Business News
Here’s a look at how Nigeria’s Pension Fund performed in Q1 2019
The latest pension statistics have shown that the Nigerian Pension Fund asset crossed the 9 trillion mark in the first quarter of 2019, a feat that analysts have largely attributed to the growing awareness campaigns which have influenced the willingness of Nigerians to take their retirement plan seriously.
The latest pension statistics have shown that the Nigerian Pension Fund asset crossed the N9 trillion mark in the first quarter of 2019. Most analysts have largely attributed this feat to the growing awareness campaigns which have influenced the willingness of Nigerians to take their retirement plan seriously.
Also, Pension data covering the first quarter of 2019 show that Pension Contributors in Nigeria rose to 8.57 million compared to 8.41 million contributors recorded in Q4 2018. From the foregoing, it can be seen that the number of pension account holders increased by 2% between Q4 2018 and Q1 2019.
However, even though the pension fund asset has reached the N9 trillion naira mark, the breakdown shows that it is largely dominated by total FGN Securities, which several analysts have flawed. Let’s take a look at the breakdown of Nigeria’s Q1 pension fund asset.
Pension contribution by age category
A closer look at the pension data shows that pension contributors within the age group 30-39 years are dominant with 36% (3.06 million) of total contributors in the first quarter of 2019. Between Q4 2018 and Q1 2019, contributors aged 30-39 years increased by 14,873.
- Also, pension contributors within the age group of 40-49 years old stood at 2.40 million (28% of total) in Q1 2019, rising by 60,341 when compared to what obtained in the previous quarter (Q4 2018)
- The total Pension contributors within the age bracket of 50-59 years ranked the third with 1.54 million (18% of total) as at Q1 2019. Comparing this to the contributors in the previous quarter (1.52 million), it implies the contributors within the age bracket rose by 60,341 in one quarter.
- Similarly, contributors aged 60-65 years recorded a 24,161 increase in one quarter, improving the total contributors with this age bracket to 494,826.
- A further breakdown shows that contributors within the age bracket 65 and above rose by 14,171 contributors in the first quarter to hit 494,826 contributors.
- Lastly, contributors under 30 grew the slowest with 12,761 contributors with the last quarter, with a total of 816,656 contributors.
Pension Fund Assets Distribution
While the pension statistics remain abysmally low in Nigeria, another critical aspect of pension that analysts have flawed is the investment’s structure of the Nigerian Pension Fund. Over the years, a larger chunk of the pension fund has been invested in FGN securities, which are regarded as safe with low investment returns.
In the first quarter of 2019, FGN Securities still accounted for 72% (N6.5 trillion) of the total pension fund in Nigeria. Items listed under FGN securities include FGN Bonds, Treasury Bills, Agency Bonds, Sukuk Bonds, Green Bonds and so on. Next to the FGN securities is real estate properties with 2.56% (N231.37 trillion) of the total pension fund.
What the future holds for Pension Fund in Nigeria
Analysis of the age distribution of Pension contributors shows that the future still looks bleak despite increasing awareness among Nigerians. Within the quarter under review, contributors under 30 years added only 14,171. A closer look at the data shows that contributors less than age 30 ranks 4th highest contributors in all the six groups.
Ideally, the way pensions are designed, the younger the contributors the better the pension funds asset in any nation. This is because younger people contribute for longer periods, ensuring that pension fund assets are robust enough for investments.
On the other hand, contributors within the age bracket 30-39 years are dominant with 36% (3.06 million). This suggests that the Pension scheme in Nigeria is laced with a high level of growth uncertainties.
- Again, despite the 8.57million mark contributors, this only represents 12% of the population of employed people in Nigeria.
- According to the National Bureau of Statistics (NBS) unemployment data for the fourth quarter of 2018, the total number of Nigerians employed in both full and part-time stood at 69.6million.
- It implies that 61 million employed Nigerians are not captured under the contributory pension scheme.
Fund Managers’ approach and way out
It has been generally argued that the “conservative” investment strategy of pension fund administrators (PFA) who invest almost exclusively in FGN securities, is the major reason for the low rate of return.
- While this is worrisome, analysts have also put forward that fund managers are not to blame so much for this, as the regulation requires them to allocate a sizable portion of their assets to fixed income securities.
- Also, the rationale of trying to preserve the pension fund has always been to invest in secured fixed income securities and this in the meantime is paying off.
- While one resonates that it is a risk management strategy for fund managers to invest in secured fixed securities, the government and the fund managers should review approaches to ensure that pension asset growth is not sacrificed under the guise of secured investments.
- Lastly, the dwindling rate of under 30 pension contributors requires urgent action, otherwise, the future of the Pension scheme in Nigeria would further remain bleak.
Coronavirus
COVID-19 Update in Nigeria
On the 24th of November 2020, 168 new confirmed cases and 1 death was recorded in Nigeria
The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record significant increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 66,607 confirmed cases.
On the 24th of November 2020, 168 new confirmed cases and 1 death was recorded in Nigeria, having carried out a total daily test of 5,838 samples across the country.
To date, 66,607 cases have been confirmed, 62,311 cases have been discharged and 1,169 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 749,136 tests have been carried out as of November 24th, 2020 compared to 743,298 tests a day earlier.
COVID-19 Case Updates- 24th November 2020,
- Total Number of Cases – 66,607
- Total Number Discharged – 62,311
- Total Deaths – 1,169
- Total Tests Carried out – 749,136
According to the NCDC, the 168 new cases were reported from 10 states- FCT (61), Lagos (50), Kaduna (27), Oyo (12), Rivers (6), Katsina (5), Ogun (3), Kwara (2), Edo (1), Kano (1).
