The
pension industry is expected to triple its assets the next three years
to $70bn (about N11.1tn), as the government targets small businesses to
get more people into the pension scheme, the National Pension Commission
has said.
Reuters, in a report on
Wednesday, quoted the Head of Research, PenCom, Mr. Umaru Aminu, as
saying this in Abuja, adding that the commission was looking at how to
attract more employees of small enterprises to the scheme.
He said 50 million people were employed
in small businesses with up to four employees — everything from barber’s
shops to small accountancy firms.
“We expect to triple (pension assets) in two or three years’ time (by) targeting the (small business) sector,” Aminu told Reuters in a telephone interview.
The country’s pension assets have grown
from about $10bn in the last eight years, split between four million
retirement savings accounts.
Aminu said pension assets stood at $23.5bn at the end of September.
He said contributions currently were
mainly from half of Nigeria’s 12 million people working for the
government or big companies but there were untapped opportunities in the
much bigger small business sector.
He, however, noted that there were some challenges too.
“It is an unwieldy sector; a sector that
has no regular income and it is difficult to track with no statistics
on the people,” Aminu said, adding that many did not have bank accounts.
He said half of Nigeria’s population of
about 160 million people were under the age of 20 years and many were
not of working age or unemployed.
The growth in pensions will also give a
boost to fund flows into equities and bonds in the country and could
also help to improve liquidity on the stock market.
Regulations currently allow Nigerian
fund managers to invest half of their portfolio in equities, 35 per cent
in the money market and the rest in government bonds.
The increase in pension assets should
ease liquidity problems that had dogged one of Africa’s biggest stock
markets since the financial crisis in late 2008, analysts said.
Large foreign funds tend to stay away
because daily turnover in individual stocks rarely exceeds more than
$1m, too small for many funds.
The stock exchange’s main index, which
ended 2009 around 70 per cent below its peak, has risen by more than 39
per cent this year compared to a decline of four per cent in its
emerging market peers, the report stated.
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