Pension Fund Managers, PFAs have given priority attention to infrastructure investment as the country’s infrastructure gap widens.
Chief Executive Officer, Pension Funds 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.
Agudah, spoke at a Webinar which attracted frontline economists with the theme: “The Nigerian Economic and an Investment Outlook: A focus on Pension Fund Investment Strategies” and organised PenOp.
He however, said: “Although fund managers are cautious about private equity, they will consider on a deal by deal basis. Twenty five per cent of fund managers polled are actively looking to invest in private equity while 67 per cent say they will consider it.
“Fund managers are looking to invest in impact focused funds but transparency and structure
Speaking further he said there was reduction in engagement with equities in the outgone year from 7.73 per cent in 2021 to 6.79 per cent in 2022.
According to him, government securities as share of portfolio declined by 118 basis points to 65.44 per cent, while there was reduction in interaction with money market securities which declined by 1.92 per cent.
On her part, 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 forex market.
She regretted that despite the high 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 posited that improving current account position provided some relief with respect to near term external financing needs.
The economist, however, cautioned that without the necessary structural reforms, the current forex liquidity pressure would persist in 2023 and potentially in 2024 on the back of increasing downward pressure on foreign reserves.