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Is the pension asset just another cookie jar?

Around 2013/2014, Nigeria’s pension fund asset was at about 4.21 trillion naira.



How negative performance in the capital market affected PFAs in 2019

Around 2013/2014, Nigeria’s pension fund asset was about N4.21 trillion. There was so much talk about the country being so dumb to let such amount sit idle. Analysts talked so much about the potential impact of investing so much money. Private Equity (PE) firms wanted it. The government also wanted it.

While the PEs could only talk, the government either resisted the pressure or lacked the balls to dip their hands into the pension asset at the time.

But powerful interests continued to encircle it, and analysts continued to denounce having so many funds sitting idle while the country grappled with myriads of the infrastructural deficit.

Nine Funds that Joined the League of Mutual funds in 2019 One of the problems that is prevalent in Nigeria is that of paucity of data. Though that problem still bedevils the Nigerian mutual fund industry, the Security and Exchange Commission has been doing its best to publish, as often as it can, a compilation of the Net Asset Values of Nigerian mutual funds. One way to judge the health of an industry like the mutual fund industry, is to look at the trends of fund flows into and out of the industry. In one of my recent pieces, I pointed out that the state of the industry seemed to be strong, and judging by how much investors poured into the industry in 2019, the state of the industry seems to be even stronger. Another way to judge the health of the industry is to look at its growth in terms of the number of funds, especially number of new funds, launched within a review period or year. Due to lack of alternative facts, our analysis is based solely on the publications by the Security and Exchange Commission. Based on the SEC NAV Summary reports, we can comfortably say that Nine new funds were added to the list of active mutual funds in Nigeria in 2019. That is a slight improvement over the 8 new funds that were added in 2018, but nothing compared with the 16 new funds added in 2017. Be that as it may, the fact that the industry added more funds, with none going into extinction, is quite commendable and a mark of growth. Here are the newcomers in 2019. Vantage Dollar Fund and Vantage Equity Income Fund: Vantage Dollar fund is a Eurobond fund, being denominated in US Dollar. It is a product of InvestmentOne Fund management. Though the fund opened for issue on April 23 2018, closing on June 1, 2018, it did not get listed in the SEC report until sometime in 2019, making it a newcomer in 2019. Its current asset value is N1.8 billion and the fund generated about N78 million in gains in 2019. InvestmentOne also launched the Vantage Equity Income Fund. That brings to 6, the number of funds being managed by InvestmentOne Asset Management, giving it a total asset under management of N21.6 billion. (1)Another new comer in 2019 is the IBTC Shariah Fixed Income Fund. The Fund is an “open-ended unit trust scheme that invests in Shariah-Compliant fixed income securities and investment products that are permissible under Shariah principles.” A product of Stanbic IBTC Asset Management, the fund was valued at N1.5 billion by the end of 2019 and generated an estimated N54.6 million in gains also in 2019. With that, the number of funds under the management of Stanbic IBTC Asset Management company now comes to 14, with total asset undermanagement of N478.2 billion as at the end of 2019. (2) PACAM Eurobond fund and PACAM Equity Fund also made it to the list of newcomers in 2019. Though PACAM Eurobond fund is said to be Eurobond fund, at least by nomenclature, the fund manager’s website says that the fund invests in “Fixed Income instruments such as FGN Bonds, Sub National Bonds, Corporate Bonds and other investment grade Fixed income instruments giving investor’s opportunity to invest in secure and high yielding Bonds offered by Federal and State Governments of Nigeria and large Corporates.” The launch of the two funds brings to 5, the number of funds being managed by PACAM Asset Management company, bringing its asset under management, AUM, to N1.56 billion. (3) Lead Balanced fund also got enlisted in the SEC NAV Summary Report for the first time in 2019. A product of Lead Asset Management, the fund is an Open-Ended Fund authorized and registered in Nigeria as a Unit Trust Scheme. Aimed at achieving capital appreciation by holding long-term positions in different asset classes and provide regular income streams for unit holders, Lead Balanced fund was valued at N475 million at the end of 2019, after making about N10.57 million in gains. Lead Asset management now manages 2 funds with combined AUM of N566 million (4) Legacy Money Market: Not wanting to be undone by other asset managers, First City Asset Management launched its Legacy Money Market fund, to bring the funds under its management to 4, and total asset under its management to N20.5 billion. (5) Growth & Development Asset Management Limited also debuted in the Nigerian mutual fund industry with its GDL Money market fund, an open-ended mutual fund that invests in a broadly diversified portfolio of short-term, high quality money market securities such as Treasury Bills, Commercial Papers, Bankers Acceptances and Certificate of Deposits issued by rated banks in Nigeria. With that, Growth & Development Asset Management Limited, GDL, gets set to make its mark in the industry with its current AUM of N896 million. (6) FSDH Treasury Bill Fund: 2019 saw what could be known as Nigeria’s first and only Treasury Bill fund, with the launch of FSDH Treasury Bill Fund by FSDH Asset Management. Though a money market fund by its characteristics, the FSDH Treasury Bill Fund “provides investors with the opportunity to invest in a range of Treasury Bills across different tenors” in Nigeria. That brings the number of funds being managed by FSDH Asset Management to 4 and its total asset under management stood at N44 billion as at the end of 2019. Conclusion: There is no doubt that the Nigerian mutual fund environment is still evolving and a fertile ground for innovation and product development. A lot of progress has been made, and a lot more needs to be made. One area that is yearning for attention is the area of fund of funds. We are watching to see who launches the first fund of funds in Nigeria.

