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Operators Raise Pension Fund Investment in Infrastructure to N1.82bn



The Director General of the National Pension Commission (PenCom), Ms
  • Operators Raise Pension Fund Investment in Infrastructure to N1.82bn

The pressure by the government and other investors on the Pension Fund Administrators to invest the growing pension fund in infrastructure to cushion the effect of recession on the economy seems to be paying off as the operators have steadily increased the value of the fund in infrastructure bond.

In May 2015, the operators invested a sum of N568m in infrastructure for the first time; they increased it to N1.35bn at the end of December 2015.

By September 2016, they had invested N1.82bn in infrastructure bond out of the total assets that currently stand at N6.2tn.

The assets under the CPS have been recording a stable growth despite the recession.

Some operators, who spoke to our correspondent, said they were ready to increase the level of investment in infrastructure during the current recession in the economy if the portfolios made available to them could meet the specifications of the pension regulatory guidelines.

It was gathered that investors, who could not access the fund due to the stringent measures introduced in the investment guidelines by the National Pension Commission, had been seeking the Federal Government’s backing to get the pension operators to invest part of the funds in their projects.

According to the operators, the fund is safer for investments if fully backed by the Federal Government securities.

According to the operators, the fund is not lying idle but has been invested in different portfolios, which are the FGN bonds, treasury bills, domestic ordinary shares, local money market securities, corporate debt securities, real estate properties, state government securities, foreign domestic shares and cash/other assets.

The fund is also being invested in private equity fund, open/close-end fund and supra-national bonds.

The Chairman, Pension Fund Operators Association of Nigeria, Mr. Eguarehide Longe, said the pension fund was making notable societal impact.

He noted that there had been calls by stakeholders in the public and private sectors that the fund should be used to address the infrastructural gap in the country.

He explained that the draft investment guidelines, which specify to the operators how to invest the fund, led to a cut in the requirements on how much pension fund might be invested in specialised instruments, such as infrastructure and private equity securities within the country.

Longe said that the pension fund was being optimally invested and professionally managed by the PFAs.

“The investment guidelines are broad and comprehensive enough to include assets that will make notable societal impact,” he said.

Longe explained that the PFAs could be more adventurous in the asset classes they reviewed, developed and invested in, adding that the CPS provided a positive opportunity over the long haul to improve the general wealth environment of the country.

The Head, Investment Supervision Department, National Pension Commission, Ehimeme Ohioma, said there was a huge infrastructure gap, cutting across critical areas of the economy, which had impacted on the level of the country’s economic growth/performance.

“The pension reforms and introduction of the CPS have significantly enhanced savings mobilisation, capital (equity and bond) market development, economic growth and macroeconomic performance,” he said.

According to him, infrastructure is a potential avenue for pension fund to reap higher and consistent returns on investment if adequate policies, structures and regulations are instituted.

He observed that several countries in Europe, Latin America and Africa had successfully utilised parts of their accumulated pension funds by investing them in new infrastructure projects or renewing dilapidated ones.

Globally, he said, productive investments in infrastructure were made possible by long-term private funds/savings and other sources like government revenues and bank loans.

“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,” Ohioma said.

According to him, Nigeria has a large infrastructure deficit in all key sectors largely due to population growth, demographic changes and urbanisation, which have driven increased demand for infrastructure.

He explained that the regulation on investment of pension fund assets issued by PenCom was amended to allow for investment in alternative asset classes such as infrastructure bonds.

PenCom, however, noted that the challenges of pension fund investment in infrastructure included availability of products and dearth of alternative asset products in the Nigerian financial markets.

The challenge also include liquidity risks, as pension funds prefer low or no risk products that are able to generate steady income from the onset.

The Director-General, PenCom, Mrs. Chinelo Anohu-Amazu, stated that there was a need for the government to provide adequate guarantees to secure investment of the pension fund in infrastructure.

She said while the commission was not opposed to the idea of deploying the pension fund in infrastructure, adequate mechanism must be put in place to ensure its safety.

The PenCom boss explained that the pension fund alone would not be able to address the infrastructure needs of the country, adding that other sources of funding such as public-private partnership arrangements should be explored.

She said, “Today, pension and social security systems serve as catalysts for generating pool of long-term investible funds that can be used to develop necessary ingredients for economic development such as infrastructure.

“Given the current global economic challenges occasioned by the drop in commodity prices, the funds generated under viable pension schemes have become veritable sources of financial intermediation.”

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.


Amazon To Open African Headquarters In South Africa




US retail giant, Amazon has announced that it would be opening its first African office in South Africa with a real estate investment of over R4 billion. This announcement is coming a week after Twitter choose to open its first African office in Ghana.

Authorities in Cape Town noted that Amazon would be occupying a new development in River Club, a prime section of the city. This new development will create 5,239 jobs in the construction phase alone. Along with 19,000 indirect and induced jobs.

The 15-hectare parcel of land will cost R4 billion and include two precincts. Authorities said the first precinct of 60,000sqm would occupy different layers of development, while the second section of 70,000 will hold Amazon headquarters in Africa.

“US retail giant, Amazon, will be the anchor tenant, opening a base of operations on the African continent. The development is envisaged to take place in phases, with construction set to take place over three to five years.

It is clear that this development offers many economic, social, and environmental benefits for the area. We are committed to driving investment to revitalize the economy, which is slowly recovering following the impact of Covid-19.” This was affirmed by Cape town city officials.

