Little change in PFAs’ asset allocation 

The assets under management (AUM) of the Nigerian regulated pension industry increased by 23.7% y/y in February to N7.79trn (US$25.5bn). They are growing at a reasonable rate yet, at just 6.9% of 2017 GDP, are running well behind many emerging markets. Nigeria was relatively late (2004) in introducing legislation creating a sound structure for regulated pensions. Strong and forward-looking leadership has not always been forthcoming from the regulator, so we have to view its target of 30% coverage of the workforce by 2024 as ambitious.                                                                                           

  • The industry’s holdings of FGN paper amounted to 69.7% of their AUM in February, compared with 72.3% one year earlier. The beneficiary has been domestic equities, the share of which gained 1.9% over the 12-month period.
  • The role of the PFAs in local debt markets remains pivotal. Their holdings of FGN bonds at end-February represented 45.5% of the stock of the instruments at end-December.
  • PenCom’s latest data do not point to a surge of investment in domestic equities. The NSEASI rose by 71.1% in the 12 months to end-February while AUM in the asset class increased by 54.8% over the same period.
  • The decline in yields on FGN paper since mid-2017 could lead to a change in asset allocation by PFAs. The share of AUM invested in equities has risen but we are not witnessing a sea-change. The generally average results of listed companies other than tier-one banks militates against such a change.

Sources: National Pension Commission (PenCom); FBNQuest Capital Research


  • We understand that conversations are taking place between the FGN and the PFAs to persuade them to invest in priority infrastructure projects through a SPV structure. Investors require attractive terms relative to those on exposure to other asset classes.

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