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PFAs Made N2.2tn Profit on 15 Investment Portfolios — Operators



The Director General of the National Pension Commission (PenCom), Ms
  • PFAs Made N2.2tn Profit on 15 Investment Portfolios

Since the inception of the Contributory Pension Scheme, operators have made about N2.2tn profit from the investment of the funds in 15 different portfolios, according to reports.

Over the years, governments and private investors have been eyeing the growing pension funds for loans to execute some of their projects.

Many people, especially those who believe that the pension funds are idle funds, are of the opinion that the money should be released to finance the development of infrastructure as well as cushion the effects of the economic recession that the country has been grappling with.

Since the commencement of the Contributory Pension Scheme in 2004, the funds have grown to the tune of N5.96tn.

The Head, Benefits & Insurance Department, National Pension Commission, Mr. Lana Loyinmi, says that the major objective of the Pension Reform Act, which gave birth to the CPS, is to ensure that every worker receives his or her retirement benefits as and when due.

Loyinmi, who notes that the scheme is contributory and mandatory, says the employer contributes 10 per cent while the employee pays eight per cent of the annual emolument into the Retirement Savings Account.

He explains that contributed funds are remitted into an individual’s RSA, which is fully funded and has a 100 per cent asset backing.

According to him, RSAs are privately managed by Pension Fund Administrators while the custody of assets is maintained by Pension Fund Custodians.

Retirement benefits payment is the last stage of the whole process under the CPS, says Loyinmi.

Investment portfolios

The total assets under the CPS grew from N4.05tn in 2013 to N4.61tn in 2014 and rose to N5.3tn as of the end of 2015, according to figures obtained from PenCom

The report also shows that the funds have increased to the tune of N5.96tn.

The commission says the funds are not lying idle, but have been invested in at least 15 different investment portfolios, with the bulk of the money going into the FGN securities.

PenCom specifically says that 58 per cent, totalling N3.49tn of the money, has been invested in the FGN bonds while N683.91bn, or 11.47 per cent of the funds, has been invested in treasury bills.

The operators have also invested 8.80 per cent of the funds, totalling N524.72bn, in domestic ordinary shares while N413.17bn or 6.93 per cent of the money has been invested in local money market securities.

According to PenCom, the operators invest N294.3bn or 4.94 per cent of the funds in corporate debt securities while N214.8bn or 3.6 per cent of the money has gone into real estate properties.

The operators also invest N137.78bn, N85.49bn and N45.8bn, which translate into 2.31 per cent, 1.43 per cent and 0.77 per cent, in state government securities, foreign domestic shares and cash/other assets, respectively.

According to the report from PenCom, the remaining funds of N23.96bn, N18.75bn, N12.48bn and N1.8bn, which represent 0.4 per cent, 0.32 per cent, 0.21 per cent and 0.03 per cent, have been invested in private equity fund, open/close-end fund, supra-national bonds and infrastructure funds, respectively.

Investment guidelines

PenCom has produced investment guidelines, which regulate how the operators should invest the funds; and these regulations are subject to review when necessary.

The commission notes in the guidelines that the Pension Fund Custodians should only take written instructions from licensed PFAs with respect to the PFAs investment and management of pension fund assets held in the custody of the PFCs on behalf of the contributors.

It says that in discharging their contractual functions to the PFAs, the PFCs should not contract out the custody of pension fund assets to third parties, except for allowable investments outside Nigeria.

The commission states that the PFC must obtain an approval from the commission before engaging a global custodian for such foreign investments.

“The PFAs, in discharging their contractual functions to the contributors, shall not contract out the investment/management of pension fund assets to third parties, except for open/close-end/hybrid funds and specialist investment funds allowed by this regulation,” says PenCom.

The Head, Investment Supervision Department, PenCom, Mr. Ehimeme Ohioma, says that the regulation of investment of pension fund assets issued by PenCom was amended in 2010 to allow for investment in alternative asset classes such as infrastructure bonds and funds, private equity funds and real estate/housing development.

Returns on investment

Since the inception of the CPS, the operators have made about N2.2tn as profit from the investment of the funds in their custody.

The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarehide Longe, confirms this, saying the N2.2tn is the profit made from the total contribution of over N3tn from workers and their employers in both public and private sectors of the economy, who subscribe to the pension scheme.

Longe says, “Of the total funds, not less than N2.2tn is the investment income. So, it means that the managers of that money have received the amount piecemeal, over the last 11 years, which is over N3tn. They have added N2.2tn to that as profit, which shows that the money has been active.”

He says the pension funds are invested optimally and managed professionally by the PFAs.

