The federal government has decided to borrow N2 trillion from the current N10 trillion pension funds to finance the development of infrastructure.
This was disclosed by the Kaduna State Governor, Nasir El-rufai, after the National Economic Council (NEC) meeting that held at the State House on Thursday.
El-Rufai said the decision is in compliance with the Pension Reform Act 2004 which gives the government the right to borrow 20% of the fund to address national issues.
“In 2019 budget, N200 billion was budgeted for construction and maintenance of federal highways. In 2020, the budget is N169 billion. If we continue this way, we will never be able to fund highway infrastructure. We need to unlock funds to construct and maintain highways,” he said.
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Justifying the committee’s decision, El-rufai said various countries such as Chile and South Africa funded their infrastructure growth by borrowing money from workers’ pension funds.
El-Rufai further noted that the funds would be invested in rail, road and power sector adding that the borrowing would be done through bonds with private companies investing in road and rail infrastructure and paying within a period of 20 years.
According to him, this decision was wise as the pension funds are owned mainly by youths in their 30s who still have several years ahead of retirement.
Meanwhile, recent pension asset report released by the National Pension Commission (PenCom) indicated that about N7tn, representing 70.88 % of the entire fund was invested in federal government bonds and treasury bills by Pension Fund Administrators (PFAs).
The commission’s report showed that a total of N40.52bn was invested in infrastructure indicating a 0.2% increase as compared to N17.12bn invested in September 2018.
