The federal government is planning to tap into the N2.4 trillion pension funds for infrastructural development. President Goodluck Jonathan stated this yesterday at the presidential dialogue with global chief executive officers (CEOs) at the 17th Nigerian Economic Summit held in Abuja.
According to the president, there are lots of projects the government will want to embark on, but lacks funding. He is therefore considering having a slice of the pension fund to invest in some productive projects.
For instance, he mentioned the issue of decongesting the ports by opening others like the one in Akwa Ibom.
“One of the reasons why the PPP (public-private partnership) is not very robust is because of funding. The funds we have from the pension scheme can support a number of those projects. But the law setting up the pension scheme does not give the managers the power to do such. That is one area we are looking to restructure. These are areas we are discussing with the Central Bank and the managers,” he stated.
Pension fund managers are currently restricted to only three asset classes -- equities, government bonds and bank deposits, in the ratio of 25 percent invested in equities, 35 percent in money market and the rest in government bonds.
President Jonathan said critical infrastructure like new ports and inland container ports could be financed with pension funds in order to decongest existing port facilities.
“These are areas where the private sector can team up with government for us to set up inland containers. We are looking at so many things,” he said.
The National Pension Commission (PenCom) last year revised the regulation for investment of pension funds, specifying criteria for infrastructure financing. It allows for pension fund assets to be invested in infrastructure projects which includes roads, railways, airports, ports, power and gas pipelines (and related facilities) through eligible bonds or debt securities.
According to the regulation, such infrastructure projects shall be “awarded to a concessionaire through an open and transparent bidding process, not less than N5 billion in value, managed by a concessionaire with good track record and must be in accordance with and meet due process requirements of the public-private partnership (PPP) policy, as certified by the Infrastructure Concession and Regulatory Commission (ICRC) and approved by the Federal Executive Council (FEC)”.
The president assured Nigerians that the Sovereign Wealth Fund, another source of long-term infrastructural funding, has come to stay as the law setting it up is to ensure its continuity. “The Sovereign Wealth Fund is a constitutional provision. The money that is there belongs to the federal, state and local governments. So nobody has the power to use it otherwise,” he said.