FG Requires Over N1.2bn For National Savings Scheme Take-Off

If the recommendations in the report submitted by members of the Working Group on the National Savings scheme is accepted by the federal government, over N1.2bn would be required for initial take-off of the initiative.

The Report was submitted to the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed by the committee on Tuesday.

The Working Group was constituted virtually by the Minister in May 2020 due to the Covid-19 pandemic.

It was saddled with the responsibilities to study the National Savings Strategy Paper and advice the federal government on the feasibility of the proposals and/or recommend changes; to advise on ways and means of mobilizing and channeling corporate and individual savings to accelerate domestic capital formation to support entrepreneurs and enterprise development and consequently achieve the urgent task of diversifying the economy and deepening the Capital Market among others.

In its recommendations which was obtained by THE WHISTLER, the Committee said while it believed that a National Savings Scheme for Nigeria as proposed in the Strategy Document is feasible, it must be a mandatory savings scheme for individuals in the formal sector.

It said only individuals between the ages of 18 years and 50 years should be mandated to participate.

The Report stated that while the National Corporate savings scheme is not feasible at this time, the Savings Scheme must be driven by incentives, primarily tax.

It said, “The implementation mechanism is designed to consider practical realities and minimize complexity. The main objective is to create a stable and optimal financial intermediation structure where channels and savings products are easily accessible, and an effective and robust institutional framework is established.

“The overriding goal is to incentivize the population to save, have access to various savings investment products and ultimately, provide a pool of funds to finance capital investments.

“The initial take-off expenses should be borne primarily by the Ministry of Finance, Budget & National Planning with some funding provided by the SEC.

“The report estimated N1.26bn as take-off funding for the program. This, however, will need to be reviewed at the time of implementation to take care of inflationary price changes.”

The Report stated further that the scheme will be open-ended and considering its medium-term to long-term objective, participants will have the opportunity to decide how their contributions will be invested and will be able to make periodic re-allocations.

To allow for product diversification and provide savers flexibility and choice, it noted that multiple investor risk/return profiles have been designed with corresponding savings products.

These products, it stated, will allow service providers offer an array of diversified product options tailored to match customer needs.

“New Government issued savings instruments that have features to protect savers from rising inflation have been recommended and a number of special products have also been proposed with the needs of Nigerians in mind,” it added.

On the implementation roadmap, the Report stated that the scheme will be subject to the overall supervision of the Securities and Exchange Commission, and structured, to start, as a Department within the SEC.

It added, “With the Investment and Securities Act (ISA) of 2007 currently being reviewed, a new section should be introduced in the proposed Investments and Securities Bill to provide for the establishment of the National Savings Scheme as a mandatory scheme and other related matters.

“The new provisions in the ISB should be articulated to give the NSS its own advisory board. The governance structure of the Scheme should be robust and transparent with stringent measures in place to ring-fence the assets of the Scheme.

“An Advisory Board will be constituted to provide oversight to the NSS. Members will be made up of top professionals, the best investment and financial professionals including representatives from associations and trade groups who will be selected by the Minister of Finance, Budget and National Planning with recommendation from SEC.

“The Advisory board will focus on strategy and advise the government on the extent and period for program incentives, conduct technical reviews of proposed products and supervise overall program philosophy.”