Nigerian Pension Funds Seek Alternative Investments to Protect N24 Trillion Amid Inflation and FX Pressure
Operators in the Nigerian pension industry are calling for regulatory reforms to allow broader investment opportunities for the nation’s N24.63 trillion pension fund. Pension managers are advocating for the inclusion of export-oriented businesses, toll roads, real estate, and high-growth unlisted companies in their portfolios, aiming to safeguard contributors’ returns amid rising inflation and currency depreciation.
Data from the National Pension Commission (PenCom) shows that a significant portion of pension assets remains concentrated in government-backed instruments. Oguche Agudah, CEO of the Pension Fund Operators Association of Nigeria, emphasized the need for alternative investments to mitigate potential losses and strengthen portfolio resilience in a challenging economic environment.
Executives from leading Pension Fund Administrators (PFAs) highlighted specific opportunities. Dave Uduanu, CEO of Access ARM Pensions, identified export-oriented businesses, infrastructure projects, real estate, and high-growth unlisted companies as potential avenues for growth. Similarly, Olumide Oyetan, CEO of Stanbic IBTC Pension Managers Ltd, urged authorities to issue floating-rate bonds indexed to inflation, which could protect fixed-income portfolios from negative real returns while optimizing yield.
The shift toward alternative assets aligns Nigeria with a global trend of increasing inflows into private credit and infrastructure, a market now valued at $1.5 trillion worldwide. PenCom confirmed that a review of investment guidelines is underway, with new rules expected within the quarter. The regulator also organized a Lagos workshop, encouraging PFAs to diversify portfolios to enhance returns and ensure long-term sustainability.
PenCom Director-General Omolola Oloworaran stressed that the current macroeconomic landscape, marked by nearly 22% inflation and a 70% devaluation of the naira since May 2023, demands dynamic and resilient investment strategies. She highlighted that investments in infrastructure and private equity complement core strategies, align with pension fund horizons, and offer improved risk-adjusted returns for contributors.
Source: Punch