Economy
Pension Assets to Grow 8.5% in 2020—Report
By Modupe Gbadeyanka
Despite the slowdown in economic activities in 2020, a report has shown that the Nigerian pension industry is expected to record a growth this year, with the pension assets rising by 8.5 per cent.
According to the Agusto & Co’s 2020 Pension Industry Report, as at 31 December, the Nigerian Pension Industry’s assets under management stood at N10.2 trillion (or $28.3 billion at $1= N360) as at December 31, 2019, representing an 18.6 per cent growth from the N8.3 billion recorded at the end of 2018 and a 17.2 per cent compound annual growth rate over the last five years.
Growth in managed assets has been increasingly driven by investment returns rather than additional contributions over the last five years.
Specifically, 63.4 per cent of growth was attributable to investment returns earned on managed assets with the outstanding 33.6 per cent representing net annual contributions in the last five years.
It is believed that the sector has evolved over the years from one with predominantly public sector participants running a defined benefit scheme to a mandatory defined contribution system for all government and private-sector employees in the country.
The 2004 pension reform redefined retirement planning in Nigeria and led to a significant boost in the number of enrolees and the size of managed assets in the Industry.
Going forward, Agusto & Co said it expects a considerable slowdown in AuM growth driven by lower contributions as unemployment is expected to rise significantly given the weakened macroeconomic environment following the COVID-19 pandemic.
“Job losses are expected to trigger higher benefit withdrawals as disengaged enrolees seek access to the 25 per cent lump sum drawings permitted by PenCom regulations for employees out of work for more than three months.
“Investment performance is also expected to fall considerably in line with the lower yields on government securities, which account for over 70 per cent of the industry’s asset allocation.
“Nonetheless, we note positively the favourable demography of enrolees, which has over 73.8 per cent below the age of 50 indicating relatively low expectations of liquidity events such as lump- sum payments, annuities and programmed withdrawals.
“We expect AuM to continue to grow albeit at a much slower pace of 8.5 per cent in 2020 and rising to 12 per cent in 2021, which is well below the compound annual growth rate (CAGR) of 17.2 per cent over the last five years,” it said.
The report noted that despite the notable strides in pension reforms and double-digit average growth in the last five years, Nigeria continues to lag behind some emerging markets in terms of pension penetration, with a pension AuM to GDP ratio of 6.8 per cent.
The sector’s AuM to GDP ratio falls below those of Kenya and South Africa with 13.2 per cent and over 120 per cent respectively but compares well with Ghana’s 5 per cent.
The weak pension penetration has been due in part to the previous exclusion of Nigeria’s informal sector (which accounts for an estimated 65 per cent of GDP) and the low compliance rate of eligible organisations.
“Nonetheless, we note increased efforts by the Commission to ensure compliance and drive enrolee participation. Most notable is the micro pension scheme (MPS).
“The micro pension scheme allows previously excluded self-employed persons and organisations with less than three persons to participate in the contributory pension scheme under more flexible rules.
“We remain unconvinced by the structure of the scheme for informal sector operators, given that compliance is optional and prior lessons from the National Health Insurance Scheme indicate voluntary compliance is unlikely to yield significant levels of enrolment,” it said.
Agusto & Co’s 2020 Pension Industry Report provides detailed information on the structure and competitive environment of the Industry as well as the regulatory environment and its impact on the Industry’s performance.
Recent developments and key issues including the most anticipated transfer window, minimum pension guarantee, multi-fund structure and the micro pension scheme are also discussed in detail.
Furthermore, the report provides detailed analysis of the Industry’s financial condition as well as the performance of the individual funds (funds I-IV). Agusto & Co has also ranked PFAs by share of managed assets and fund performance in the report.
By Adedapo Adesanya
The duo of Afriland Properties Plc and Geo-Fluids Plc crashed the NASD Over-the-Counter (OTC) Securities Exchange by a marginal 0.06 per cent on Wednesday, December 11 due to profit-taking activities.
The OTC securities exchange experienced a downfall at midweek despite UBN Property Plc posting a price appreciation of 17 Kobo to close at N1.96 per share, in contrast to Tuesday’s closing price of N1.79.
Business Post reports that Afriland Properties Plc slid by N1.14 to finish at N15.80 per unit versus the preceding day’s N16.94 per unit, and Geo-Fluids Plc declined by 1 Kobo to trade at N3.92 per share compared with the N3.93 it ended a day earlier.
