Nigeria’s National Economic Council plans to borrow N2trillion from the N10trillion accumulated Pension Funds to fund infrastructure in the country.
Governor of Kaduna state Nasir El-Rufai gave the indication while briefing State House correspondents after the meeting of the Council presided over by Vice-President Yemi Osinbajo.
El-Rufai heads the committee set up by the NEC to seek ways of leveraging on a portion of the Pension Funds for investments in infrastructure.
According to El-Rufai, budgetary allocations would not be enough for the type of investments required to fix Nigeria’s infrastructure.
“In 2019 Budget, the budget for construction and maintenance of federal highways was about N200billion.
“In this approved budget of 2020, the budget for construction and maintenance of all the federal highways is something in the region of N169billion.
“If we continue budgeting N160billion, N200billion, N300billion, even N500billion, we will not have roads functioning in Nigeria.
“Even the maintenance of existing stock of federal highways requires much more money.
“We must find a way to unlock large amount of money that can be used to reconstruct our highways and maintain existing highway. And we will not be able to do so with 100, 200, 400 billion every year.”
Explaining further, El-Rufai said that studies have shown that highway infrastructure and other cost intensive investments in other countries were constructed using long-term funds by government and the private sector.
He said the enactment of the Pension Reform Act of 2004 was aimed at solving the problem that pensioners faced at the time when it was very difficult for them to get pension.
“But in the process of solving that we realized that there is a long term opportunity through contributory pension schemes to accumulate large amount that can be used to invest in long term projects like infrastructure.
“This is what Chile has done; this is what South Africa has done; this is what many countries, both developed and developing have done.
“They have used the pension funds as long-term funds to develop infrastructure and other key sectors of the economy, and today, due to the reforms that we started around 2002, 2003, culminating into the enactment of the Pension Reform Act in 2004, Nigeria has about N10trillion in its Contributory Pension Fund.
“This is long-term money, contributed by young people that have 20 to 30 years to retire. So, the money will be there.
“It is growing every month by between 100 and 200 billion. So, today, we are speaking of N10trillion; in about a year, we will be speaking of N11 to N12 trillion.”
He said the Act provides that up to 20% of the total fund could be accessed for investments in infrastructure, adding that “once the legal and regulatory framework is in place, Nigeria will have available fund that can be accessed by the private sector to build roads, to build more rail lines or to invest in power.
“These are the three priority sector that the committee has identified and recommended to NEC for approval as the ones that will enjoy these long-term funds.
“The money will be by way of bonds that we expect private companies to build roads and access and toll them.”