₦airaland Forum

Why we should not sell Nigeria, by Babatunde Fashola

ON JANUARY 31, 20169:29 AMIN FOR THE RECORD, NEWSCOMMENTS
KEYNOTE SPEECH AT THE NIGERIAN PENSION INDUSTRY STRATEGY IMPLEMENTATION ROADMAP RETREAT ON JANUARY 21-23, 2016

We are gathered at a historic time to discuss an important matter.

Some may see a Pension Conference, but I see more.

I see a future for Africa, led by Nigeria, using the resources of the people to build a future that includes the people.

It is not a vision or an idea. It has gone beyond that. It is a journey, one that started a while ago when the Pension Reform Act was signed into Law.

That journey started with the coming together of some Nigerian minds. Minds like that of President Olusegun Obasanjo and Mr Fola Adeola. It has been nurtured by the dedicated hands of men and women who have served in the pension commission who are represented by the current Director- General Mrs Chinelo Amazu- Anohu. It has reached a major milestone from where it must reinvigorate itself .

The tools for that reinvigoration have been provided by our legislators in the Amendment they passed into in 2014. The success of this phase of the journey now rests with you and I. And this is why we gather.

In the letter of the Pension Commission inviting me to be a Keynote Speaker at this event, no topic was assigned.

However, some paragraphs of the letter which I have excerpted provide some directions as to the thinking of the organizers and I will share them with you:

(a)“Two of the most strategic themes, positive that returns (on investment) and visible (measurable) impact on the economy”

(b)“creating solutions to the binding constraints that Nigeria faces in developing “bankable projects” in infrastructure and real estate that pension funds can invest in…”

(c)“While the pool of Pension Funds are a veritable source of capital, lack of suitable investable vehicles with low risk profiles and sufficient comfort continues to hamper the drive to make visible economic impact”

It seems to me that the key words such as “positive real returns”, “visible impact on the economy”, “bankable products…that pension funds can invest in”, “low risk profile and sufficient comfort” makes it easy to create my own topic “Overcoming the Challenges and Managing the Risks and Constraints that Inhibit the Investment of Private Capital and Funds in Nigeria’s Infrastructure Landscape in Order to Make a Visible Economic Impact”.

In seeking to address this topic, which I hope accords with the objective of the organizers, I will attempt to be empirical by a case study discussion where I will review some of the public infrastructure that have been funded by private capital, and I will do some comparisons of what the Pension Funds are achieving in other economies.

In this way, I hope to highlight the differences between us and those economies, and in that way, make my recommendations about what we should be doing.

The History of Pension Funds in Nigeria

It is impossible in this kind of forum to exhaustively deal with the issue of Pension Funds and its management in the Nigerian public service.

What is appropriate is to highlight the largely unsuccessful initiatives that have been characterized by such brand names as the National Provident Fund (NPF) and the National Social Insurance Trust Fund (NSITF).

Those brands represent the era when pension was only the responsibility of the employer,

What simply happened was that from a failure of governance, coupled with lack of funds as a result of planning deficiency, and sometimes incompetence, pensioners faced a life of uncertainty after a lifetime of service and at a time when they had become frail, unable to work or earn income and often then left disappointed by a system that had taken all they had to give.

It is sad a story that is written on so many faces characterized by many living and dead people whose lives tell the story of anguish.

It is a chapter of Nigeria’s story that is perhaps best forgotten, but regrettably they cannot yet be consigned to history because there are still debts to be paid, there are still beneficiaries who are owed, there are still Nigerians, who gave a lot, almost everything under a defined benefit scheme that is yet to give them benefit.

The current pension regime, whose managers are the organizers of this event happily have a better story to tell. It is a story of mutual contribution, where the employee and the employer share the responsibility of planning for the tomorrow.

It is a story different from the past, where the funds are safe and have exceeded N5 Trillion.

It is a story of better management.

It is the starting point for this discussion because there is a hard lesson here.

If people put their money into what they believe in, it is likely to serve them better.

The old scheme where there was no contribution by the employee perhaps reduced their role as stakeholders but does not justify the mismanagement.

But the real story is about contribution, paying your share; and it takes me to the next point which is diversification and the relevance of diversification to our subject.

Diversification

For over 3 (Three) decades we have mouthed the need to diversify our economy in order to open up more sectors for productive activities, income, economic growth and jobs.

But we failed to follow through because of oil resources. It was quick and bountiful income even though there were boom and burst cycles.

Every time the cycle burst, we scampered, and promised to diversify, we take tentative steps, we feel pain. We do not endure, and it is easy to escape because not too far on the horizon is a boom in oil prices and we go back to an old life.

Remember 1970s up to 1976; remember the early 1980s and the burst. Remember the late eighties and Gulf War boom, remember the 1990s and the drop, remember the period of 2009-2014 when oil sold for over $100 per barrel for almost 5 years.

