Monday, May 20, 2024

FG moves to take N20 trillion from pension funds for investment in infrastructural development

The federal government has announced plans to use N20 trillion from the country’s pension to finance infrastructural projects across the federation.

• May 15, 2024
President Bola Tinubu and Wale Edun
From the left: President Bola Tinubu [Credit: Punch Newspapers] and Wale Edun[Credit: X account]

The federal government has announced plans to use N20 trillion from the country’s pension to finance infrastructural projects across the federation.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this to State House correspondents after the Federal Executive Council meeting held on May 13 and 14 at the Presidential Villa and presided over by President Bola Tinubu.

According to the minister, the government’s move to invest pension and life insurance funds, along with other domestic funds, “in housing, power, rail, roads, water transport, even technology” is also to improve Nigeria’s economic growth, create jobs, and reduce poverty.

Mr Edun said, “These are key drivers of economic growth. They increase productivity. When you invest in them, you get increased productivity, economic growth, and job creation, which reduces poverty.

“And that is the strategy, so it’s two-pronged, and we’re not pivoting towards this all-important growth, and you say, where the resources come from? Nigeria is resilient. Nigerians are resilient.”

Mr Edun stressed that “even before we start looking to foreign investors, we start looking to foreign funding available in Nigeria, long-term funds to fund infrastructure projects, and it’s within the pension.”

He mentioned that per the life insurance and investment fund industry, “generally, there are offers of N20 trillion available, or much of it is in short-term funding that doesn’t need to be quite sure money is long-term,” noting that “people save over their lifetime for their pension.”

The minister, therefore, revealed that “in conversation, in consultation, collaboration, and cooperation with the private sector, we are now able to announce, with the full knowledge and support of all parties, that there will be an initiative to fund growth through investment in infrastructure, including housing provision of mortgages, long-term mortgages, and 25-year mortgages at relatively low interest rates.”

He added, “Initially, of course, the government will stand by and provide some support, particularly in this era of high interest rates, but eventually, as interest rates come down, there should be less room for the government through providing, for example, guarantees and so forth.

“So, we can look forward to these huge funds being leveraged with the expertise, the ability, the capacity of the private sector, partnering with the government to drive economic growth.”

He said house construction will be funded on the supply side while mortgages will be provided on the demand side so that those constructing houses have an outlet and Nigerians who are saving so much through pension funds have the bonus of access to affordable mortgages.

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