Longe notes that the investment guidelines released by PenCom are broad and comprehensive enough to include assets that will make notable impact on the society.

According to him, the PFAs can be more venturesome in the asset classes that they develop and invest in.

“The CPS provides a very positive opportunity over the long-haul to improve the general wealth environment of the country,” he says.

He notes that the money is being managed in accordance with the guidelines so that when people retire, they can receive their pensions seamlessly.

“If you then decide that you are going to utilise that money to create projects that are not adequately thought out, rather than add to the money, it disappears or brings no return, you then have a problem,” he says.

He also notes that the increase is regularly reflected in the balance of the RSAs of the contributors to the scheme.


Since Nigeria’s economy plunged into a steep recession this year, there has been agitation that the funds should be used in some critical sectors in order to improve the living standards of the people.

Specifically, there have been increased requests that the funds should be used to solve the country’s infrastructural problems.

The Chief Executive Officer, RiskGuard Africa Nigeria Limited (Pension & Insurance), Mr. Yemi Soladoye, says pension funds are long-term funds and that part of the reasons for creating the pension scheme is to finance national development projects.

“As long as you can guarantee the safety and security of the funds, it is okay to borrow the government’s part of the funds, because that it part of the reasons why we generate long-term funds,” Soladoye says.

He also supports investing the bulk of the funds in government securities, stressing that it will be safe there as long as the country is safe for investment.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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4DX Ventures, Flutterwave Invest in CinetPay, Payments Processor Company



CinetPay, a digital finance platform that enables merchants in Francophone Africa to seamlessly accept and make payments, has announced a $2.4 million seed fundraising round from 4DX Ventures and Flutterwave. The investment will boost CinetPay’s sales and marketing efforts across nine markets in West and Central Africa.

Since its 2016 launch in Côte d’Ivoire, CinetPay has processed over 30 million transactions for 350 active merchants in nine countries, including Côte d’Ivoire, Senegal, Cameroon, Mali, Togo, Burkina Faso, Benin and Guinea. CinetPay’s platform provides a single interface for businesses to process over 130 different payment operators, from mobile money to credit and debit cards and e-wallets, eliminating the need for merchants to spend months integrating with different systems in order to manage sales and revenues.

Used by a broad range of businesses from e-commerce platforms to digital public services, insurance companies and schools, CinetPay simplifies the process of accepting payments online or via mobile Point of Sale (PoS) devices with best in class security protocols.

By bringing Flutterwave onboard, CinetPay is building on a successful commercial partnership that has evolved since 2019, and this investment follows Flutterwave’s recent acquisition of Disha and marks the unicorn’s first direct investment in the region.

“For a first institutional investment, we couldn’t have asked for two better partners in 4DX Ventures and Flutterwave,” said Idriss Marcial Monthe, CEO & Co-Founder of CinetPay. “We’ve watched firsthand as thousands of merchants waste crucial time, even up to 6 months, getting their payment systems in order. Now we’ve got the resources to market and sell our optimal solution across the region and we’re excited to ensure that all businesses in our region never miss a sale again. We have selected highly strategic partners as investors and are excited about the immediate next steps we take together in terms of simplifying and improving digital payments in Francophone Africa.”

The rapid growth in a wide range of digital payments channels across the continent over the last decade has led to a disaggregated market. Two-thirds of global mobile money transactions are driven by users in sub-Saharan Africa, with 562 million registered accounts by the end of 2020, while the number of e-commerce users on the continent is expected to double from 281 million in 2020 to 520 million by 2025. This trend continues with public institutions as well, with more bodies now offering digital public services, such as payments for ID cards, Visas and COVID tests, and school fees, which are often paid digitally. With such a multiplicity of payments required across different verticals from a growing number of sources, CinetPay is fast building its presence in the region.

“We’ve been tracking the Francophone Africa market for some time now, and have been impressed by Cinetpay’s ambitious goal to digitize payments across the region,” said Walter Baddoo, Co-Founder and General Partner at 4DX Ventures. “The company has demonstrated deep product knowledge with a differentiated offering and a strong brand with customers. We look forward to partnering with the Cinetpay team alongside our long-time portfolio company, Flutterwave, to help usher in the next phase of digital payments across the Francophone region.”

“We’re building the payments infrastructure for Africa, making it easier for businesses to grow and expand their customer base on the continent and worldwide,” said Olugbenga Agboola, Founder and CEO at Flutterwave. “Having collaborated with the Cinetpay team for a number of years now, our shared vision to simplify payments on the continent further strengthens our commitments to working towards creating endless possibilities and experiences for all our customers. Cinetpay is well positioned for the next chapter of growth and we’re excited to work with the team to help scale the business to achieve maximum impact and value for its customers.”

