MARCH 7, 2016
LAUNCH - From left: Steve Judo, General Manager, Special Duties, Channels Television; Bola Onadele Koko, MD/ CEO, FMDQ OTC Securities Exchange; John Momoh, Chairman/CEO, Channels Media Group, and Emmanuel Ukeje, Director, Financial Markets Department, CBN, at the live launch of FMDQ Price Ticker Tape on Channels Television in Lagos. PHOTO: AKEEM SALAU
INFRASTRUCTURE:
Why FG, other investors can't access N5.3 trn pension fund By ROSEMARY ONUOHA
H
aving been in operation for over eleven years, investors are still unable to access the accumulated pension fund which is in excess of N5.3 trillion due to inability to meet criteria in the investment guidelines. Investigation by Financial Vanguard revealed that Pension Fund Administrators, (PFAs) in charge of channeling the fund into qualified investment vehicles are yet to see any C M Y K
credible investment vehicle from Nigerians. Even government bodies, especially state governments that are clamouring for the fund to be invested in infrastructure have not been able to come up with an infrastructure bond as the guideline stipulates. Minister of Works, Power and Housing, Mr. Babatunde Fashola recently approached pension operators to see if part of the fund could be channeled into infrastructure but was told that even the Federal Government
must meet the criteria in the guidelines. Aside from the government, other interested investors have consistently failed to meet the requirements as stipulated in the investment guidelines. As such, the fund has continued to be invested in zero risk investment vehicles, despite the fact that the infrastructure deficit of the country needs long-term funds for investment in the sector. Although the guidelines clearly state the investment criteria, Financial
Vanguard's findings showed that the National Pension Commission, (PenCom) ensures that interested investors abide strictly by the law. PenCom ensures that in the case of infrastructural investment, there must be a competitive bidding process for any contract, the bidders must be qualified to carry out the contract, there must be a time limit for completion of the contract, there must be a monitoring team to monitor the progress or otherwise of the contract, there must be experts to ascertain that the quality of products the investors purport to buy are up to standard. Due to these oversight functions of PenCom, Nigerians have not been able to access the fund as most investors that have come forward to use part of the fund for investment are merely looking for quick profits, while PenCom on its part stands guard to ensure that pensioners’ money are not wasted on unrealistic projects. Director-General of PenCom, Mrs. Chinelo Anohu-Amazu said, “I have always been a proponent of investment in infrastructure for a simple reason that this is one investment if handled properly would benefit both the contributors and retirees alike. The Federal Government bonds are safe but it is not something you can see and feel like infrastructure. “When we were doing this reform in 2001/02, we were in Mexico and had gone to other South American countries where they have implemented the contributory system. We were going down a road and what we saw on the signboard on the road was ‘contributory pension fund.’ This is the kind of thing we want to see in Nigeria. Ten years down the line there is no such signboard in Nigeria and the funds are growing. Who will use the roads? “The reason for the criteria in the guideline is to make sure that the funds are safeguarded, shrouded from the vagaries of human discrepancies and all. Countries like Singapore and Canada have utilized their pension funds effectively for their citizens. It is not something that is outlandish; the key thing is: How did that utilisation happen? “Why are Nigerians not meeting the guidelines? What is preventing those who are looking to build things for the community from meeting the Continues on page 18