The federal government has announced a strategic plan to utilize the N20 trillion pension fund, alongside other domestic resources, for infrastructure development in Nigeria. This initiative was disclosed by Wale Edun, the coordinating minister for the economy and finance, after a federal executive council (FEC) meeting chaired by President Bola Tinubu.
Edun emphasized the government's focus on leveraging domestic financial resources, particularly pension and life insurance funds, to foster national growth. He highlighted the potential to channel over N20 trillion available domestically into critical sectors like housing and long-term mortgage provision.
As part of the plan, the government aims to address Nigeria’s estimated 20 million housing deficit by providing significant housing and mortgage loans at 12 percent interest rates, with 25-year repayment plans. Edun pointed out that before seeking foreign investments, it is prudent to utilize the available long-term funds within Nigeria’s pension and life insurance sectors.
He explained that pension funds are long-term savings, which makes them suitable for funding infrastructure projects. The initiative will be executed in collaboration with the private sector, ensuring the expertise and capacity necessary for such projects are harnessed.
Initially, the government will offer support, especially during periods of high interest rates, but as rates decline, its involvement will decrease. This plan aims to leverage substantial domestic funds in partnership with the private sector to drive economic growth.
The construction industry will benefit from funded housing projects, and Nigerians will gain access to affordable mortgages through their pension savings. This comprehensive approach aims to boost the construction industry and provide significant economic benefits.
This initiative echoes a similar plan by former President Muhammadu Buhari, who also aimed to use pension funds for infrastructure development. However, Buhari’s proposal faced significant resistance from the Nigerian labour movement and other stakeholders. Concerns were raised about the security and safety of workers' retirement savings, with critics arguing that mismanagement or failure of infrastructure projects could jeopardize these funds.
Despite these challenges, the current administration is pressing forward, seeking to address past concerns through robust safeguards and collaboration with the private sector. Edun concluded by expressing confidence in the initiative, highlighting the collaboration of Nigeria’s top talents in achieving these infrastructure and economic growth goals.
