Emmanuel OchayiNigeria’s Contributory Pension Scheme surged to N18.36 trillion by the close of 2023, marking a notable 22.43% surge from the previous year.
The latest report from the National Pension Commission reveals that despite a global average AUM penetration of 29.4% in 2020, Nigeria stands at only 9%, indicating untapped potential in the pension sector.
FGN securities took center stage, constituting 64.9% of total assets, with FGN bonds making up a 96% of these securities.
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The surge is attributed to increased supply by the Debt Management Office, aligning with the Federal Government’s domestic funding targets. This growth occurred even as the Central Bank of Nigeria raised the monetary policy rates to 18.75% in 2023.
The domestic equities market experienced a 70% YoY increase to N1.57 trillion, driven by the Nigerian Exchange’s outstanding performance, closing the year at over 45% growth.
Factors such as robust corporate earnings, government-led market reforms, and increased interest from investors contributed to the market’s resilience.
Analysts from Cowry Asset Management foresee the positive trajectory continuing, with the equities market playing a pivotal role. They anticipate attractive opportunities for increased penetration into the pension fund space, fostering higher pension savings in Nigeria.
Despite the overall growth, the value of pension funds declined by 45.18% when dollarized, following the devaluation of the naira.
PenCom’s Abdulqadir Dahiru acknowledged the broader impact on the economy, emphasizing the dual challenges of inflation and devaluation affecting everyone.
As Nigeria navigates economic headwinds, the pension industry’s resilience, coupled with expectations for a more dovish stance by the Central Bank in 2024, positions it to contribute to the nation’s economic development in the mid to longer term.
