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Financial Literacy

Conditions For Nigerian Pension Funds (PFA) To Invest In Shares

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Pension funds

The Pension Reform Act of 2014 allows Pension Fund Administrators (PFA’s) to invest funds in companies listed in the Nigerian Stock Exchange or any registered exchange . However the regulator, Pension Commission stipulates conditions for which this can occur.

Here is a list of conditions that Publicly listed companies must comply with before they are listed on the floor of the Nigerian Stock Exchange;

They are as follows;

  • The issuing companies’ shares are listed/quoted on a securities exchange registered by SEC. This means the shares must be listed on an exchange registered by the Security and Exchange Commission (SEC). In Nigeria, the Nigerian Stock Exchange and the National Association of Security Dealers (NASD) are the only two registered stock exchanges currently in operation in Nigeria. It means PFA’s can inly invest in shares listed in both exchanges. PFA cannot invest for example, in the Ghanaian Stock Exchange.  
  • The public limited liability company has an operating track record of having made taxable profits for, at least, three out of the five years preceding the investment, and paid dividends or issued bonus shares for at least one year within the five years. This means that companies that do not pay dividends at all in 5 years will not attract investments from Pension Funds. Companies that are perpetually loss making will also not qualify for pension funds to invest in them.

This conditions are pointers to investors (especially long term) identifying stocks that they should avoid if they track pension funds investments as a guide for where to put their money. Investors track Pension Fund Indexes because of the liquidity they bring when they invest in such companies. It is believed that a Pension Fund will only invest in sound companies with good corporate governance.

This regulation can be found in Section 5.24 of the Regulation of the Investment of Pension Fund Assets 

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MSME

GEEP provides COVID-19 palliative microloans to 87,614 traders

The loans were in line with the government’s policies to reduce poverty and boost productivity.

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GEEP provides COVID-19 palliative microloans to 87,614 traders, Nigeria SME, LAPO, More than 40 SMEs in Lagos shut down due to economic crisis

The Federal Government of Nigeria, through the Government Enterprise and Empowerment Programme (GEEP), has provided a COVID-19 palliative relief loans to about 87,614 traders across twenty states. This was disclosed earlier today through a brief press statement that was made available via the government’s official Twitter handle.

According to the disclosure, the microloans have helped to reduce extreme poverty and encouraged productivity following the easing of the lockdown. Part of the statement said:

In line with the vision of the Nigeria Government to curb poverty and boost productivity in different parts of Nigeria, GEEP has provided palliative microloans to 87,614 petty traders hit by COVID19 pandemic in 20 states of the country in the first phase of disbursement.

These palliative microloans have helped petty traders revive their businesses, as the government eases lockdown measures nationwide. The second phase of the disbursement will target 412,386 petty traders across the country.”

READ ALSO: How Nike rejection birthed sportswear industry in Nigeria

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READ MORE: Alcohol Taxes: Heineken may need to shelve plan to increase beer prices

The Federal Government also announced that the second phase of the loans would be disbursed to a 412,368 trader across the country in a bid to restart economic productivity as the government eases the economic lockdowns that have heavily affected the informal and formal sectors.

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The palliative schemes under the GEEP scheme include FarmerMoni, TraderMoni, and MarketMoni.

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FEATURED

FG releases new details on MSMEs support scheme, budgets N200 billion for loans

The Bank of Industry will also join to coordinate the implementation of the scheme.

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FG releases new details on MSMEs support scheme, budgets N200 billion for loans

The Federal Government has released new details on the Micro Small and Medium Enterprises (MSMEs) support scheme being rolled out under the National Economic Sustainability Programme.

According to estimates provided, the sum of N50 billion will be used to provide payroll support, N200 billion for loans to artisans, and N10 billion support to private transport companies and workers

The government disclosed in a tweet on the official handle of the government, the support scheme will include a Guaranteed Off-take Scheme for priority products, and an MSMEs Survival Fund.

READ ALSO: Covid-19: Timeline of every pronouncement made by Nigeria to support the economy

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Modalities for the take-off scheme

The first track is a Guaranteed Off-take Scheme which will ensure continued local production and safeguard 100,000 existing small businesses to save 300,000 jobs.

Priority products include processed foods, personal protective equipment, hand sanitizers, face-masks, face-shield, shoe-covers and pharmaceuticals.

The implementation committee chaired by Ambassador Mariam Katagum, Minister of the Federal Ministry of Industry Trade and Investment, will collaborate with private sector MSME associations to verify and screen applications from bidding MSMEs, define quantity and price of products required, and also get participants to join in the procurements.

