Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, is in the eye of the storm. And rightly so. Perhaps feeling the weight of an office saddled with rebuilding an economy plumbing new depths of uncertainty despite a slew of policy measures already deployed to reverse that trend, he came up with a brainwave to bridge Nigeria’s massive infrastructure deficit by raiding the pension funds. This is bad news for Nigerian workers. It is insensitive to the plight of the Nigerian worker and a lazy way to raise funds by the government.
Although the minister has denied that the Bola Tinubu administration would dip its hand into the pensions and life assurance funds to build infrastructure and housing, Edun’s rebuttal is an afterthought. He has touched a raw nerve.The PUNCH categorically condemns the attempts by successive federal administrations to plunder the funds primarily because it is irrational to change a winning strategy.
At N19.66 trillion, the pension funds are about the only enduring legacy of the Fourth Republic. No wonder Edun and his predecessors regularly toy with plundering it. With sensible arguments, protests, and campaigns, the Nigeria Labour Congress, the Trade Union Congress, and all Retirement Savings Account holders should unite to mount sustained pressure on Tinubu and Edun to abort their plan.
Credit to the Olusegun Obasanjo government for the Contributory Pension Scheme. It rewrote history profoundly by replacing the sordid Defined Benefit Scheme with theCPS. This changed the game. Instead of deaths in queues and endless biometric capturing, the CPS has worked seamlessly for retirees in the public and private sectors since its inception in 2005.
After the 2014 amendment, the employee now contributes8.0 per cent monthly from his wages and the employer 10 per cent (18 per cent total). As of December, the Chartered Institute of Personnel Management put the total number of RSA account holders at 10.19 million. That reportedly leaves over 63 million workers out of the scheme, per CIPM.
Seeing the success, federal administrations have tried to do a property grab.
Erroneously describing the funds as idle, Edun argues that Nigeria needs to look inward to fund housing, roads, power, railways, and other critical infrastructure, create jobs, and reduce poverty before seeking international investors after the two-day Federal Executive Council meeting held last week.
It is a hijack.This means that money saved over the years by struggling Nigerian workers, ravaged by high inflation and 65 per cent naira devaluation just one year of this same administration, will be subject to further jeopardy.This is most disconcerting and the workers have to be at constant alert.
It is a classic case of throwing good money after bad and should not happen. This is especially so as the Federal Government as an institution has been defined by a track record of corruption, mismanagement, incompetence, waste, and a withering lack of foresight that created the infrastructure crisis in the first place.
The pension reform has only worked well since its inception becauseof thestrong laws backing it and private sector participation.By law, the funds are being managed by pension fund administrators and pension fund custodians.The Federal Government, through the National Pension Commission, is performing oversight.
Undoubtedly, the Pension Reform Act (2014) stipulates that at least 75 per cent of the pension funds should be invested in government securities, mainly FGN Bonds with other portions allowed for stocks, real estate, and no more than 5.0 per cent for infrastructure. Where will Edun find his idle funds? To sustain the success story, this percentage for infrastructure should not be tampered with.
While it is true that pension and insurance funds, being long-term savings, can and have been invested in infrastructure in other climes – at the discretion of competent managers – it would be suicidal to trust the Nigerian government with any worker’s life savings here. Certainly not after the prices of fuels, electricity, food, and everything else have ballooned.
As it stands, the Federal Government cannot even put its hands in the pension pot as proposed without running afoul of the law.The National Assembly should not be persuaded to amend the PRA to accommodate the finance minister’s dangerous fancies.
That would amount to the ‘nationalisation’ of private wealth, akin to that infamous expropriation of $30 billion in private pensions in 2008 by the Argentine government under Cristina Kirchner to refinance the country’s debts. That action rocked investor confidence and the stock market virtually crashed. With an economy on the verge of collapse, Nigeria cannot afford such a misadventure.
There are misgivings over the CPS already. While top political officeholders do not join the scheme, certain categories of public workers, including the military and even staff of the NASS,have exited the CPS. That is bad enough because it reduces the pool of funds available for investment by the PFAs.
So, it is the duty of the government, not Nigerian workers, already saddled with a plethora of official and unofficial taxes, to develop innovative ways for infrastructure financing as it is done elsewhere, especially through private capital.
The N20 trillion pension fund is just about $13.4 billion today though the value was three times higher this time last year. The Dangote Refinery costs $20 billion.The lesson should not be lost on Edun that Nigeria, with its large and increasingly sophisticated youthful population and market, is a natural investors’ paradise. To attract private capital, the government needs to do the right thing.
This administration should live up to its promise to exploi the public-private partnership model in infrastructure delivery by offering incentives and placing proper regulatory frameworks, indeed the clement environment to attract investments, local and international. Edun’s proposal is a distraction and provocative at best.
In August 2023, the Ministry of Finance Incorporated disclosed a plan to identify, revive, and list moribund assets of the government on the Nigeria Stock Exchange. The idea was to grow MOGI’s assets under management from N18 trillion to N100 trillion in 10 years. Has this plan been binned?
Top on the to-do list is the privatisation of the four public refineries and the Ajaokuta Steel Company. Tinubu should do this quickly.
A lot of money will be generated for infrastructure investments if the loopholes in the economy are blocked, and wasteis curbed. Currently, Nigeria loses 400,000 barrels of crude oil per day to theft and nothing has been done to stop this travesty. The tax system is such that the rich escape payment of appropriate taxes. The government remains too large, unwieldy, and expensive. The Presidential Air Fleet is larger than many local airlines. Corruption remains unchecked.
