Nigeria’s N22.8 Trillion Pension Assets Face Credit and Liquidity Hurdles in Infrastructure Push
Nigeria’s pension assets, totaling N22.8 trillion as of January 2025, remain vastly underutilized for infrastructure development due to prevailing credit and liquidity risks. According to the Africa Finance Corporation’s (AFC) latest State of Africa’s Infrastructure (SAI) Report, although the country boasts one of the largest institutional capital pools in Africa, structural barriers continue to obstruct the effective deployment of these funds into long-term infrastructure projects.
In a bid to address these constraints, Nigeria launched InfraCredit in 2017, a public-private initiative supported by key partners including the Nigeria Sovereign Investment Authority (NSIA), GuarantCo, and the AFC. InfraCredit was created to provide local currency guarantees for infrastructure bonds, thereby enhancing their credit ratings and making them viable investment options for pension fund administrators within regulatory confines.
Since its inception, InfraCredit has significantly influenced the infrastructure financing landscape by enabling multiple local currency bond issuances. These issuances have supported projects in sectors such as renewable energy, gas distribution, logistics, and industrial development. The initiative has reduced investor risk perceptions, encouraging greater participation of pension capital in infrastructure finance.
The impact of this de-risking mechanism is evident in the sharp growth of pension fund allocations to infrastructure, which jumped from N1.2 billion to over N242 billion, now representing 1% of total pension assets under management. This transformation underscores the effectiveness of market-driven credit enhancement strategies in unlocking institutional investment for national development.
The AFC report advocates for Nigeria’s approach as a scalable model for other African economies, emphasizing market-based solutions over regulatory mandates. It calls for continued reform of Nigeria’s financial frameworks, including enhanced regulatory structures and broader risk mitigation strategies, to deepen pension fund engagement in infrastructure and boost Africa’s self-reliance in financing development.
Source: Nairametrics