Despite Nigeria boasting one of Africa’s largest institutional capital pools, the effective deployment of its N22.8 trillion in pension assets remains hampered by credit and liquidity risks, according to the latest State of Africa’s Infrastructure (SAI) Report by the Africa Finance Corporation (AFC).
The report reveals that although Nigeria’s pension system has amassed significant funds under management as of January 2025, structural constraints prevent these assets from being fully utilized for long-term infrastructure development.
“As of early 2025, Nigeria’s pension assets under management exceeded N22.8 trillion (approximately US$14.2 billion), making it one of the largest institutional capital pools on the continent. However, the effective deployment of this capital in long-term infrastructure had been constrained by credit and liquidity risks,” the report states.
Bridging the Gap Between Pension Funds and Infrastructure Development
Recognizing these limitations, Nigeria established InfraCredit in 2017, a public-private guarantee institution designed to boost infrastructure financing. The initiative was launched with the backing of the Nigeria Sovereign Investment Authority (NSIA), GuarantCo, Africa Finance Corporation (AFC), and other strategic partners.
According to the report, InfraCredit plays a crucial role in providing local currency guarantees for corporate infrastructure bonds, enabling them to achieve investment-grade ratings that align with pension fund requirements under existing regulatory frameworks.
Since its inception, InfraCredit has catalyzed local currency bond issuances for multiple infrastructure projects, spanning renewable energy, gas distribution, logistics, and industrial development.
By enhancing creditworthiness and reducing investor risk perception, InfraCredit has successfully bridged the gap between pension capital and infrastructure financing in a challenging investment climate.
Increasing Pension Fund Allocations to Infrastructure
The results of InfraCredit’s intervention have been noteworthy. The allocation of Nigerian pension funds to infrastructure has risen dramatically, from N1.2 billion (0.02% of total assets under management) to more than N242 billion (1% of total AUM), equivalent to approximately $155 million.
This sharp increase in infrastructure-focused pension investments demonstrates the catalytic potential of targeted credit enhancement strategies, enabling institutional investors to participate in long-term economic development.
Market-Based Solutions Offer a Viable Path Forward
The report suggests that Nigeria’s approach provides a complementary model for mobilizing pension capital toward infrastructure investments, without imposing direct allocation mandates. Instead, market-based de-risking mechanisms, such as InfraCredit, present a sustainable way to unlock long-term institutional investments for critical development projects.
As Nigeria continues to refine its financial frameworks, further regulatory enhancements and risk mitigation strategies could expand pension fund participation, reinforcing Africa’s ability to finance its own growth through local investment mechanisms.
What you should know
Nigeria’s pension fund assets have increased to N23.26 trillion as of February 2025, according to the latest data from the National Pension Commission (PenCom).
- This marks a 1.77% growth compared to N22.86 trillion reported in January 2025.
- The February 2025 data, published in PenCom’s monthly report and obtained by Nairametrics, reflects ongoing stability in Nigeria’s pension industry.
As of February 2025, the total net asset value (NAV) of the pension fund stood at N23.26 trillion, up from N22.86 trillion the previous month. Notably, the pension funds remain heavily invested in FGN securities, which account for N14.46 trillion or 62.18% of the total NAV.