What did we do? We went on a spending spree. Politicians promised everything free.

Everyone got a wage increase, sometimes up to 80% (minimum wage from N7,500 – N10,000 raised to N18,000.00). Did our income as a Nation increased by 80%?

As we sought after free health, free education, free fuel, free housing and free everything, we refused to confront the reality that life is not free.
It was difficult to get private capital into critical sectors of our economy like infrastructure. Private capital and fund managers were not going to invest funds entrusted to them in infrastructure if we wanted to use them for free.

As a people, we were willing to pay for these services outside our country but demanded that they be provided for free in our country.

The new pension fund has shown what can happen if people resolve to contribute and pay their way.

Health insurance is another area that can open up access to top class health service for even the poor , if people are ready to contribute and save for their well being.

Insurance will give them a choice and access to the best medical service when they need it.

It will give them a second highway away from public health service, which even with its best intentions cannot provide every service free (examples).

But today’s reality is that we are in another cycle of burst. Oil prices have crashed from over $100 per barrel and is now hovering around $30 per barrel and there is a real chance that it will fall lower.

Put very simply, our main source of revenue has taken a big blow. This household has lost its bread winner.

However, it is not without options. It has assets, it can raise money, it has savings such as the private money belonging to pensioners, but it cannot be used like oil money.

Whatever is used must return.

This calls for a new attitude. There is no free money.

Ladies and gentlemen, I have news for you.

After 3 (three) decades of prevaricating about diversification, diversification has walked into the front door of the Nigerian household.

We must either embrace it, with a new attitude, or idle in agony and anguish until when hopefully the price of oil will rise again, as it will surely do.

The pension funds, which are under the management of pension funds administrators will not go into roads, rail, housing, hospitals or universities unless we change our attitude.

Attitude Change

As I said earlier, I intend to be empirical. So instead of prescribing what to do, I will simply share the experiences we are all familiar with and leave us with the options first to make rational choices, and also to be agents for change in the areas where we can influence others.

In the course of my public service, I have been privileged to be involved in getting private capital to operate in areas that were once the sole preserve of government and I will share the experiences and the results.

(a)Lekki-Epe Expressway

This is a 60km road in the eastern axis of Lagos State that was built in the 1970s and has scarcely seen any maintenance.

Potholes had taken over its surface, the population it was serving was growing daily and neither Lagos State Government had the funds to rebuild it and the Federal Government at the time was not interested even though oil income was increasing.

Accidents were claiming lives regularly and nothing seemed to offer a solution until the Lagos State Government in 2005 signed a concession with a private group of financiers.

They were very skeptical of many things not the least our political environment and behaviour.

We had previously nationalized assets of investors in the oil and gas sector and other sectors before.

Investors don’t like that and they don’t forget.

But their sense of entrepreneurship if nothing else, keeps them from staying away. In spite of risks they sometimes come back when they think the waters have calmed.

But they do so with conditions, which they hoped will mitigate risks, especially political risks.

They are used to and trained to deal with business risks, but often unprepared to deal with, and frequently unable to deal with politically induced risks.

In the Lekki-Expressway, after doing their traffic studies, satisfying themselves that the business was “bankable” (which is what the organizers of this event are looking for) they asked the Lagos State Government to pass a law; in effect to tie the hands

[b]Pension Funds in Africa

Perhaps the appropriate starting point will be to acknowledge that Pension Reforms are just beginning to gain foothold across most of Africa in jurisdictions like Nigeria, Ghana, Botswana, Kenya and Uganda to mention a few.

But perhaps the biggest and most advanced of the Pension Funds, especially in sub-saharan Africa is the South African Pension Fund.

But while the sizes of these funds are happily growing, and the number of contributors is increasing, the impact in the quality of life on the continent is not yet anywhere near minimum globally acceptable standards.

The reason is not farfetched once we take a look at where the funds are being invested.

The funds are largely invested in equities and bonds, and in the case of Nigeria, so much of it is held in Government bonds.

It is tempting therefore to argue that although the pension funds contain contributions of the working class they do not as yet penetrate enough into giving value to the lives of the contributors.

Across all of Africa, there is a visible infrastructure deficit. No country to country rail service across most parts, the highways that connect most of the countries such as in the ECOWAS region are in very poor shape and these are roads that can easily be built, and tolled to earn income to secure the return of pension funds invested in building them.

Air travel is no better. Airports are not of the quality of design and construction or efficiency that are obvious in Europe.

These are places where pension funds can be impactful.

An online publication of “Institutional Investors” estimated that Sub-Saharan Africa’s ten largest pension fund markets had approximately $310 billion in assets recently.

But while these funds are not serving the “REAL SECTOR” of roads, bridges, hospitals, rails, airports, fee paying universities, there is a palpably visible poverty in most of these countries, some of who gathered to seek funding support in South Africa recently at the instance of the Chinese Government who offered funding support (loans) of $60 billion for all of Africa, when 10 (ten) pension funds had $310 Billion to invest.