Available on desktop and mobile, CinetPay is quick to set up and designed with a modular approach that integrates within a merchant website and accepts Mastercard, Visa and all major local mobile money in 9 markets from MPESA to MTN mobile money and Orange Money.

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Additional Pension Fund Assets Invested in Banks in Third Quarter (Q3) of 2021



pension funds - Investors King

The National Pension Commission has released a new report on pension fund assets, which has shown that investment in Local Money Market Securities had more pension fund assets invested in banks than in papers through Open Market Operations, as well as fixed deposits of banks in the third quarter of 2021.

The report from the NPC also showed that the total invested fund placed with banks as a percentage of the total pension fund assets sat at 17.10 percent, which translates to N2.22 trillion in September, rising from 13.15 percent or N1.66 trillion in June 2020.

It showed that investment in commercial papers which constitutes about 0.5 percent of investment in pension fund assets, went down to N0.68 trillion from N0.72 trillion (which constitutes 0.57 percent).

The report also addressed corporate debt securities, stating that the amount invested in the space went up by 1.82 percent to N0.97 trillion in Q3 from the N0.95 trillion which it had recorded in Q2.

Cash and other assets which are responsible for 0.46 percent (or N59.79 billion) of the total pension fund assets in September 2021 also fell from 0.59 percent (or N74 billion) in June 2021.

All funds invested in real estate properties as a section of the total pension fund assets went down to 1.18 percent (or N153.4 billion) from 1.24 percent (or 156.88 billion) in the period which was under review.

Cowry Research analysts discovered that the increased investment by the Pesnion Fund Administrators (PFA) in bank placements was mainly to take advantage of the relatively high yields in the short term without gaining much exposure to the risk that is inherent in the money market.

The Cowry analysts stated that the increased activities of pension managers in the equities market throughout Q3 2021 was on the platform of an improvement in the performance of corporate organizations as the Nigerian economy continues its recovery from the COVID-19 pandemic.

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Verdant Capital Advises WIOCC on USD80 Million Equity Capital Raise



Edmund Higenbottam, MD of Verdant Capital -

Verdant Capital has advised WIOCC Holding Company Limited (or “WIOCC”) on an USD 80 million equity capital raise.  USD 75 million of equity was invested by CAPE IV, a fund managed by leading African private equity fund manager African Capital Alliance.  The balance was invested by management and an existing shareholder.

The equity raised has been supplemented by a debt capital raise.  The total capital raise of USD 200 million will be used to expand its connectivity within Africa and internationally, and through Open Access Data Centres (or “OADC”) – a newly created WIOCC Group company – to launch a network of pan-African data centres optimised to serve the needs of the cloud provider and wholesale community.

As well as introducing a strong new investor into the company, the capital will be used to support WIOCC’s expansion strategy across Africa and accelerate its investment in enhancing the continent’s digital infrastructure. Strategic investments in the new Equiano and 2Africa international subsea systems will augment and complement WIOCC’s existing core network infrastructure, cost-effectively adding multi-Terabits (Tbps) of capacity and significantly increasing its options for delivering the high-availability solutions demanded in markets across Africa. WIOCC’s terrestrial strategy, which includes deployment of metro and national networks in key locations, will be extended to include new countries and metropolitan areas, increasing its portfolio of end-to-end solutions for clients across Africa.

Part of the capital raise will be used in funding OADC, which is creating a transformational interconnected pan-African network of open-access, carrier-neutral data centres. First-phase locations will house key submarine cable landings in Lagos, Durban and Mogadishu, supporting the drive to land international submarine capacity directly into carrier-neutral data centres. Each will provide clients with bespoke colocation facilities and ultra-reliable, seamless connectivity directly into new international subsea systems, eliminating the costs and risks traditionally associated with terrestrial backhauling. Construction and fit-out is underway in Lagos and Durban, with both to be launched early in 2022, whilst the Mogadishu data centre will be ready before the end of 2022. Further phases of deployment will deliver more than 20 new data centres in strategic locations throughout the continent, focusing on major connectivity hubs in each country.

African Capital Alliance was attracted to the investment by the clear vision to develop high quality and synergistic assets and solutions to support its long-term client partnerships. The investments will further position WIOCC to take advantage of the accelerating migration of infrastructure and services into the cloud, driving demand for data transmission, storage and processing in wholesale, enterprise and consumer end-markets in Africa, and bringing forward realisation of WIOCC’s vision to make an enduring contribution to Africa’s communications.

The successful capital raise further strengthens Verdant Capital’s track record as a leading advisor on transactions for or involving pre-eminent private equity firms in Africa.

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