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Nigeria hikes capital requirement for pension managers as mergers loom

Published 30/04/2021, 16:31
Updated 30/04/2021, 16:36
© Reuters.

By Chijioke Ohuocha
ABUJA, April 30 (Reuters) - Nigeria has increased the
capital requirement for pension managers in an attempt to steer
the biggest sector of its fund management industry to target
untapped opportunities in the much larger, informal sector of
small business.
Three pension managers are in talks to merge to meet the new
capital requirement of 5 billion naira ($13.14 million) by next
year, two pension executives with knowledge of the matter told
Reuters. Pension funds currently operate with 1 billion naira
capital.
Fund managers include Stanbic IBTC Pension Managers, a unit
of Stanbic IBTC Holdings IBTC.LG , Sigma Pensions, which sold a
majority stake to private equity firm Actis, and several others
with either banking or insurance parent companies.
The National Pension Commission was not available for
comment.
Nigeria's pension funds were worth around 12.3 trillion
naira as of March, up from 10.5 trillion naira in 2019. Fund
growth slowed in 2020 due to the COVID-19 pandemic but a strong
rally on the equity market helped counter historically low bond
yields.
Africa's most populous country faces a shrinking labour
market, double-digit inflation and low growth in the face of
mounting insecurity. So far, contributions are mainly from the
millions working for the government or big companies.
But there are untapped opportunities in the small business
sector, the executives said, adding that the sector needed to
overcome challenges on how to track them.
The growth in pensions has lifted fund flow into equities
and bonds in Nigeria. Current regulations allow Nigerian pension
managers to invest up to 30% of their portfolio in equities and
limit investment in government bonds to a maximum of 80%.
($1 = 380.5500 naira)

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