Nigeria needs to embrace change, plan for the future – Chief British economist Gerard Lyons

Chinelo Anohu-Amazu, the Director General of PenCom and Dr. Gerard Lyons, chief economist and global economic adviser

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Chuks Udo Okonta

The second edition of the World Pension Summit ‘Africa Special’ (WPS-AS) kicked off in Abuja, Nigeria today with a welcome address from Chinelo Anohu-Amazu, Director General of PenCom, and a keynote speech from chief economist and global economic adviser, Dr. Gerard Lyons, amongst others.

The annual event organised by the National Pension Commission, Nigeria and the WorldPensionSummit, the Netherlands, has brought together leading players and decision makers in the pension industry in Africa, as well as key figures in finance and pensions from across the world. The theme of this year’s Summit is ‘Building sustainable pension systems in Africa’ and is focused on entrenching enduring pension systems across the continent with a particular emphasis on channeling pension funds towards addressing its huge infrastructure deficit.

In his speech Dr. Lyons looked at Nigeria from a global, regional and national perspective and focused on the implications for the economy, infrastructure and pension funds. Lyons focused initially on the changing global environment that has resulted in greater uncertainty, more volatility, a desire by investors to search for yield and growth opportunities, and the need for markets to price for risk. “Regionally, Africa is globalising at a fast pace and I think ‘Pan Africanism’ may become a more common future term, capturing the mood of the time. In this context, Nigeria can assume a greater regional role, as it is already doing in west Africa.”

To appreciate the domestic challenge, Lyons gave the foreign view of Nigeria, what is being said, and also where he felt it was right and wrong: “There is unease about corruption and concern about security. It is good therefore that the administration is addressing these head on. It is also important to remember that in a world of high debts, Nigeria’s debt position is a big advantage and gives it room for fiscal flexibility. Its market size, young sizeable population, entrepreneurial spirit, and the growth of its service sector are also key positives that should not be overlooked.”

Dr. Lyons advocated investing a portion of the country’s pension fund assets into infrastructure and emphasised the need for a stream of infrastructure projects, stating that the country should focus on hard, soft and institutional infrastructure, which in turn would help address social infrastructure. “Hard infrastructure opportunities include broadband and transport such as road and rail as well as housing and energy” he said. “Soft infrastructure is building the skills and education needed, while institutional infrastructure is linked to openness and transparency, as strong institutions allow confidence, enable growth and greater investment and create stability. Regulations, rules and laws are also vital so Nigeria should be proud of the progress made by PenCom on this so far. However, it’s important that the country continues to build on this progress, embracing change and planning for the future.”

In an op-ed written for the Financial Times today, Chinelo Anohu-Amazu, the Director General of PenCom, said: “Compared with many of its African peers, Nigeria has relatively advanced infrastructure networks that cover extensive areas of the nation’s territory and, thanks to its strong economy, it is better placed than many of its neighbours to increase the share of fiscal resources going to infrastructure. Yet, according to the African Development Bank (AfDB), the nation’s core stock of infrastructure is estimated at only 20-25 per cent of GDP, compared with 70 per cent for other middle income countries of its size, leaving a gaping infrastructure deficit of $300bn.

Speaking at the summit earlier today, Anohu-Amazu said: “The Summit, which will continue tomorrow, has already provided a vital platform for pension regulators and operators in Africa to brace up to this challenge and discuss other ways in which pension funds can positively contribute to the socio-economic growth of the continent, whilst also ensuring that retirement benefits are paid as and when due.”

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