PFAs to Make Heavy Investments in Infrastructure in 2023

Ebere Nwoji

Contrary to initial fears by pension fund managers that investment of pension funds in infrastructural development would sink contributors’ funds due to lack of safety, the PFAs have disclosed their plans to invest heavily in infrastructure this year.

The managers disclosed this at a recent virtual market outlook seminar where they reviewed their economic and investment performance in 2022 and deliberated on their investment out look for the current year.

In his presentation, the Chief Executive Officer, Pension Fund Operators Association of Nigeria (PenOp), Oguche Agudah, said 42 per cent of the Pension Fund Administrators (PFAs) indicated that they were actively looking for investments in infrastructure while another 50 per cent said they would also consider investments along that line of business in the current year. 

The event, which attracted frontline economists was anchored on the theme: “The Nigerian Economic and an Investment Outlook: A focus on Pension Fund Investment Strategies.”

Oguche, however, said although fund managers were cautious about private equity, they would consider a deal-by-deal basis. 

According to him, 25 per cent of fund managers polled are actively looking to invest in private equity while 67 per cent say they will consider it.

He added, “Fund managers are looking to invest in impact focused funds but transparency and structure are key.”

Also speaking, Chief Economist at Africa Finance Corporation (AFC), Mrs. Rita Babihuga-Nsanze, outlined a number of steps the incoming government must take to put the economy on the right path, suggesting that oil subsidy policy must be halted.

She said the incoming government must address security in oil sector corridor, address subsidy regime and enthrone the expected reform in foreign exchange market. 

She regretted that despite the high international oil price, it failed to translate into foreign reserves accumulation for Nigeria, adding that the foreign exchange reserves fell by $3.5 billion or eight per cent between January and December 2022.

“The FGN earned no revenues from the sale of crude oil despite the windfall crude oil prices recorded in 2022 owing to the subsidy payments. Government interest payments as a share of revenue have more than doubled from 19.7 per cent in 2018 to the current 48 per cent. 

“Low amortisation requirements for 2023 and 2024 offer Nigeria some breathing space on the external front. But given that the majority of Nigeria’s external debt is multilateral based lending (47% of total stock) we do not foresee high levels of debt stress from its Eurobond repayments in the near term. Eurobond markets, however, remain inaccessible to Nigeria for its financing needs given its current sovereign spreads and credit rating, “she stated.