Meanwhile, the latest numbers bring Lagos state total confirmed cases to 23,018, followed by Abuja (6,576), Plateau (3,805), Oyo (3,715), Rivers (2,963), Kaduna (2,940), Edo (2,695), Ogun (2,156), Delta (1,823), Kano (1,777), Ondo (1,727), Enugu (1,332), Kwara (1,095), Ebonyi (1,055), Katsina (1,012), Osun (945), Gombe (938). Abia (926), Bauchi (753), and Borno (745).
Imo State has recorded 662 cases, Benue (493), Nasarawa (485), Bayelsa (445), Ekiti (354), Jigawa (328), Akwa Ibom (319), Niger (296), Anambra (285), Adamawa (261), Sokoto (165), Taraba (157), Yobe (94), Kebbi (93), Cross River (90), Zamfara (79), while Kogi state has recorded 5 cases only.
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Lock Down and Curfew
In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.
The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.
On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.
On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.
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Hospitality & Travel
US imposes $15,000 visa bond on 15 African countries, others
The US has issued a visa rule requiring tourist and business travelers in some countries to pay a bond of up to $15,000 in addition to the visa fees.
The outgoing administration of US President, Donald Trump, on Monday, November 23, 2020, issued a new temporary visa rule that requires tourist and business travelers from 15 African countries and others to pay a bond of up to $15,000 in addition to the visa fees, which ranges from $16 to $300, in order to visit the United States.
According to TheCable, the US State Department said the visa bond pilot programme, expected to take effect from December 24 and end on June 24, 2021, is targeted at countries whose citizens have higher rates of overstaying B-2 visas for tourists and B-1 visas for business travelers.
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The Trump administration said the six-month pilot program aims to test the feasibility of collecting such bonds and will serve as a diplomatic deterrence to overstaying the visas. Hence, overstay places significant pressure on Department of Justice and Department of Homeland Security.
The visa bond rule will permit U.S. consular officers to request tourist and business travelers from countries whose nationals had an overstay rate of 10% and above in 2019 to pay a refundable bond of $5,000, $10,000, or $15,000.
READ: COVID-19: IMF Chief predicts $345 billion financing gap in African countries
The countries whose tourist and business travelers fall into this category and subjected to the bond requirements are 24 countries, including 15 African countries. While these nations had higher rates of overstays, they sent relatively fewer travelers to the United States.
The countries include Afghanistan, Angola, Bhutan, Burkina Faso, Burma, Burundi, Cape Verde, Chad, the Democratic Republic of the Congo (Kinshasa), Djibouti, Eritrea, the Gambia, Guinea-Bissau, Iran, Laos, Liberia, Libya, Mauritania, Papua New Guinea, Sao Tome and Principe, Sudan, Syria, and Yemen
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Nigerian travelers escaped paying the temporary visa rule, as their overall score was below the threshold of 10% and above overstaying rate.
Economy & Politics
Senate approves issuance of N148bn promissory notes to Bayelsa, 4 others
Promissory notes worth N148,141,969,161.24 has been approved by the Senate as refund to Bayelsa, Cross River, Ondo, Osun and Rivers States
Promissory notes worth N148.141billion have been approved by the Senate as a refund to Bayelsa, Cross River, Ondo, Osun, and Rivers States for projects executed on behalf of the Federal Government.
The approval which was given by the Senate at the plenary on Tuesday, 24th November 2020, came after the presentation of a report by the Committee on Local and Foreign Debts, led by Senator Ordia Clifford (PDP-Edo).
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According to a news report by NAN, this is a go-ahead to the Federal Government, who had sought the approval of the Senate for issuance of promissory notes for a refund on federal projects executed by State governments.
The request was contained in a letter addressed to President of Senate, Dr. Ahmad Lawan by President Muhammadu Buhari, and read at plenary. The Senate referred the matter to the Committee on Local and Foreign Debts for further legislative input.
(READ MORE: FG inaugurates steering committee on Covid-19 economic recovery)
Senator Ordia Clifford, while presenting the report of the committee, said the Permanent Secretary, Federal Ministry of Finance; Federal Commissioners of Finance and Works in the five states, had briefed the committee on details of the projects.
He said the Committee was presented with documents relating to the approvals of the Federal Government through the Federal Ministry of Works and Housing for the execution of the projects and certificates of completion, amongst other documents.
READ: Boosting IGR; A necessity for states to avoid total dependence on FAAC allocations
At the plenary today, Senator Ordia moved the motion that the Senate approves the Committee’s recommendations by approving the issuance of the promissory notes to the State governments.
According to him, the amount due to the five states is N148.14billion.
- Bayelsa was allotted N38.40billion
- Cross River was allotted N18.39billion
- Ondo was allotted N7.82billion
- Osun was allotted N4.57billion
- Rivers was allotted N78.95billion
What they are saying
The President of the Senate, Ahmad Lawan, disclosed that records showed PDP states had the highest refund, he said: “If you look at the list of states, only two are APC states and they have the least in terms of refund, this is fantastic and a mark of leadership by the Federal Government. This shows tolerance and leadership by this administration.”
COVID-19 Update in Nigeria
US imposes $15,000 visa bond on 15 African countries, others
FIRS rakes in N4.178 trillion revenue, achieves 98.6% of revenue target
Senate approves issuance of N148bn promissory notes to Bayelsa, 4 others
Interswitch Group becomes Finastra’s lead technology partner in Nigeria
COVID-19 Update in Nigeria
Daily Parallel Market Exchange Rate – ₦480/$1
Oil prices hit highest price level since Q1
Ripple on high demand, XRP up 100% in 14 days
FG secures $72 million from World Bank for states to develop land information systems
