Williams Anuku, Abuja
Efforts to address deficits in the 2020 budget may see the Federal and state governments borrowing over N2 trillion from dormant funds in the pensions scheme.
A better part of the funds would go into investments in road infrastructures among other critical sectors begging for attention.
Kebbi state governor, Atiku Bagudu gave this indication on Thursday, shortly after the National Economic Council (NEC) meeting chaired by Vice President Yemi Osinbajo.
Besides the borrowing plan which will be managed by the Nigerian Sovereign Investment Authority, there is a plot by states to also review the ownership structure of electricity distribution companies.
NEC came to the conclusion to leverage on the funds after it undertook a study of how South Africa and Saudi Arabia drive development.
Bagudu said, “you will recall that at the 99th NEC meeting, the NEC set up a sub committee to see how Pension funds can be used for infrastructure development as provided for by the Pensions Reform Act, because we realised that up to 20 percent of the pensions funds under the current law can be used for infrastructure.
“At last NEC meeting, there was a review of the performance of the Nigerian Sovereign Investment Authority and we are all impressed about the experience they had gained in the last few years and their performance and it was decided that a committee be set up to see how we can leverage on that performance to create a platform where pension funds can be used for infrastructure development in a safe manner, so that it will earn long term returns for the pension funds while also helping to build Nigeria’s infrastructure.
“So today, the sub-committee presented and interim report where they advise on some of the issues that came up while deliberating. Of particular note was that other countries have been using the same mechanism – South Africa, Saudi Arabia and others have been using their pension funds and sovereign wealth authorities investment process to create platform for development.
“So, the committee reported and identified potential road infrastructure, infrastructure in the power, rail sectors that can be funded through this mechanism.
“They noted that this year’s budget for example has N169 billion for roads across the federation and is grossly inadequate but with this mechanism maybe up to N2 trillion can be accessed and leverage upon.
“The NEC commended the committee for the interim report and the subcommittee promised that early next year there will be final report for the NEC to consider.
“Secondly, the NEC also received the interim report of the sub-committee to consider the ownership structure of Electricity Power Distribution Company as far as state ownership is concerned.
“You will recall also that at the 99th NEC meeting, NEC discussed that since the privatization of Electricity Power Distribution Company that at least 40 percent that was meant to be for the states government and federal government have not been so distributed.
“Therefore, a committee was set up to review the status/ownership of those shares that have not been distributed and report back to NEC. The committee is charged by the governor of Kaduna State, Nasir El-Rufai with six other governors, some ministers including the minister of finance and some agencies”.