Mallam Nasir El-Rufai

So, many knew it was only a matter of time before someone had the guts to lay hands on the retirement savings of Nigerians. That came in December 2019, when the National Economic Council announced that it would be borrowing from the pension asset. The reactions that trailed it were not unexpected. A part of those reactions included a poll by a civic organisation, BudgIT where people literally shouted at the government to stay away from their retirement savings.

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But of course, that would not be, as the council met again last week and decided that the plan to borrow N2 trillion from the pension asset had been perfected. According to Kaduna State Governor, Mallam Nasir El Rufai, who announced this to newsmen, the money would be invested in the construction and maintenance of road infrastructure, rail, and power.

El Rufai further argued that there is no cause for alarm in the borrowing of the pension fund as a significant portion of the fund belongs to workers in their 30s, who wouldn’t be needing the money in the next decade or two. He cited such sovereign nations that had used its pension assets to bolster its infrastructure to include South Africa and Russia, saying Nigeria could do the same.

These seem like a fair argument but the challenge this government faces, like the ones before it, is that the people do not trust it. For a government that has demonstrated its ingenuity in the mismanagement of resources and continues to borrow and borrow, many do not seem to understand how it would be able to manage this differently and payback promptly. The fear that the borrowed fund will be pilfered, turned into just another cookie jar, is not also unfounded as the government is neither reputed for its accountability.

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[READ MORE: Nigeria’s Pension Asset increased by N228 billion in October)

Meanwhile, those who argue that whatever the government decides to do with the borrowed fund would be better than letting it sit idle should be reminded that trillions of naira of the pension asset are already in government debt, as part of investments into government securities. This approach has been considered the safest as opposed to direct deduction from the fund.

More so, Governor El Rufai should be reminded that the demographics he referenced have made only a little contribution to the pension asset. A huge percentage of young Nigerians in their early 30s have not had their first job, post-graduation, at least in the formal sector where pension contribution is mandatory. So, those who argue that the pension fund belongs to young people should have a rethink.

Another sad part is that there is no guarantee that the government will not come for more of the pension fund once it is able to lay hands on this successfully. That would automatically trigger a tale of how Nigeria’s pension asset was ballooning and running smoothly until the government decided to borrow from it. No Nigerian deserves such a story in his old age.

The truth that this government has refused to admit, is that it has a worsening revenue crisis.

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Now, Nigeria’s revenue crisis is worsened by growing recurrent expenditure, debt service of 70% of revenue and growing revenue shortfalls. And with debt up to its throat within a short period, tinkering with the citizens’ retirement savings won’t offer much relief either. Instead, it could resolve this crisis by a conscious effort to shrink the size of the government to reduce its staggering overheads, while letting in more participation of the government.

Stanbic IBTC

One will wonder if this move replaces the controversial plan to borrow $29.9 billion which the government is seeking approval from the senate. If it is not, then Nigerians should brace up for a heavily debt-laden and unpalatable future.

