AFEX Drives Pension Investment In Commodities Sector

A private commodities exchange in Nigeria, AFEX, is driving pension investment in the commodities sector by hosting an executive roundtable discussion for stakeholders in the pension industry.

The discussion was meant to expand market participation in the commodities sector by driving pension fund investments.

The event brought together key stakeholders from the pension industry, including fund managers, trustees, and regulators, for a dynamic conversation aimed at unlocking the immense potential of the sector.

The domestic agriculture sector has long faced challenges across low capital and lack of investments, which has only reduced in the past couple of years, owing to the risk and volatility of the industry. Government allocation to the sector has been drastically dropping from 3.61 per cent in 2019, 1.51 per cent in 2020, 1.92 per cent in 2021, and a record low of 1.05 per cent in 2023.

In the H1 2023 report released by the National Pension Commission(PenCom), the total asset under management stood at N16.8 trillion which was mainly invested in Federal Government securities (65 per cent), local money market securities (18 per cent), corporate debt securities (8 per cent) and domestic ordinary shares (8 per cent).

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With this, the pension industry represents a significant pool of long-term, patient capital essential for driving sustainable development in the agriculture sector.

Speaking at the roundtable, group CEO, AFEX, Ayodeji Balogun, expressed that, “there is perhaps no better time to drive investment in the commodities sector than now. Food inflation and demand has hit an all-time high, and the direct implication of this is a pressing need to shore up agricultural productivity to meet household consumption and processing demands.

“Over the years, we have built a track record of facilitating efficient commodity trading through the exchange and our innovative basket of instruments, which has significantly de-risked the sector. This robust infrastructure provides investors with the security and transparency needed to navigate the commodity sector with confidence”.

Just last year, AFEX recorded a significant milestone in the journey to unlocking pension capital for the commodities market by signing an MoU with the Pension Fund Operators Association of Nigeria (PenOp), which was announced at the second edition of the AFEX CEO Breakfast.

Also present at the event was the executive secretary/CEO of the Pension Fund Operations Association of Nigeria(PenOp), Aguda Oguche, who stated that, “we will always prioritize diversified and sustainable investments for our members and this roundtable is that critical step forward in fostering collaboration between key stakeholders. We are excited to participate in this open dialogue and explore innovative solutions that can bridge the gap between pension fund capital and the vast opportunities within the Nigerian commodity sector, ultimately contributing to economic diversification and shared prosperity.”