Nigeria’s Pension Industry Grows 18%

Nigeria’s pension industry grew by 18 per cent in the last five years, the Pension Funds Operators Association of Nigeria has said.

PenOp said this in a statement titled ‘Pension funds and private equity in Nigeria: Release of research report’.

“Nigeria’s pension fund industry has grown at an impressive compound annual growth rate of 18 per cent over the last five years, culminating in an asset base of N12.3tn ($29.9bn) as at December 31, 2020,” it said.

It noted that the African Private Equity and Venture Capital Association and PenOp released the first-ever report on Nigerian pension funds engagement with private equity.

The association said the report incorporated responses from the nation’s leading pension fund managers, exploring their interest and perception of private equity as an asset class.

It said although there had been a concerted effort by both sets of industries to increase the level of pension allocation to private equity, the allocation of Nigeria’s pension funds to the asset class had traditionally been low when compared to their allowable limits.

The statement said, “The release of this flagship report aims to bridge the gap between these two complementary industries by investigating and assessing the role of Nigerian pension funds in empowering local investors in Nigeria’s private equity industry.

“The pension funds and private equity in Nigeria report finds that Nigerian pension funds display a strong appetite for private equity investment both locally and across the continent.”

It added that 75 five per cent of the pension fund managers that participated in the survey plan cited a desire for portfolio diversification and performance as the most important factors driving their investment plans.

The report also catalogued some of the obstacles faced by pension funds investing in the asset class.

PenOp, however, added that 49 per cent of survey participants did not consider any of the current pension investment regulations to be prohibitive, suggesting that respondents view the existing regulatory environment as conducive for investment in alternative asset classes.