Many of these countries are scurrying after multilateral agencies looking either for aid or loans, while sitting literally on a pot of money.

If Africa is poor today it is not because of a lack of resources; rather it is likely a poverty of ideas or the abundance of risk elevating attitudes, some of which I have alluded to, such as judicial and political, and these must change, as I will contend in my conclusions.

It must be mentioned of course that the attitudes that once mired pension funds management in scandals and lack of transparency, had led to very stringent legislative interventions that limited the scope of activities that pension funds could participate in.

For example, until recently, the Nigerian Pension Fund Law limited the contributor from using part of his pension to secure a mortgage.

How, one may ask is a person supposed to finance or part finance ownership of a home if he cannot use his own savings.

Happily the Amendment Act of 2014, has rectified this by the provision of Section 89 (2) of the Act which provision provides that:

“Notwithstanding the provision of sub-section (1) (c) of this section, a Pension Fund Administrator may, subject to guidelines issued by theCommission, apply a percentage of the pension assets in the retirement savings account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account”.

In contrast to the mismanagement that used to be the story of our own pension funds, the most prolific of the pension funds in Africa, which is the South African Public Investment Corporation (PIC) has over $150 Billion assets under management.

In Nigeria alone, they have $289 million in Dangote Cement , $98million approved but yet to be drawn for Notore Fertilizer, $230million in MTN Nigeria, $270million in Erin Energy (f[/b]

http://www.vanguardngr.com/2016/01/why-we-should-not-sell-nigeria-by-babatunde-fashola/



Lalasticlala mynd44 Seun please let pension funds owners be aware



Cc
Modath
Firefire
Ajepako
Eleko1
Talktimi
Tonyebarcanista

Before these people vacate the seat of power, they will make sure they suck everything that is left in this country dry. How we ended up inside this web is what I don't understand. Dear Lord please preserve my pension money, somebody wants to eat N1.7b meal with it.

nnachukz:
Before these people vacate the seat of power, they will make sure they suck everything that is left in this country dry.

Including your pension funds

Second time Fashola is bringing up this topic, know that they've already gone far with implementation.

I hope Oshiomole will cry out again this time that it's true just like he did under Gej when it was a lie

SmartChoices:
In seeking to address this topic, which I hope accords with the objective of the organizers, I will attempt to be empirical by a case study discussion where I will review some of the public infrastructure that have been funded by private capital, and I will do some comparisons of what the Pension Funds are achieving in other economies.

In this way, I hope to highlight the differences between us and those economies, and in that way, make my recommendations about what we should be doing.

The History of Pension Funds in Nigeria

It is impossible in this kind of forum to exhaustively deal with the issue of Pension Funds and its management in the Nigerian public service.

What is appropriate is to highlight the largely unsuccessful initiatives that have been characterized by such brand names as the National Provident Fund (NPF) and the National Social Insurance Trust Fund (NSITF).

Those brands represent the era when pension was only the responsibility of the employer,

What simply happened was that from a failure of governance, coupled with lack of funds as a result of planning deficiency, and sometimes incompetence, pensioners faced a life of uncertainty after a lifetime of service and at a time when they had become frail, unable to work or earn income and often then left disappointed by a system that had taken all they had to give.

It is sad a story that is written on so many faces characterized by many living and dead people whose lives tell the story of anguish.

It is a chapter of Nigeria’s story that is perhaps best forgotten, but regrettably they cannot yet be consigned to history because there are still debts to be paid, there are still beneficiaries who are owed, there are still Nigerians, who gave a lot, almost everything under a defined benefit scheme that is yet to give them benefit.

The current pension regime, whose managers are the organizers of this event happily have a better story to tell. It is a story of mutual contribution, where the employee and the employer share the responsibility of planning for the tomorrow.

It is a story different from the past, where the funds are safe and have exceeded N5 Trillion.

It is a story of better management.

It is the starting point for this discussion because there is a hard lesson here.

If people put their money into what they believe in, it is likely to serve them better.

The old scheme where there was no contribution by the employee perhaps reduced their role as stakeholders but does not justify the mismanagement.

But the real story is about contribution, paying your share; and it takes me to the next point which is diversification and the relevance of diversification to our subject.

Go get a job sucker & stop lamenting old fool! Church rat, dnt worry we go soon kill u wit rat poison.

He should use any legal means to source for money to finance the budget.

Na waoo this economy sef.hey guys check out the link below for real men

DonBobes:
Go get a job sucker & stop lamenting old fool! Church rat, dnt worry we go soon kill u wit rat poison.

Tonyebarcanista
Denn
Ajepako
Truckpusher
Eleko1
Modath
see this military officer! with men like these boko haram may be a friend of us