various sectors of the economy.

“The pension funds have been the largest players in the bond and equity markets. We are very proud of the work we have done in this regard, and we continue to look for opportunities to develop and deepen the market.”

Oguche Agudah, chief executive officer, Pension Fund Operators Association of Nigeria, said the PFAs were willing to invest in infrastructure if properly packaged, with guaranteed safety.

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Oguche said pension fund managers were enthusiastic about investing in infrastructure, disclosing that in a recent pool among PFAs, 42 percent indicated they were looking for investments in infrastructure.

Bankole Opeyemi, a staff of one of the PFAs, said the integration of Sukuk bonds into the pension fund’s portfolio and the allocation of assets to infrastructure projects were strategic decisions with potential benefits to the pension fund’s overall performance.

He also said that the allocation of assets to infrastructure projects could support the growth of critical infrastructure, such as transportation systems, energy generation and housing, which are essential for economic growth and job creation.

The combination of Sukuk bonds and infrastructure development can contribute to the country’s economic growth by providing a stable source of funding for these projects and creating jobs and opportunities for local businesses.

“Overall, this development is likely to have a positive impact on the pension fund’s performance and contribute to the country’s economic development.”

Investment in pension funds is guided by regulations issued by the National Pension Commission (PenCom) in February 2019.

According to the guidelines, government securities is 70 percent; corporate debt – 40 percent; money market- 30 percent; ordinary shares- 25 percent, while infrastructure funds is 5 percent.