Nigeria’s Pension Fund Hits ₦23.65tn as Infrastructure Deployment Remains Hampered by Risks

Nigeria’s pension fund industry has reached a new milestone, with the total Net Asset Value (NAV) growing to ₦23.65 trillion as of April 30, 2025, up from ₦23.32 trillion recorded a month earlier. This steady rise, revealed in the National Pension Commission (PenCom)’s Unaudited Report on Pension Funds Industry Portfolio, highlights the increasing strength of Nigeria’s pension sector, even amid structural challenges.

Despite this encouraging growth in fund value, the increase in the number of contributors under the Contributory Pension Scheme (CPS) remained marginal. The number of registered contributors only inched up from 10.68 million in March to 10.71 million in April, signaling that while assets are growing, the reach and participation of the scheme are expanding at a slower pace.

2027 Vice-Presidency: Senator Wamakko Denounces Ambition Claims As False, Politically Motivated

Pension Fund Growth Meets Deployment Hurdles

While PenCom’s figures affirm robust asset accumulation, a recent Africa Finance Corporation (AFC) report paints a more nuanced picture regarding the effective use of these funds, especially in infrastructure financing. According to the AFC’s State of Africa’s Infrastructure (SAI) Report, Nigeria’s pension assets—one of the largest pools of institutional capital in Africa—remain underutilized due to credit and liquidity risks that hinder their deployment into long-term infrastructure projects.

As of January 2025, Nigeria had already accumulated ₦22.8 trillion (approximately $14.2 billion) in pension assets, making it a major reservoir of capital with the potential to drive nationwide development. However, structural bottlenecks continue to prevent these funds from being channeled into critical infrastructure sectors, such as energy, logistics, and transportation.

 Bridging the Infrastructure Financing Gap

To address these concerns, the Nigerian government, in partnership with various stakeholders, created InfraCredit in 2017—a credit guarantee institution aimed at unlocking long-term domestic financing for infrastructure projects. Backed by the Nigeria Sovereign Investment Authority (NSIA), GuarantCo, AFC, and other partners, InfraCredit offers local currency guarantees to infrastructure bonds, making them compliant with regulatory thresholds for pension fund investments.

The AFC describes InfraCredit as a cornerstone of Nigeria’s infrastructure financing strategy, having significantly impacted the creditworthiness of infrastructure projects. These credit enhancement mechanisms are instrumental in mitigating perceived investment risks, thereby encouraging pension funds to enter sectors they would have traditionally avoided due to high risk profiles.

The results are already visible. According to the report, pension fund allocation to infrastructure jumped from ₦1.2 billion—a mere 0.02% of total assets under management (AUM)—to over ₦242 billion, or 1% of total AUM, equivalent to about $155 million. Though modest compared to the total fund size, this leap demonstrates the powerful catalytic effect of tools like InfraCredit.

Nigeria’s Strategy: Market-Driven Risk Mitigation Over Mandates

Unlike countries that mandate pension fund allocations into infrastructure through regulatory compulsion, Nigeria has opted for a market-based approach, enabling voluntary participation by investors. The AFC commended this strategy, noting that it encourages sustainable investment behavior while preserving the integrity of pension mandates.

The report emphasizes that Nigeria’s approach offers a replicable model for other African nations. By deploying credit enhancement structures, countries can unlock local institutional capital without resorting to distortionary mandates that could undermine investor confidence.

 Scaling and Deepened Engagement

While InfraCredit’s performance has been commendable, the AFC warns that Nigeria must scale up such interventions to ensure broader and deeper pension fund participation in national development. As the infrastructure financing gap widens—especially in areas like energy access, transportation, and urban housing—policymakers must empower pension administrators to invest more confidently in long-tenure projects.

The report concludes by urging Nigeria to continue strengthening its financial and regulatory frameworks to accommodate more robust risk-mitigation strategies. The long-term goal, the AFC says, is for Africa to finance its own growth from within, leveraging the massive capital lying dormant in pension funds and other institutional asset pools.

 Potential, and the Need for Innovation

Nigeria’s pension fund growth to ₦23.65 trillion underscores its strength as a capital hub in Africa. However, real development impact will only be achieved if more of this capital is effectively deployed into transformative infrastructure. Tools like InfraCredit are proving to be a viable bridge between idle pension funds and Nigeria’s pressing development needs.

To fully unlock this potential, the country must address credit and liquidity concerns through innovative financing structures and deeper engagement between the public and private sectors. Only then can the pension fund become not just a financial milestone—but a true engine for Nigeria’s economic transformation.