N241bn Pension Fund For Infrastructure Must Prioritise Returns, Risk Mitigation – Experts

Financial stakeholders have hailed the N241 billion pension fund for infrastructure, but insisted that investments must be structured to secure returns and safeguard pensioners.

This comes as Nigeria’s pension industry committed N241 billion to fund infrastructure development across the country under the newly established Pension Industry Infrastructure Consortium.

The vice chairman of Highcap Securities Limited, David Adonri, described the pension industry’s N241 billion commitment to infrastructure financing as a positive and commendable step toward addressing Nigeria’s development challenges.

“It is a positive development if PENCOM, which is the regulator of the pension sector in Nigeria, is able to mobilise the entities it supervises, which are the PFAs, to put together that amount of money to finance infrastructure development in Nigeria,” he said.

Adonri noted that Nigeria’s underdevelopment is largely tied to its huge infrastructure deficit, estimated at over $3 trillion.

“In fact, the major reason why the Nigerian economy is underdeveloped is the absence of engineering infrastructure in particular, and infrastructure deficit in general,” he stated.

He said that while the N240 billion is modest compared to the gap, it is a significant starting point.

“So they are mobilising about 240 billion Naira towards that. It’s like a journey of a thousand miles. It begins with one step. It will help a lot in developing infrastructure for the economy,” he said.

According to him, infrastructure is critical because of its multiplier effect on other sectors.

“Infrastructure is very vital because it provides secondary development activities that provide social services and ancillary services that will make the economy strong and virile, internally self-generating and capable of creating enormous wealth and generating productive employment.”

Adonri stated that PENCOM’s initiative to channel long-term pension assets into infrastructure is a welcome development that should be encouraged.

An economist, Mr Tunde Oyediran, also said that “the move aligns with global practice where pension funds are natural financiers of long-term infrastructure due to long-dated liabilities. However, the N241 billion, about $150 million at current rates, is modest relative to the $3 trillion gap.

“What matters is not just the headline number but structure. PENCOM must ensure investments go through well-structured infrastructure funds with proper risk mitigation, inflation-linked returns and credit enhancements. Pensioners come first. Projects must be bankable, with clear cash flows, not just patriotic intent,” the expert said.

Analysts agreed that while N241 billion will not close the infrastructure gap, it provides catalytic domestic long-term capital that can crowd in DFIs and private investors if deployed into energy, transport, housing and industrial infrastructure with strong governance and transparent reporting.

The director-general of PenCom, Omolola Oloworaran, speaking at a press briefing after the Pension Industry Council meeting yesterday in Lagos, said the commitment is part of a strategic move to mobilise long-term capital within the pension industry to deepen infrastructure development.

She said the Consortium was established in conjunction with FSD Africa earlier in the year and represents the first step in a deliberate effort by the industry to play in the infrastructure space.

“As of today, pension funds have committed a total of N241 billion, and we expect that to touch almost N300 billion very soon as we get all the commitments in,” the DG said.

According to Oloworaran, the industry is working with a clear timetable, with the signing of an MOU with FSD Africa and appointment of a fund manager expected between now and Q1, while the first tranche of investments should be deployed by Q2 2027.