READ MORE: How to access new N75 billion Nigerian Youth Investment Fund

SME survival fund

With a budget of N15 billion, the SME survival fund is expected to sustain 500,000 jobs in 50,000 SMEs.

Major sectors to benefit from the SME survival fund include hotels, restaurants, creative industries, road transport, tourism, private schools and export-related businesses.

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The committee will identify eligible SMEs and screening and verification for this fund will be based on company registration, and tax registration. The implementation committee will approve disbursements through microfinance banks and fin-tech credit providers.

MSMEs that are unregistered will receive support to complete registration with the Corporate Affairs Commission (CAC), and all participants will be expected to make payments based on signed agreements.

The Bank of Industry will also join to coordinate the implementation of the scheme.

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The scheme will last 3 months with Ambassador Mariam Katagum as Chairman, while Ibukun Awosika, Founder of The Chair Centre Limited (TCCL), and First Bank Nigeria will serve as the Vice Chairman.

More details are to be released subsequently from the Implementation Committee.

The Backstory

In July 2020, the Federal Government announced plans to roll out a N2.3 trillion stimulus package and survival fund for Micro Small and Medium Enterprises (MSMEs) to stay afloat amid the economic challenges imposed by the pandemic.

The Vice President Yemi Osinbajo, who also heads the Economic Sustainability Committee, announced it at the 2020 edition of the Micro MSMEs Awards held virtually in July.

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To benefit from the scheme, MSMEs would have to go through a rigorous and painstaking verification process which will be based on certain criteria.

MSMEs that have between 10 to 50 staffs are qualified for this fund. The businesses must make their payroll available to the government for verification while applying for the fund. Once qualified, the MSMEs will be eligible to have their staff salary paid directly from the fund for 3 months.

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FEATURED

How new CAMA 2020 will enhance SMEs’ ease of doing business

President Buhari recently assented to the Companies and Allied Matters Bill 2020.

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Companies Allied Matters Act (CAMA)

The new Companies Allied Matters Act (CAMA) 2020 is expected to enhance the ease of doing business in Nigeria. The new document has repealed and replaced the extant CAMA 1990 with key amendments that would remove some bottlenecks from the old act.

The revised Act will make Nigeria’s business environment as competitive as its counterparts around the world.

Back story: Nairametrics had reported when President Muhammadu Buhari assented to the Companies and Allied Matters Bill 2020, which was recently passed by the National Assembly.

READ ALSO: Corporate organisations now pay N200,000 for unsolicited premises inspection in Abuja 

He explained that some innovative processes and procedures were included in the new document to ease the operations of companies. Some of them are the introduction of Statements of Compliance, which replaced “authorised share capital” with minimum share capital to reduce costs of incorporating companies; and providing for electronic filing, electronic share transfers, e-meetings as well as remote general meetings for private companies.

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READ ALSO: Prestige Assurance could be a good opportunity if it gets its recapitalization right

Provisions that aid ease of doing business:

* Provision of single-member/shareholder companies- Section 18 (2) of the new CAMA now makes it possible to establish a private company with only one member or shareholders.

* Restriction on multiple directorship in public companies- S.307(1) of the Act frowns at a person from being a director in more than five (5) public companies at a time.

* Appointment of Company Secretary now optional- Going forward, the appointment of company secretary for private company is optional. According to Section 330 (1) of the new CAMA, the appointment is only mandatory for public companies.

* A Director can’t hold the office of a Chairman, CEO – According to Section 265 (6), private firms are now restricted from appointing a director to hold the office of the Chairman and Chief Executive Officer.

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* Procurement of Common seal not mandatory – Contrary to the previous document that insisted that every company must procure a Common Seal, CAMA 2020, according to Section 98, states that most jurisdictions around the world have expunged the requirement from their laws.

* Concept of Limited Liability Partnership and Limited Partnership – The new act combines the organisational flexibility and tax status of a partnership with the limited liability of members of a company.

* Virtual AGMs – New act made provision for virtual annual general meetings (AGM), provided that such meetings are conducted in accordance with the Articles of Association of the company. This is expected to facilitate participation from any location at minimal costs.

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* SMEs exempted from appointing auditors – Small companies or any company with a single shareholder are no longer mandated to appoint auditors at the AGM to audit their financial records.

Why it matters:
Nigeria is largely dominated by Medium and Small-Scale Enterprises (MSMEs). Making registration easier for them brings in more businesses into the formal space. This also enhances tax revenue for the government.

The Companies and Allied Matters Act (CAMA) was promulgated in 1990 to regulate the formation and management of companies in Nigeria

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