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Pension funds are in trouble as inflation erodes asset values by 100%  

The persistent depreciation in the value of the Naira has eroded the value of Nigeria’s pension funds assets by as much as 100% between 2012 and 2019. In the meantime, inflation continues to be a major problem.

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Nigerian Pension funds, 2019 pension fund performance ranking

The persistent depreciation in the value of the Naira has eroded the value of Nigeria’s pension funds assets by as much as 100% between 2012 and 2019. In the meantime, inflation continues to be a major problem.

The pioneer Director-General of the National Pension Commission (PenCom), Muhammad Ahmad, called the attention of stakeholders to this problem when he spoke recently on the topic “The Pension Industry – The Way Forward” during a retreat that was organised for National Assembly members on pension.

A serious problem: The Nation Newspaper reported that Ahmad stressed the need to ensure that contributors and retirees do not end up suffering unduly due to the depreciation of the Naira over the years.

The former DG also pointed out the fact that a dollar exchanged for an average of N170 in 2012, whereas today it exchanges for N360. What this means, therefore, is that within this period, pension contributors and retirees have collectively had the value of their monies eroded by 100%.

PFAs make N1.69 trillion ROI , Pension Contributions in Nigeria rose by N169.9 billion in 3-month , PenCom calls for thorough scrutiny of dead RSA holders’ benefits, PenCom discontinues Employee Death Benefit Account  , PFAs boost investment in infrastructure by N17.77 billion in one year , Pension: Low RSA balances - a subtly growing concern, PENCOM boss queried for spending unapproved funds, N5 billion on 360 staff in 8-month 

The current DG of PenCom

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The Way forward: The former PenCom boss went further to argue that in order to preserve the value of the N9.5 trillion pension fund asset, there is an urgent need for PenCom to allow more investment of pension funds in foreign assets. According to him, the provisions made by the Pension Reform Act (PRA) of 2014, Section 87 (1) which allowed for this have remained fairly non-operational.

Ahmed also urged PenCom and other industry stakeholders to engage the Central Bank of Nigeria in order to develop a workable framework to access foreign exchange for pension funds investments for the benefit of RSA holders in the immediate future. He added that the power to increase the limit of pension funds’ assets allowed to invest in foreign investments should be moved from the presidency to the board of the pension commission.

[READ MORE: PenCom boss queried for spending N5 billion on 380 staff in 8 months]

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Going forward, however, I will strongly suggest that the need for Presidential assent be removed and replaced with the power of the Board of the Commission to issue investment regulation for foreign investments as is done in a number of North and South American countries. 

“There is the need to encourage the development of enabling a framework for pension funds to facilitate national development. In this case, Public-Private Partnership (PPP) rules need to be strengthened at both the national and state levels while Africa infrastructure collaboration initiative projects like roads, rails, telecommunication, power, among others should be promoted.

“There is also need to promote credit enhancement market in the short term – currently InfraCredit is virtually the only private institution providing such guarantees (incentives) in Nigeria. However, enabling environment such as policies on project preparation to enable quality project issuance need to be established so as to walk ourselves out of provision of guarantees in the future.” 

1 Comment

1 Comment

  1. onlooker

    December 11, 2019 at 12:16 pm

    It will be a complete disaster to allow them to invest pension in foreign lands.

    They are trying to become completely immune from the the institutionalized grand rent-seeking pyramid scheme they have perpetuate in Nigeria.

    One of the things that shields civil servants from the bad decisions they make in office is Pensions, Nigerian civil servants are living in a bubble, by moving their pension to another country for investment, it further protects them from the hash reality they create in our country.

    They can recover some of the money lost from paying civil servants that have been dismissed from office/service.

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Corporate Press Releases

Technology now a great tool to drive desired growth in Nigeria, amid COVID – FITC

FITC is passionate about empowering the youths with the right skills and knowledge needed to excel in todays’ tech-driven world.

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The Financial Institutions Training Centre has stated that technology has become a great tool for driving the desired changes in Nigeria, altering ways of life, individual engagements and interactions, especially amid Coronavirus pandemic.

During a webinar organised by the Centre and attended by Nairametrics, Managing Director/ CEO, FITC, Chizor Malize, explained that the 20th century has recorded major breakthroughs in technology through innovation in health, energy production, disease control, business engagement, financial services, and other enterprise solutions.

