Pension Industry Operators (PenOp) Retreat has opened in Lagos with Operators asking for a modification of policy and regulation regarding investment of Pensions funds to bridge infrastructure deficit in the country.
They appreciated National Pension Commission (PenCom) ring fencing of the fund but suggested some consideration and review of existing engagement rule to create opportunities for investment in that critical area.
In her paper titled, “Investment of Pensions Funds, Processes- Challenges, Risks and Rewards” Abimbola Suleiman, Head, Investments at Pensions Alliance limited, noted that current regulations prescribed that maximum possible spend on infrastructure is N682 billion or $3.4 billion.
Suleiman opined that when considered that an estimated $3 trillion is required over a period of 30 years to cover infrastructure deficit according to the National Integrated Infrastructure the limit of spending is grossly inadequate.
She said government should consider the introduction of infrastructure bond as the surest way to introduce majority of pension funds with infrastructure investment.
According to her, Bonds should be tied to specific projects issued with government guarantees and issued at project completion or close to cash flow generation.
Listing challenges with risks around government support for infrastructure investment, Suleiman said there are regulatory instability, inadequate viable Public Private sector Partnership, legal framework, high bidding and fragmentation of market among different levels of government.
Speaking on issues with investment conditions, she said there is lack of investment options (Bankable projects) lack of transparency and shortage of data as well as high risk related Greenfield investment among others.