The economics are as dramatic as the implications for structure and markets: Nigeria is set for a pensions explosion, which will throw up vast sums of liquidity. Urgent changes in the capital markets are required to absorb this liquidity. The challenge to regulators and to market players is enormous. This is the message of Charles Stevens, a pension fund administrator with long experience of the Nigerian markets, who is advising a Nigerian bank.
Aigboje Aig-Imoukhuede, managing director at Access Bank, shares Mr Stevens’ view. “Pensions reform is one of the greatest legacies of President [Olusegun] Obasanjo. Most of our parents died without savings but in five years’ time, you will be able to borrow against your pensions,” he says. “Capital is being created in the hands of people and this is going to transform the country. There are three million retirement savings accounts (RSA) today. In 10 years’ time, there will be 20 or 30 million RSAs, each with N1m ($7835). That is N20,000bn. If the exchange rate grows to N75 to one dollar, the amount of money under management in pension funds will be $1000bn.”