At the close of transactions, the market capitalisation of the bourse, which measures the total value of securities on the platform, shrank by N650 million to finish at N1.055 trillion compared with the previous day’s N1.056 trillion and the NASD Unlisted Security Index (NSI) went down by 1.86 points to wrap the session at 3,012.50 points compared with 3,014.36 points recorded in the previous session.
The alternative stock market was busy yesterday as the volume of securities traded by investors soared by 146.9 per cent to 5.9 million units from 2.4 million units, as the value of shares transacted by the market participants jumped by 360.9 per cent to N22.5 million from N4.9 million, and the number of deals increased by 50 per cent to 21 deals from 14 deals.
When the bourse closed for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc 297.5 million units sold for N5.3 million.
Also, Aradel Holdings Plc, which is now listed on the Nigerian Exchange (NGX) Limited after its exit from NASD, remained the most active stock by value (year-to-date) with 108.7 million units sold for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 billion.
By Adedapo Adesanya
The euphoria around the recent appreciation of the Naira eased on Wednesday, December 11 after its value shrank against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N5.23 or 0.3 per cent to N1,547.50/$1 from the N1,542.27/$1 it was valued on Tuesday.
It was observed that spectators’ activities may have triggered the weakening of the local currency in the official market at midweek as they tried to fight back and ensure the value of funds in foreign currencies strengthened.
The domestic currency was regaining its footing after the Central Bank of Nigeria (CBN) launched an Electronic Foreign Exchange Matching System (EFEMS) platform to tackle speculation and improve transparency in Nigeria’s FX market.
At midweek, the Nigerian currency depreciated against the Pound Sterling by N3.56 to close at N1,958.68/£1 compared with the preceding day’s N1,955.12/£1 and against the Euro, it slumped by 34 Kobo to trade at N1,612.66/€1, in contrast to the previous session’s N1,613.00/€1.
As for the black market segment, the Naira lost N45 against the American currency during the session to quote at N1,670/$1 compared with the N1,625/$1 it was traded a day earlier.
A look at the cryptocurrency market showed a recovery following profit-taking as the US Consumer Price Index report matched economist forecasts.
The news was enough to convince traders that the Federal Reserve is certain to trim its benchmark fed funds rate another 25 basis points at its meeting next week.
The move also saw Bitcoin (BTC), the most valued coin, return to the $100,000 mark as it added a 2.9 per cent gain and sold for $100,566.12.
The biggest gainer was Cardano (ADA), which jumped by 15.00 per cent to trade at $1.16, as Litecoin (LTC) appreciated by 10.4 per cent to sell for $121.76, and Ethereum (ETH) surged by 7.0 per cent to $3,929.30, while Dogecoin (DOGE) recorded a 6.7 per cent growth to finish at $0.4181.
Further, Binance Coin (BNB) went up by 5.2 per cent to $716.72, Solana (SOL) expanded by 4.6 per cent to $229.77, and Ripple (XRP) increased by 4.2 per cent to $2.43, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
By Aduragbemi Omiyale
The Dangote Refinery located in the Lekki area of Lagos State has made its first export of premium motor spirit (PMS) just three months after it commenced the production of petrol.
In September 2024, the refinery produced its first petrol and began loading to the Nigerian National Petroleum Company (NNPC) on September 15.
However, due to some issues, the facility has not been able to flood the local market with its product, forcing it to look elsewhere.
In a landmark move for regional energy integration, Dangote Refinery has partnered with Neptune Oil to take its petrol to neighbouring Cameroon.
Neptune Oil is a leading energy company in Cameroon which provides reliable and sustainable energy solutions.
Dangote Refinery said this development showcases its ability to meet domestic needs and position itself as a key player in the regional energy market, adding that it represents a significant step forward in accessing high-quality and locally sourced petroleum products for Cameroon.
“This first export of PMS to Cameroon is a tangible demonstration of our vision for a united and energy-independent Africa.
“With this development, we are laying the foundation for a future where African resources are refined and exchanged within the continent for the benefit of our people,” the owner of Dangote Refinery, Mr Aliko Dangote, said.
His counterpart at Neptune Oil, Mr Antoine Ndzengue, said, “This partnership with Dangote Refinery marks a turning point for Cameroon.
“By becoming the first importer of petroleum products from this world-class refinery, we are bolstering our country’s energy security and supporting local economic development.
“This initial supply, executed without international intermediaries, reflects our commitment to serving our markets independently and efficiently.”
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