She lauded the event partners and sponsors – Bank of Industry, Stanbic IBTC, International Business Machines Corporation (IBM) and media partners; Nairametrics, Regtech, BBbuzz, The Nation and Financial Nigeria for making the event a huge success.

One of the speakers, the Managing Director of Zercom Systems, a software technology company, Tayo Awosanya, noted that digitization, creativity, and resourcefulness are key elements in achieving personal and organizational success in today’s world. He noted that one of the very bright spots on COVID-19 pandemic is the acceleration in digital learning being witnessed across the different sector of the economy.

For Tayo, aside from turning to technology for effective and smart learning outside the classrooms, the pandemic has triggered rapid online product advertisements which is a formidable space for everyone to explore in growing their businesses and acquiring knowledge, which in turn can also become a huge source of livelihood for implementors.

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In her submissions, Chief of Staff/ Co-Founder, Future of Africa, Adenike Sheriff, urged youths to consider ways of designing and implementing solutions amid challenges. She disclosed that while Africa has a plethora of problems, the problems invariably presents opportunities for the people of the continent to explore and deploy solutions for the benefits of mankind.

According to Sheriff, leveraging and finding investible ideas opens doors for organizations that will provide the needed take-off grants. Still, the promoter of such idea, she said, must have a clear understanding of how it works and what to do to turn it to reality.

Musty Mustapha, Co-Founder & CTO of Kuda, who spoke on the “Rise of Bedroom Coders” among others, stated that more Africans, many of whom are women, are learning software development with free resources online. He noted that as the continent produces coders, potentially disruptive start-ups are being founded in sectors ranging from fintech to transportation.

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According to Musty, while digitization is spreading across the African continent, it is not quite a revolution yet. “Only about 20% of the people living in sub-Saharan Africa have internet subscriptions. In the same region, the average subscriber uses 300MB of internet data in a month,” Musty noted.

While listing the gains of affordable banking services to the people, economy, and businesses, Musty noted that smart technology is leading and bringing people to take advantage of the global digitization that is taking place.

“There are lots of start-ups springing up around Nigeria, and people have to take advantage of the industry that is exploding. What we need currently, is the democratization of knowledge to enable more people take advantage of technology to drive their businesses and promote connectivity” Musty stated.

Also at the event, FITC announced the top three winners in the maiden edition of its Youth Connect Essay Challenge 2020.

The winners were announced during the FITC’s virtual Pan African Technology Summit which held on Tuesday, December 1, 2020, in Lagos, with the theme: “Accelerating Growth and Development in Africa: The Role of Technology and Innovation”.

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Oke Donatus Chibuzor, an undergraduate from the National Open University, Lagos, Nigeria was announced the star prize winner for the essay competition. He was rewarded with $1,000 cash prize, a laptop, a Leadership Certification programme and a one-year mentorship programme.

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The second prize went to Abdul Pelumi Ganiyu, a 20-year old undergraduate at the University of Ilorin, Kwara State, who received $500, a laptop and one-year mentorship programme while Ololade Oshodi, a 23-year old undergraduate at the University of Lagos, emerged as the third-place winner and was awarded a laptop and one-year Mentorship programme.

In their comments, the judges said submissions by the finalists were judged on originality, expression, creativity, and appropriateness to the theme.

Speakers at the summit and awards event – Managing Director/ CEO, FITC, Chizor Malize, as the key note speaker, Tayo Awosanya, Managing Director, Zercom Systems; Greg Malize, Founder, IMPACTGEN; Adenike Sheriff, Chief of Staff/Co-founder, Future of Africa and Musty Mustapha, Co-Founder, Kuda- discussed extensively on the growth and development Africa can achieve by leveraging on technology.

Malize, stated that FITC is passionate about empowering the youths with the right skills and knowledge needed to excel in todays’ tech-driven world. She noted that the star prize winner went the extra mile in his report to give depth and showed mastery of the subject, which gave him an edge over others.

“Africa is filled with very intelligent people and we are proud of all the contestants for the zeal and knowledge displayed in the course of the exercise. FITC will be adopting all winners from across Africa and exposing them to fantastic programmes in the next one year.

