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Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO 

The CEO of Sigma Pensions Limited, Dave Uduanu, said Pension Fund Administrators in Nigeria are going to have a really difficult year.

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Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO 

The Chief Executive Officer of Sigma Pensions Limited, Dave Uduanu, said Pension Fund Administrators in Nigeria are going to have a really difficult year. Uduanu disclosed this recently when he joined CNBC Africa’s Esther Awoniyi to talk about how Nigerian PFAs intend to navigate through Nigeria’s compressed investment terrain and inflationary pressures.

According to him, 2020 is looking very tough, with bond yields below 10%, even as treasury bill yields are at about 4%. Uduanu also noted that these are all below inflation rate, even as he wondered how possible it is to manage savings in a country where yields are below inflation.

Pension funds managers are really going to struggle in 2020 – Sigma Pensions CEO 

Dave Uduanu, Sigma Pensions Limited 2

He said: “In 2019, a lot of PFAs were able to deliver returns that were slightly above inflation in the four key funds that we manage. However, this year is looking tougher, it’s looking challenged. Bond yields are below 10% and treasury bill yeilds are below 4%… All below inflation. 

“I think the key question is – how do you manage savings in a country where yields are below inflation. Even asides from pension funds, for the man on the streets, if you want to achieve the goal of financial inclusion which is for them to open bank accounts and keep their money in the bank, you have to ensure that at least, interest rates are at par with inflation or very close to inflation. But that’s not the case here.

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“So, PFAs are really going to struggle this year. However, the equity market has come to support the yields. In the first month of the year, it was about…just under 10% and in the first two weeks of the year it was touted as the best performing stock in the world.”

[READ MORE: PFAs boost investment in infrastructure to N40.52 billion)

At the bane of PFAs’ rather gloomy 2020 performance outlook is recent restrictive policy that was implemented by the Central Bank of Nigeria. Uduanu recalled that 2019 was relatively good year for bonds and treasury bills until the apex bank came up with its OMO policy. The policy more or less restricted a large segment of investors from being able to invest in treasury bills.

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Speaking further, Uduanu admitted to a sentiment which was previously expressed by other PFAs about the likelihood that some specific banking stock might lose their valuation. He also expressed worry over the lack of alternative asset classes to support the void this would most certainly create.

“Look, the market is driven by liquidity. We see a lot of PFAs and indeed other investors jumping into the equity market. The market has been depressed for the last three years. There are some good names that have rallied in the last few years. Banking names will struggle this year because, as you know, the Central Bank raised its CRR rate and that means that banks are going to struggle with liquidity…”

He, however, expressed the optimism that the Nigerian equity market will do much better than last year and this is due mainly to the fact that investors t=do not have much investment options at the moment.

In terms of where PFAs are specifically looking to invest this year, Uduanu mentioned the real estate sector. According to him, now that the other rates are down significantly, PFAs are beginning to see mortgage rates that are very close to 10%. He added that the PFAs are now trying to come up with a vehicle that allows borrowers to borrow at 9%.

You may watch the full interview here.

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Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs. He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor. Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan. If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Financial Services

NAICOM issues operational licences to 6 insurance firms and 1 reinsurer

Four new insurance firms and one reinsurance company have been issued operational licenses by the National Insurance Commission (NAICOM).

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The National Insurance Commission (NAICOM) has issued operational licences to six new insurance firms and one reinsurer.

This was disclosed by the NAICOM boss, Mr. Sunday Thomas, while handing over operational licenses to the five firms at the NAICOM Head Office in Abuja today.

The new firms are Heirs Insurance Limited (General); Stanbic IBTC Insurance Limited; Heirs Life Assurance Limited; Enterprise Life Assurance Company Nigeria Limited; and FBS Reinsurance Limited, Salam Takaful, and Cornerstone Insurance Co. Limited.

According to Mr. Thomas, “The National Insurance Commission (NAICOM) received applications from the under listed companies for registration as Insurance and Reinsurance Companies to transact insurance and reinsurance business in Nigeria. In fulfilment of the statutory provisions of extant laws for the registration/licensing of insurance Companies, the general public is hereby informed that the Commission has commenced the process of registering the companies.”

What you should know

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Heirs Insurance Limited (General) has Mr. Olaniyi Stephen Onifade as its Managing Director; Mr. Akinjide Orimolade, Stanbic IBTC Insurance Limited; Mr. Abah Okoriko, Heirs Life Assurance Limited; and Mrs. Fumilayo Abimbola Omo, Enterprise Life Assurance Company Nigeria Limited.

