N17trn Borrowing: Don’t Experiment With Pension, Rewane Tells Governors’ Forum

A Member of the Presidential Economic Advisory Committee and the Chief Executive Officer of Financial Derivatives Company Ltd, Mr Bismarck Rewane, has said Nigeria’s Pension Funds will not be borrowed by State Governors for experiment.

THE WHISTLER had reported that the 36 State Governors under the Nigerian Governors’ Forum had resolved to borrow about N17trn from the country’s pension Fund and the Nigerian Sovereign Investment Authority.

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The country’s Pension Fund Assets currently stands at N11.56trn, according to official data.

Rewane said on Arise TV that the plan by the NGF to borrow such huge amount would erode the pension fund asset.

He said, “With all due respect to the Governors Forum, eroding the pension fund is very dangerous incident. The State Government themselves they took money from the bond market, N50bn, N100bn and N200bn. I want you to go and audit and see what each of these State Government have done with the bonds money.

“So, if the money they borrowed from the financial markets have not been well and efficiently deployed, where is the guarantee that the one they want to take from the pension, which is for the people’s retirement to be used and when the time comes for redemption and repayment, the State Government would say they don’t have the money.

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“We are not going to use pension funds for security votes, we are not going to use the pension fund for this and that is not to say that among the State Governments themselves there are not some good ones.

“But so far, the records and history shows that they have not been prudent and in terms of fiscal consolidation, they have not be showing examples of fiscal efficiency and fiscal consolidation.

“We shouldn’t experiment with peoples pension. It took a long time before we passed the Pensions Act of 2004. It took a long time, the total fund in the pensions fund is about N13trn or N14trn.

“Don’t forget that because the pension guideline was strictly adhered to, that was why during the merging call of 2008 and  2009, no pensioner lost their money, they got their money as at when due.

“So, when the recession came and people were laid off you found that people could get their money.

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Rewane said the State Governments could raise money at market rates for carrying out and executing projects which will have an internal rate of return.

He said if State Governments want to increase borrowing from the capital market, they should go and get credit ratings.

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