“This is definitely not a winner takes it all programme as there is something significant for everyone that has shown interest and commitment in this maiden edition,” she assured.

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Hospitality & Travel

COVID-19: Over 70% of jobs lost in aviation, tourism industries in 2020 – AfDB

The AfDB has stated that about 5 million jobs have been lost in the aviation and tourism industries in Africa due to the COVID-19 pandemic.

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Aviation in Africa

About 5 million out of Africa’s 7 million aviation and tourism industry-related jobs have been lost in 2020. Also, as much as $15 billion in revenue, half of this to African airlines.

This was disclosed by the African Development Bank (AfDB) in a statement issued and seen by Nairametrics on Friday.

Vice President for Infrastructure, Industrialization and Private Sector, AfDB, Solomon Quaynor explained that the pandemic’s effect was felt more in Africa, a claim that was backed up by numerous panelists at the just concluded AfDB’s webinar themed ‘African Aviation Recovery Conference: coordinating an efficient response to the COVID-19 crisis’s effects on the Aviation sector in Africa.’

He said, “The air transport system is really at the forefront of all our collective objectives to realize Africa as a single economic bloc. The centrality of the aviation sector to Africa’s long-term goals by referencing three flagship projects of the AU’s Agenda 2063 that aim to advance open skies and closer connectivity: SAATM, The African Continental Free Trade Area, and the African Passport-Free movement of people.

“The air transport system is really at the forefront of all our collective objectives to realize Africa as a single economic bloc of 1.3 billion people with a GDP of almost 3 trillion dollars, for which we want to begin to really focus and increase trade among ourselves, as well as investment.”

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Also at the event, Minister of Aviation, Hadi Sirika called on African governments to embrace full liberalisation of the aviation sector, invoking the Yamoussoukro Decision, which established an arrangement for the gradual liberalization of intra-Africa air transport services.

He said, “Nigeria today has all its bilateral air service agreements with the YD and was also among the first ten countries that signed a commitment to implement the Single African Air Transport Market.”

Dr. Amani Abou Zeid, African Union Commission for Infrastructure and Energy, explained that Africa’s aviation industry represents a huge market that the continent’s airlines need to exploit more fully, with technology and AI offering the way forward for expansion, regional development experts.

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“Technology and smart technologies are offering this fantastic opportunity, so let’s make use of AI, let’s make use of the Internet of Things, let’s capacitate our people to revamp and to rethink our industry, to make sure that both our airports and our airlines cater for the very near future,” said Zeid.

What they are saying

A key takeaway was the urgent need for coordinated action among the sector’s actors, including governments, aviation authorities and multilateral stakeholders such as the Bank.

“The time is now. All of us who have really been working on upstream issues such as SAATM, the World Bank, ourselves, the AU and others, now is the time to really pool our advocacy and resources to make this happen once and for all because if we continue to operate as a federation of 54 states as opposed to an integrated market, our economies will continue to be sub-optimal,” said Quaynor

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Energy

Autogas: Nigerians will not pay N250,000 for conversion, it is free – FG

The FG has clarified an earlier statement about Nigerians having to pay N250,000 to have their vehicles converted from diesel/fuel use to autogas.

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FG says vehicle owners to pay N250,000 to convert from petrol to autogas

The Federal Government has said that news reports of Nigerians having to pay N250,000 to convert their cars from diesel/petrol engines to gas is false and incorrect.

This was disclosed by Justice Derefaka, the Technical Adviser on Gas Business and Policy Implementation to Minister of State for Petroleum, Timipre Sylva, to newsmen on Friday.

On Friday, Derefaka clarified his position as wrong and said the FG plans make the conversion for free. He added that the FG plans to convert 1 million vehicles for free by the end of 2021.

“I granted an interview on Channels Television, where I stated the auto conversion of vehicles to gas will amount to N250k and Nigerians will need to pay for that. That statement is not correct, it is wrong.

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“On that note, I will like to state the position that has been made by my boss, Timipre Sylva, that FG will convert those vehicles for free for Nigerians, and we are looking at 1 million vehicles by the end of 2021,” he said.

What you should know 

  • Nairametrics reported earlier this week that  Justice Derefaka had said vehicle owners in the country would have to pay N250,000 to have their cars converted to autogas from petrol.

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