From Uche Usim, Abuja
President Muhammadu Buhari, policy makers from various African nations and economic experts have called for the inclusion of the informal sector in the pension scheme, describing those in that bracket as the future of Africa’s economy.
The leaders stated this at the opening of a two-day World Pension Summit (WPS) in Abuja yesterday, hailed Nigeria for adopting and sustaining the Contributory Pension Scheme (CPS) from 2004, which has turned out as way forward to handle pension assets.
The speakers including diplomats from around the globe, also called for a cautious investment of pension assets, currently standing at over N6 trillion, to ensure handsome returns.
Speaking at the forum, President Buhari, who was represented by the Head of the Federal Civil Service, Winifred Ekanem Oyo-Ita, said pension matters occupy a strategic place as a vital component of social security and a vehicle for nation building.
She added that Nigeria’s pension regulator, the Pension Commission (PenCom) was working assiduously to extend its drag net to cover those in the informal sector under the micro pension scheme.
“The contributory pension scheme was established in 2004 and in 12 years, it has stabilised the system. Before the reform, Nigeria had pension liabilities running into trillions of naira. It has also generated over N5.83 trillion worth of pension assets as at June 30, 2016, invested in various sectors of the economy.
“PenCom has been asked to step up its enforcement drive to ensure full compliance by public and private sector institutions in line with the enabling law. Within the confines of limited resources, we’re addressing pension liabilities.
“Africa has given considerable attention in the recent past to pension related issues due to the myriads of challenges encountered in the administration of pension as well as the economic downturn in the continent. The governments in most African nations were compelled by their peculiar circumstances to either make priority changes to their pension schemes or a paradigm shift from the direct benefit to the contributory pension scheme,” she said.
According to her, “developing countries in Africa opted for the latter model, while developed countries are also gravitating towards the contributory pension scheme. The establishment of the contributory pension scheme was due to its obvious advantages, including the sustainability as a system, robust framework that eliminates incentives for corruption and its ability to generate investible long-term funds.”
Also speaking at the conference with the theme: “Pension Innovation, the African Perspective, the Director General of the National Pension Commission of Nigeria (PenCom), Chinelo Anohu-Amazu, said Africa has a rapidly growing population, with estimates showing that the region will become a much larger part of the global population with a projected 2.8 billion people by 2060.
“Therefore, there is an urgent need to address the issue of ageing population on the African continent that will emerge as the demographic transition comes to an end, by developing robust pension and social security systems to cater for old age income.
She also noted that “the United Nations estimated that by 2025, the population in Lagos and Kinshasha would reach 18.9 million and 14.5 million, respectively. To put this in context, it would be the equivalent of combining the current populations of London, Berlin and Madrid, which stand at 15.42 million based on 2015 population figures.
“Bridging Africa’s infrastructure deficit will require sustained spending of about US$93 billion per annum, which translates to about 15% of Africa’s GDP. This huge challenge, I believe, can be surmounted by a coordinated, multifaceted approach to development and the integration of domestic funding sources such as pension funds, and foreign institutional investors.
“The posers, however are: how do we build deep and efficient capital markets and financing models that would enable institutional investors such as pension funds to invest in Infrastructure? How can pension fund managers in Africa mainstream Environmental Social and Governance (ESG) principles in their investment decisions with a view to promoting sustainable impact investments? How do pension fund managers and regulators leverage technology to stimulate the impact of pensions on socio-economic systems? What specific action steps can be taken today to begin the process of developing these practices? We need to get the answers as we deliberate in this forum”, she said.
Promasidor to inject over $8bn in to Nigerian operation
Promasidor Nigeria Limited, makers of Cowbell, Onga, Toptea and Loya Milk, has concluded arrangements with Ingternational Finance Corporation (IFC), a member of the World Bank Group, to inject a $25 million loan (over N8billion) into its operation in Nigeria with a view to increasing efficiency and producing more goods for the benefit of Nigerian populace.
Olivier Thiry, Managing Director, Promasidor Nigeria Limited, explained that the capital injection would be used to support purchases of new machinery that will enable PNL to increase efficiency, expand production and develop new products, leading to greater availability of nutritious food products in Nigeria at competitive prices. His words: “This is a very competitive market for food products. We expect that this investment will help us optimise production costs, enabling us to reach and nourish more consumers with our affordable range of quality products. We will also target our portfolio extension by gradual integration of more locally sourced raw materials from producers in Nigeria and widening our network of distributors.”
According to him, the investment became necessary in view of the numerous business opportunities in the Nigerian market.
Meanwhile, Mary-Jean Moyo, IFC Head of Manufacturing, Agribusiness and Services for sub-Saharan Africa said, “Agribusiness is Nigeria’s largest employer. Increasing investment in food-processing companies like PNL will help diversify Nigeria’s economy and improve nutrition by expanding the supply of affordable food.”
IFC said it invests in Agribusiness to enhance productivity with the goals of greater food security, higher rural incomes, and improving environmental and social sustainability. Today, it added, the average African farm performs at just 40 percent of potentials. The organisation said by 2030, Africa’s agriculture and agribusiness market is expected to triple in value to reach $1 trillion, but would needs more than $10 billion in new investment annually to achieve this desired expansion of output.
In the fiscal year ended in June 2016, IFC’s overall, long-term investments in sub-Saharan Africa totalled nearly $3.7 billion, including more than $1.8 billion mobilized from other investors. IFC clients provided 240,000 jobs, supported nearly 1.2 million farmers, and treated nearly 960,000 patients.
PNL is a subsidiary of Promasidor Holdings limited (the Company), a leading Pan-African consumer goods company operating in 25 countries across the continent. The Company was founded in 1979 in the Democratic Republic of Congo by Mr. Robert Rose, who pioneered formulations and packaging of dairy products which extended shelf life and made them more accessible and affordable for millions of low-income consumers.