Pension Funds Hit N320 Billion by December
...as PenCom Discusses Private Equity
 23rd OCT 2006

Pension funds of both the public and private sectors had reached 220 billion naira. Of this amount, the public sector’s contribution was 70 billion naira. It is expected to reach N320 billion naira at the end of the year.

The rising stock of the new contributory pension fund is making the financial system regulators and supervisors to put on their thinking cap in order to come up with ways the funds can well be deployed to serve the purpose it was set up for as well as grow the national economy by providing long term funds and at the same time minimize it’s negative impact on inflation.

 The implementation of the new pension reform has thrown up challenges in the form of the dearth of capacity in the financial sector, especially the general knowledge gap of long term financing, and the very shallow and inadequate investment outlets, aside from government bonds and foreign exchange dealings.

To address the observed challenges, the National Pension Commission (PenCom) stocked with rising pension funds has embarked on popularizing private equity investment which in itself holds a very bright future for the Nigerian economy.

Private equity is a concept of providing long term finance backed by strategic management and advisory services to private and unquoted companies. The finance is provided on behalf of third parties. The private equity investment managers with minority holdings nurture the companies and exit at a significant profit within five to seven years.

Indeed, studies show that private equity and venture capital schemes were largely responsible for the magic of the Asian tigers and very recently, India and China. The schemes were also critical to the growth, development and sustenance of the European and United States economies. There are indications that European, American and Asian markets are now saturated. The focus of institutional investors and international funds appears to be focused on Africa, where Nigeria stands out as a result of the improvement in the economic environment.

To get the attention of the international funds and given the availability of long term funds through the new pension funds, the National Pension Commission (PenCom) intends to sensitize and educate the Nigerian public of the wonders private equity can perform in our environment. Indeed, it is relatively new in Africa except South Africa.

To achieve its goal, PenCom has invited the subject matter global expert, an international consultant as well as a professor of Harvard Business School, Walter Kuemmerle to lead a two day seminar on private equity and the impact it could have on the Nigerian economy. Seminar participants are drawn from the financial sector regulators, such as CBN, SEC, FIRS, DMO, NSE, etc as well as auditing and law firms, and other financial sector managers. The minister of finance, Mrs Nenadi .E. Usman is expected to give a key note address and declare the seminar open.

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