The Pension Fund Administrators (PFAs) have outlined strategic plans to invest huge funds in infrastructure in the country.
The Chief Executive Officer, Pension Funds Operators Association of Nigeria (PenOp), Oguche Agudah, in his presentation during a webinar organised by the association yesterday on the theme “The Nigerian Economic and an Investment Outlook: A focus on Pension Fund Investment Strategies” highlighted various investment opportunities in the Nigerian economy and the Fund Administrators plans for year 2023.
According to him, 42 per cent of the Pension Fund Administrators (PFAs) have indicated that they were actively looking for investments in infrastructure while another 50 per cent said they would also consider investments along that business segment this year.
Besides, fund managers are cautious about investing in private equity but are looking forward to invest in ‘impact focused funds’, adding that consideration will be made ‘on a deal by deal basis’
Said he “Although fund managers are cautious about private equity, they will consider on a deal by deal basis. Twenty-five per cent of fund managers polled are actively looking forward to invest in private equity while 67 per cent say they will consider it.
According to him, “Fund managers are looking to invest in impact focused funds but transparency and structure are key.”
The PenOp boss said there was reduction in engagement with equities in the previous year from 7.73 per cent in 2021 to 6.79 per cent in 2022.
He said government securities as share of portfolio declined by 118 basis points to 65.44 per cent, while there was reduction in interaction with money market securities which declined by 1.92 per cent.
Also speaking at the event, the Chief Economist at Africa Finance Corporation (AFC), Rita Babihuga-Nsanze, suggested that oil subsidy policy must be halted in order to put the economy on the right path.
She expressed displeasure that the high international oil price failed to translate into foreign reserves accumulation for Nigeria.
According to her, the foreign exchange reserves fell by $3.5 billion or eight per cent between January and December 2022, advising that the incoming government must address security in oil sector corridor, address subsidy regime and enthrone the expected reforms in forex market.
She said FGN earned no revenues from the sale of crude oil despite the windfall crude oil prices recorded in 2022 owing to the subsidy payments.
“Low amortization requirements for 2023 and 2024 offer Nigeria some breathing space on the external front.
“But given that the majority of Nigeria’s external debt is multilateral based lending (47% of total stock) we do not foresee high levels of debt stress from its Eurobond repayments in the near term.”
She said government interest payments as a share of revenue have more than doubled from 19.7 per cent in 2018 to the current 48 per cent level.
Rita said the current forex liquidity pressure would persist in 2023 and potentially in 2024 on the back of increasing downward pressure on foreign reserves and called for necessary structural reforms.