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Chuks Udo Okonta
Lack of investment options – Bankable projects – transparency; shortage of data as well as high risk related greenfield investment among others have been identified as clogs to investment of pension funds especially in infrastructure.
The Head, Investments, Pensions Alliance limited, Mrs Abimbola Sulaiman, said this today at the ongoing 2016 Media Retreat for Pension Journalists, organised by Pension Fund Operators Association of Nigeria (PenOp) in Lagos.
In a paper entitled: “Investment of Pensions Funds, Processes- Challenges, Risks and Rewards”, she suggested some consideration and review of existing engagement rule to create opportunities for investment in critical areas in the economy, adding that infrastructure bonds remain the easiest way to introduce majority of pension funds into infrastructure investments, as it is similar to traditional bond investments
Sulaiman opined that when considered that an estimated $3 trillion is required over a period of 30 years to cover infrastructure deficit according to the National Integrated Infrastructure the limit of spending is grossly inadequate.
She said government should consider the introduction of infrastructure bond as the surest way to introduce majority of pension funds with infrastructure investment.
According to her, Bonds should be tied to specific projects issued with government guarantees and issued at project completion or close to cash flow generation.
Listing challenges with risks around government support for infrastructure investment, Sulaiman said there is regulatory instability, inadequate viable Public Private sector Partnership, legal framework, high bidding and fragmentation of market amongst different levels of government.