FBS Reinsurance Limited is to be led by the former Commissioner of Insurance, Fola Daniel, along with other seasoned professionals from the brokerage and underwriting units of the industry like Bala Zakariyau, the former Managing Director of Niger Insurance, Ahmed Olaniyi Salawu of the Standard Insurance Consultants, and Wole Oshin of the Custodian Investment Plc.

Takaful Insurance is based on sharia or Islamic religious law, which explains how individuals are responsible for the protection of one another. Takaful Insurance policies cover health, life, and general insurance needs. It is introduced as an alternative to those in the commercial insurance industry, which is believed to go against Islamic restrictions on interest, gambling, and uncertainty principles – all of which are outlawed in sharia.

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Economy & Politics

Nigeria edges closer to getting World Bank loan, in the final stages of talk

The Finance Minister has disclosed that Nigeria has fulfilled the conditions and is in the last stages of securing a World Bank loan.

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FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion,IMF, International monetary fund, Zainab Ahmed, Nigeria's Minister of Finance, Budget and National Planning

Nigeria is set to achieve its plans of getting the $1.5 billion World Bank loan package as it is in the closing stages of the deal following its fulfilment of the conditions set by the international multilateral organization.

This disclosure was made by the Minister for Finance, Budget and National Planning, Zainab Ahmed, during an interview on Friday, November 27, 2020, with Bloomberg Television.

While pointing out that Nigeria’s senate approved the borrowing plan from the World Bank in June, Ahmed said the board of the multilateral institution will discuss the loan package at their next meeting.

What you should know

It can be recalled that the World Bank loan which had been sought by Nigeria in the wake of the devastating impact of the coronavirus pandemic, was being delayed by the Brettonwood institution due to concerns over reforms as it feels that Nigeria has not shown enough commitment towards achieving them.

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Some of the reforms include the unification and flexibility of the exchange rate, removal of fuel subsidy, increase in electricity tariffs amongst others.

However, it seems that with the recent deregulation of the downstream sector of the oil industry with the attendant removal of fuel subsidy and increase in electricity tariff, some of those concerns of the World Bank are gradually being sorted out.

Ahmed also said that Nigeria is considering joining the G-20 debt-relief initiative and is talking to commercial lenders to secure their backing.

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She said, “We will consider joining as long as it is safe for us to do so. Nigeria couldn’t participate initially because some of the conditions were unfavourable for existing loan commitments with bilateral lenders and other international borrowings.”

On the increased gap between the official rate and parallel market rate, the minister said the government is concerned about the widening gap in the naira’s exchange rate on the official and parallel markets.

She said, “We have been taking measures to close the gap. We hope to get to an even level very soon so the impact of the exchange rate will become moderated.”

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Coronavirus

Covid-19: Africa prepared for possible second wave – Africa CDC

Africa CDC has confirmed its preparedness for the possibility of a second wave of COVID-19 pandemic in Africa.

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Covid-19: African Union in talks with China and Russia over vaccine

The Africa Centres for Disease Control and Prevention has confirmed its preparedness for the possibility of a second wave of COVID-19 pandemic in Africa, especially with the current upsurge of active cases.

This disclosure was made by the Director, Africa CDC, Dr. John Nkengasong, during the teleconference Weekly Press Briefing on #COVID-19 on November 26, 2020.

According to him, Africa CDC has started to distribute 2.7 million rapid antigen tests with the hope that by mid-2021, the health officials would have been able to vaccinate about 60% of the continent’s population with one of the several promising new vaccines — it all depends on the cooperation and support of the continent’s leaders.

(READ MORE: Reps Committee warns MDAs against failure to render accounts to Auditor-General)

What they are saying

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According to Dr. Nkengasong: To achieve 60% vaccination, we will need to mobilise up to about $10 to $12 billion, including the cost of buying the vaccines and the cost of delivering the vaccines. So, that is the 60% mark that we really want to achieve. And I just really want everyone on this platform and our partners to understand that as a continent, that is our aspiration and goal.”

As the end-of-year holidays are around the corner, Dr. Nkengasong advised: “Do not relent in wearing masks. One message that is emerging across the visits we are conducting across the continent is that people are not masking enough. And in some settings, absolutely it seems like they are not masking at all. And that is extremely dangerous.”

What you should know

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  • As of November 26, 2020, Africa had 2,106,931 confirmed caseloads, with a death toll of 50,628 and 1,781,744 persons recovered.
  • The Southern African region is the worst hit both in terms of the number of confirmed positive cases and deaths.
  • South Africa, Morocco, Egypt, and Ethiopia are the most affected countries in terms of number of positive cases.
  • South Africa is presently the worst hit with active cases of 775,502.

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