The federal government is making a move to rev up economic growth by unlocking N20 trillion from the nation’s pension funds to finance critical infrastructure projects across the country.
Finance Minister and coordinating minister of the Economy, Wale Edun, disclosed this to State House correspondents after a two-day Federal Executive Council (FEC) meeting presided by President Bola Tinubu at the Presidential Villa on Tuesday.
He said the initiative forms a key part of Tinubu’s broader reforms to stabilise the economy amid high inflation and interest rates.
To this end, he said the government will collaborate closely with private sector players to tap into the over N20 trillion pool of long-term funds available with Nigeria’s pension, life insurance and investment funds.
The Minister said, “and one of the key drivers of economic growth is investment in infrastructure, in housing, power, rail, roads, water transport, even technology.
“These are key drivers of economic growth, they increase product when you invest in them, you get increased productivity, you get economic growth, and you get 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 were the resources coming from? Nigeria is resilient, Nigerians are resilient.
“And the fact is that even before we start looking to foreign investors, we start looking to foreign funding, there is available in Nigeria, long term funds to fund infrastructure projects, and it’s within the pension.
“The life insurance and investment fund industry. Generally, there is offers of 20 trillion Naira available, or much of it is in short-term funding that doesn’t need to be quite sure money is long term. People save over their lifetime for their pension.
“And so in conversation, in consultation, collaboration and cooperation with the private sector, we are now able to announce and 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, 25 year mortgages at relatively low interest rates.
“Initially, of course, the government will standby 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.”
He said this large corpus will be deployed to finance housing, power plants, rail, highways, and cutting-edge technology infrastructure.
The model envisions the government providing enablers like guarantees initially to facilitate affordable 25-year mortgages at low interest rates.
While drawing on domestic savings was the immediate focus, the initiative is expected to attract foreign investment interest over time by demonstrating Nigeria’s commitment to infrastructure development.
The Finance Minister exuded confidence, stating that: “The best minds have committed to realising this ambitious vision that leverages our own resources to build a prosperous future.”