Tinubu’s government to use N20trn Pension Funds for infrastructure development

The federal government has unveiled a strategic plan to harness the N20 trillion pension fund and other locally available resources for infrastructure development in Nigeria.

Finance Minister and coordinating minister of the economy, Wale Edun disclosed this to State House correspondents after the Federal Executive Council meeting presided by President Bola Tinubu at the Presidential Villa.

He said the initiative forms a key part of Tinubu’s broader reforms to stabilise the economy amid high inflation and interest rates.

He added that it was a significant step towards driving economic progress and addressing critical infrastructure needs.

According to Edun, with over N20 trillion available funds within the country, there is a clear opportunity to channel these resources into vital sectors such as housing and long-term mortgage provision.

The minister said the move is part of the government’s efforts to bridge Nigeria’s estimated 20 million housing deficits and to provide massive housing and mortgage loans at 12 percent interest rates, with 25-year repayment plans.

“And the fact is that even before we start looking to foreign investors, we start looking to foreign funding, there is available in Nigeria, long term funds to fund infrastructure projects, and it’s within the pension, the life insurance and investment fund industry generally,” he said.

“There is upwards of N20 trillion available, and much of it is in short-term funding that doesn’t need to be. Pension money is long-term.

“People save over their lifetime for their pension. And so in conversation, in consultation, collaboration and cooperation with the private sector, we are now able to announce and with the full knowledge and support of all parties, that there will be an initiative to fund growth through investment in infrastructure, including housing, provision of mortgages, long term mortgages, 25-year mortgages at relatively low interest rates.

“Initially, of course, the government will stand back and provide some support, particularly in this era of high interest rates but eventually as interest rates come down, there should be less role for the government through providing, for example, guarantees and so forth.

“So, we can look forward to these huge funds being leveraged with the expertise, the ability, the capacity of the private sector, partnering with the government to drive economic growth.

“On the supply side, construction of houses will be funded. On the demand side, mortgages will be made available so that those constructing houses have an outlet and Nigerians who are saving so much by way of pension funds, have the added bonus of access to affordable mortgages.

“That really is the long and short of this initiative and you also as much as anybody else can understand and see what it means in the construction industry to do for the country.

“That is the plan, that is the target that is the hope. And in this particular case, you have the best and the brightest that Nigeria has to offer, putting their minds together and committing to achieve their goals.”

Meanwhile, a Former Vice President of Nigeria, Atiku Abubakar, has criticized the federal government’s proposal to use N20 trillion from pension funds for infrastructure projects, labeling the plan as illegal.

In a statement on Wednesday, the ex vice president said on his X account the that the law only required that 5% of the fund to be used for infrastructural projects.

Abubakar expressed concerns over the proposal by Wale Edun, the Minister of Finance, to “unlock” pension funds for national projects.

He argued that such a move could have severe repercussions for the country’s workforce.

According the him, diverting these funds, which consist of the savings of diligent workers relying on their pensions in retirement, could disastrously affect the lives of countless Nigerians who have retired after years of service.

“My attention is drawn to a disturbing disclosure by the Finance Minister and Coordinating Minister of the Economy, Wale Edun, as he addressed State House correspondents after the Federal Executive Council (FEC) meeting at the Presidential Villa on Tuesday, 14 May.

“This is, according to the Minister, a move by the Federal Government to rev up economic growth by unlocking N20 trillion from the nation’s pension funds and other funds to finance critical infrastructure projects across the country.

“It is a misguided initiative that could lead to disastrous consequences on the lives of Nigeria’s hardworking men and women who toiled and saved and who now survive on their pensions having retired from service.

“It is another attempt to perpetrate illegality by the Federal Government. The government must be cautioned to act strictly within the provisions of the Pension Reform Act of 2014 (PRA 2014), along with the revised Regulation on Investment of Pension Assets issued by the National Pension Commission (PenCom).

“In particular, the Federal Government must not act contrary to the provisions of the extant Regulation on investment limits to wit: Pension Funds can invest no more than 5% of total pension funds’ assets in infrastructure investments,” Atiku said.

The PDP former presidential candidate called on the federal government to seek alternative reforms to address the infrastructural deficits in the country.

He said Edun must restore the confidence investors to drive key investments, rather than relying on the pension of hard-earned working Nigerians.

“I note that as of December 2023, total pension funds assets were approximately N18 Trillion, of which 75% of these are investments in FGN Securities.

“There is NO free Pension Funds thst is more than 5% of the total value of the nation’s pension fund for Mr. Edun to fiddle with.

“There are no easy ways for Mr. Edun to address the challenges of funding infrastructure development in Nigeria. He can’t cut corners.

“He must introduce the necessary reforms to restore investor confidence in the Nigerian economy and to leverage private resources, skills, and technology,” Atiku added.

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