Earlier last week, Techcrunch had reported that Amazon announced the opening of Amazon Salon, the retailer’s first hair salon and a place where Amazon aims to test new technologies with the general public.

Amazon has had its web engineering giant AWS in South Africa for years, but its main e-commerce services have not been available anywhere on the continent.

This announcement came a week after Twitter announced the decision to set up its first African office and headquarters in Accra Ghana. Twitter claimed that Ghana’s democratic and economic strides made the West African country a highly competitive destination over Nigeria and other countries.

It was unclear whether Amazon considered Nigeria and similar parameters as Twitter while deciding its African base.

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Dangote Commits $700M To Sugar Production In Support of Backward Integration Policy



Dangote Sugar Refinery Plc

The management of Dangote Sugar Refinery Plc has said it is committing over $700m to its sugar projects to support the Backward Integration Policy of the Federal Government to make Nigeria self-sufficient in sugar production.

According to a statement issued on Sunday by Dangote Industries Limited, the company disclosed this to visiting members of the Nasarawa House of Assembly on Friday.

The company noted that Nigeria was one of sub-Saharan Africa’s largest importers of sugar, second only to South Africa with an annual import of over $337m.

The Dangote Sugar management however assured the lawmakers that with the completion of its sugar projects in Nasarawa and Adamawa under the BIP, the nation would be saved more than half of the forex expended on sugar imports annually.

It added that the investment would also lift its people as other people-oriented infrastructures would come with the sugar projects.

The state lawmakers commended the Dangote Group for the choice of the state for the project and the accelerated pace with which the project was being executed, despite occasional delays arising from communal disagreements.

General Manager for the BIP, Dangote Sugar, John Beverley said when the factory was fully operational, it would have the capacity to crush 12,000 tons of cane per day, while 90MW power would be generated for both the company’s use and host communities.

He also disclosed that some 500km roads in all would be constructed to ease transportation within the vicinity. He solicited the support of the lawmakers in controlling the menace of land encroachment by settlers and itinerant farmers.

The Speaker of the Nasarawa State House of Assembly, Ibrahim Abdullah, and his team members, who were conducted around the company’s 78,000 hectares BIP in Tunga Awe Local Government Area commended the company for the project.

Abdullah noted that it would not only open up opportunities in the state but in Africa as a whole, and said the lawmakers were ready to partner and support the company towards the realisation of the sugar project through the relevant legislation.

When phase II of the project is completed, according to the company, it will make it the largest sugar refining plant in Africa.

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French Trade Advisors pledge Massive Investment In Lagos Free Zone



The Conseillers du Commerce Exterieur (French Foreign Trade Advisors) has expressed readiness to invest massively in the Lagos Free Zone (LFZ) being developed by the Tolaram Group as they endorsed the zone as the ideal industrial destination for French businesses in Nigeria.

This was made known on Thursday, April 15, 2021, during a visit to the Lagos Free Zone. The delegation led by the Ambassador of France to Nigeria, His Excellency Jerome Pasquier accompanied by his Economic Advisor, the Consulate General of France in Lagos and the Conseillers du Commerce Exterieur comprising of CEOs of several French businesses in Nigeria.

Speaking during the visit, the Ambassador of France in Nigeria, His Excellency Jerome Pasquier explained that the aim of the visit of the Conseillers du Commerce Exterieur to Lagos Free Zone (LFZ) was to discover the opportunities in the Lagos Free Zone and the Lekki Port project, which is expected to have a huge positive impact on businesses in Nigeria.

Pasquier commended Tolaram Group, the promoter of the zone, for the foresight of integration of Lekki Port into the master plan of the Lagos Free Zone (LFZ), which would serve as the gateway for import and export from the zone thereby giving businesses in the zone a competitive edge.

The Ambassador also commended the Lagos Free Zone (LFZ) for its Master Plan for the zone which includes world-class infrastructure that is in line with its vision to be the preferred industrial hub and investment destination in West Africa.

“I am impressed by the huge size of the Lagos Free Zone project. We are very happy that the French companies will be deeply involved in this Lagos Free Zone project. It is really impressive to see how ambitious this project is. The French Minister was in Nigeria yesterday and I explained to him that Nigeria is a country where we can have big projects. For us, this project means big opportunities and that explains why we need to be here. We are happy to be here and work with Tolaram Group”, he added.

It is noteworthy to mention that the first French company to be established in the Lagos Free Zone is the terminal operations arm of CMA – CGM which has established a subsidiary within the Lagos Free Zone and is the appointed operator for the container terminal operations scheduled to commence at Lekki Port next year.

In his remarks, the Chief Executive Officer, Lagos Free Zone (LFZ), Mr. Dinesh Rathi assured the Ambassador of France and the Conseillers du Commerce Exterieur that the zone remains the best destination for investment in Nigeria and the West African sub-region given the seamless integration with Lekki Port and the world-class infrastructure provided by Lagos Free Zone.

Explaining the configuration of the zone, Rathi disclosed that the clustering is planned in line with the international best practices of Work, Live, and Play. He stated that the land-use plan of the Lagos Free Zone allocates 70 percent area towards industrial developments, 20 percent towards logistics and support services while the real estate will cover the remaining 10 percent.

He also stated that Lagos Free Zone (LFZ) has simplified the process of business entry and operation in the zone in line with the Federal Government of Nigeria’s Ease of Doing Business policy.

“We have made it very easy for the business to berth and take off at zone by making our process less cumbersome and friendly, we are open for business 24/7 and willing to help investors to settle in very fast,” he said.

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