President Buhari may sign 2020 Budget tomorrow, President Buhari approves N37 billion for National Assembly renovation, President Buhari appoints Sarki Auwalu to head DPR , Economy: Reviewing FG’s 2019 revenue performance, Nigeria, and other African markets top destination for investments in 2020

However, one would also argue that if the government has decided that the pension fund should be invested outside the safe havens of bonds and treasury bills, it should do well to extend a portion of the fund to Venture Capital firms to invest in Nigeria’s bourgeoning technology space.

[READ ALSO: Pension asset increases to N9.33 trillion – PenCom)

The technology ecosystem in Nigeria attracted approximately $663.24 million, and about N239 billion-naira investment in 2019. The analysis shows that more than 80% of this capital is foreign. This means that the country is building a generation of enterprises that could dominate the economy in the next decade on foreign capital. The government can use this opportunity to tap into the industry by creating an investment vehicle using a portion of the pension fund (they could start with N500 billion naira), allowing VCs in Nigeria to invest in several viable technology start-ups across Africa. Imagine the impact that could have.

Beyond initiatives such as this, borrowing money from the pension fund equals to treating it as just another cookie jar. Nigerians don’t deserve that.


Jonah Nwokpoku is a financial journalist and the publisher of an online newspaper, Nigeria Today News.


Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform. To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.



  1. Ose

    January 30, 2020 at 10:45 am

    There is no reason that justifies direct borrowing of pension funds by the federal government. For sake of emphasis, the bulk of pension fund is being invested in government securities. This is an indirect borrowing and utilization of pension funds by the government. It amounts to oppression of the masses to dip into funds contributed by hardworking individuals without their consent.

    Also, if government need funds, they should cut down on the cost of running the government. A 50% reduction in legislators’ allowances across the federal and state level will free-up tangible funds to be used for other developmental projects.

  2. Trouble

    February 4, 2020 at 8:37 am

    Government has no moral grounds for borrowing from pension funds when pensioners are not paid their entitlements. Many pensioners die without collecting a kobo from their pension funds because of flimsy excuses from the pension fund administrators . Nobody is looking into the plight of pensioners. Please leave the pensioners funds alone. Those who want to borrow from the funds did not contribute to it.

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Fidelity Bank Plc must cover the chink in its curtains to keep rising 

Fidelity Bank Plc follows the narrative of top tier-2 banks, which have had better or easier years.



Fidelity Bank Plc

The Nigerian banking sector has consistently been one of the most profitable sectors in the Nigeria Stock Exchange market. However, in 2020, Deposit Money Banks (DMBs) have faced a flurry of impediments, which may have affected their solidity.

With reduced income from fee and commission implemented at the start of the year by the Central Bank of Nigeria, the paucity of foreign currency for international transactions, the resulting economic contraction from dire effects of the coronavirus pandemic, and the consequent operational constraints of keeping employees safe, 2020 is obviously fraught with numerous disorders for banking institutions.

READ: Another Fidelity Bank Non-Executive Director purchases 1 million shares worth N2.75million

For most, it hasn’t exactly been a year for growth at all, more like a walk in the woods, where improvements to bottom-line is almost unexpected. This period, many banks seem content with simply surviving and fundamentally matching their previous feats.

Fidelity Bank Plc follows the narrative of top tier-2 banks, which have had better or easier years. The bank generated a 2020 9M PAT of N20.4billion, rising 7.08% from the corresponding figures last year, but drilling solely into its results in Q3’2020 and its exact comparative period in 2019, the bank suffered reduced interest revenue, reduced fees and commission, reduced profit before tax, and reduced after-tax profit.

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READ: STANBIC IBTC posts Profit After Tax of N45.2 billion in H1 2020

Fidelity Bank Plc concluded Q3 with a profit position of N9.1billion, 13.7% decline compared to its position in 2019 y/y. PBT reduced by 12.9% from N10.8billion in 2019 to N9.4billion this year. Gross earning in Q3 was only N49billion as against N57billion in 2019 – plummeting 14%.

The Group Chief Executive Officer of the bank, Mr. Nnamdi Okonkwo, commenting on the result said: “Our 9 months results reflect our resilient business model, particularly in a very challenging operating environment. We worked closely with our customers to gradually recover from the economic impact of the pandemic and the attendant effect of the lockdown. The drop in gross earnings was due to the decline in interest and similar income, caused by lower yields and drop in fee income.”

