National Pension Commission has said that the country needs to deploy the huge pool of savings available in Pension Trust Fund to develop her infrastructure. This was stated by Head Investment Supervision PENCOM, Ehimeme Ohioma during Financial Correspondents Association of Nigeria FICAN 2016 Conference in Abuja yesterday. According to him, “Globally, productive investments in infrastructure are majorly made possible by long term private funds/savings. Other sources are government revenues and bank loans.”
He disclosed that the Pension assets in Nigeria, valued at N5.8Trillion as at July 2016, are currently the largest and only available pool of patient capital.
He added that Pension Fund investment in infrastructure is a reasonable proposition given the good asset/liability match, as infrastructure projects are long term investments that match the long duration of pension liabilities.
Examples of similar jurisdictions, like Nigeria, that have effectively deployed pension funds for investment in infrastructure include Ghana, Kenya, South Africa, India and Brazil.
He also said that Pension Reforms and introduction of the Contributory Pension System (CPS) always result in the development of the financial and capital markets in most countries. “This is evident by the CPS in Nigeria, which had since 2005 significantly enhanced savings mobilization, capital (equity and bond) market development, economic growth and macroeconomic performance – pension funds account for about six percent of GDP”
“Current huge infrastructure gap, cutting across critical areas of the economy, There is high correlation between the level of infrastructure development and level of economic growth/performance”
Infrastructure is a potential avenue for pension funds to reap higher and consistent returns on investment, if adequate policies, structures and regulations are instituted, Pension fund investments in infrastructure and real estate development, provide veritable avenues for portfolio diversification as well as properly match pension assets with their future liabilities.
Several countries in Europe, Latin America and Africa have successfully utilized part of the accumulated pension funds by investing in new infrastructure projects or renewing dilapidated ones
Infrastructure: Is defined as the basic systems and services, such as transport and power supplies, that a country needs, in order to function effectively. They are the bedrock for economic development and prosperity.
Types of Infrastructure: Infrastructure is defined as either “Hard” or “Soft”.
Examples of Hard Infrastructure include capital assets such as roads, real estate/housing, telecommunication systems, railways, dams, drainage systems, airports and bridges.
Soft Infrastructure refers to refers to the institutions which are required to maintain the economic, health, and cultural and social standards of a country. Examples include the education system, the health care system, as well as emergency services. Capital Intensive, Long-term in nature and Illiquid Necessary, to enhancing the standard of living of the populace.

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