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READ: Sterling Bank Plc records 3.28% decline in 2020 9M gross earnings

True cause of the reduction in earnings

DMBs generate gross earnings under three primary subheads: Interests earned, Fees and commission, and Other operating income. Fidelity Bank Plc generated a combined total of N150.8billion for the period ended September 2020 from these three categories, compared to the N158.5billion in the corresponding period last year.

READ: Ethereum Miners earn a staggering $1 million in 1 hour

Deeper analysis reveals that this rising tier-2 bank has seen more deficit in revenue from fee and commission compared to the other aforementioned gross-earnings’ generating-sources within this period. Interest earned dropped by a difference of N4.3billion, while revenue from fee and commission saw a decline of N4.8billion from N14.5billion in 2019 to N19.3billion YoY.

Fee and commission as a component of gross earnings

Card maintenance fees, account maintenance fees, commission on remittances, collect fees, telex fees, electronic transfer fees, amongst others, represent the plethora of channels that makes up income from fee and commission.

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READ: Strong performance from Stanbic IBTC, despite weak retail banking position

Stanbic IBTC

The real insight this particular component of gross earnings provides is that a spike in revenue generated indicates increasing/increased customer account activity. The more a customer maximizes the usage of an account’s product and facilities, the more the revenue earned from this segment. Thus, earnings from fees and commissions are so overriding due to their apparent controllability.

For example, a bank could make the decision to purely pursue and aggressively drive the usage of its ATM debit card and promptly see the revenue from commission rise. Furthermore, an increased rate of card production and collection necessitates usage and consequently means more money is earned as card maintenance fees.

READ: Unity Bank Plc posts gross earnings of N11.04 billion in Q3 2020

The fact that gross earnings reduced mostly from fees and commissions should be a telling concern for the Management of Fidelity Bank Plc. Post covid-19 would birth the dawn of a new era for business processes. The management must guarantee the usability of its electronic banking channels, promotion of its cards, and with urgency, implement improved service delivery mechanisms to ensure that it is the first port of call to customers for general payments and remittances.

These measures are of grave significance in the bid to bridge its widened fee and commission income gap.

READ: Central Bank says monetary policy not to blame for rising food cost

Other indices

Holistically, in the 9 months ended September, it is worthy of note that the bank made certain advancements. Customer Deposits, Net Loans and Total Assets all grew in double digits. Customer Deposits grew by 22.3% from N1.2billion to N1.5billion, Total Assets also rose by 21% from N2.1billion in 2019 to N2.5billion, and Net Loans rose by 12.9% to N1.3billion from N1.1billion.

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Airtel is paying up its debts

Airtel’s annual report revealed that the company has a repayment of $890 million due in May, as well as, an installment of $505 million due in March 2023.



Top payday loans, Airtel is paying up its debts

Airtel’s presence in 14 countries from East Africa to Central and West Africa would have been impossible without relevant financial investments. But, while the funds have been key to its growth in the past few years, many of its financial obligations are starting to mature quickly.

The Covid-19 pandemic has had negative economic effects on different sectors of the economy; however, the resilience of the telecom sector is evident in an increase in Airtel’s income. The overall performance of Airtel increased with a revenue growth in constant currency of 19.6% in Q2 compared to 16.4% recorded in Q1, while revenue on reported basis increased by 10.7% to $1.82 billion, with Q2 revenue growth of 14.3%.

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Unilever Nigeria Plc: Change in management has had mixed impact

9 months into the change of management, Unilever Nigeria Plc’s performance in Nigeria has been largely underwhelming.



Unilever Overseas increases stake in Unilever Nigeria Plc

Change in the management of a company is never a walk in the park. Transitions usually take time to yield the desired results. Organizations can look to past successful managerial transitions for inspiration, but not for instruction because there is no defined playbook. The decision to replace Mr Yaw Nsarkoh, who served as the Managing Director of Unilever Nigeria Plc until the end of 2019 was plausible, but adjustments were never going to be an easy task.

Mr Nsarkoh had served as Managing Director of the company for 5 years and steered the course of its proceedings with remarkable skill up until the financial performance disaster which culminated in his resignation on November 28th, 2019.

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