Central Bank Governor Sanusi Lamido Sanusi has revealed plans to revise regulations covering pension funds, to allow pension fund managers to invest up to 20% of their portfolios in infrastructure projects, particularly electricity.
Of course, this is done all over the world. Pension funds are responsible for much long-term investment in the so-called "mature" markets. And in a potentiall high-growth area like electricity, not just in Nigeria but in West and Central Africa (nothing stops us producing enought to export in bulk), our pensioners would be in a more secure position financially if managers can grow the portfolio via long-term infrastructure investment.
Unfortunately, as of 2010 the Nigerian Federal Government has not done anything to give me any sense of security viz-a-viz proper regulations, proper application/interpretation of regulations, and proper enforcement of regulations. Heck, if you are in the right political camp, the powers-that-be will leave you alone no matter what you do. Imagine Chris Uba walks the streets a free man, in spite of what he did in full view of the entire world.
You don't play around with pensions.
If they are going to do this, they need to start with fundamentally reforming government.
Please don't say I am being naive or unrealistic .... because you are the same people who will criticize worse than anything I have ever done if this plan results in substantial losses for our pension funds.
Every year since I can remember, the federal government announces or launches some new plan to fix electricity. Billions get spent, yet our output of electricity only ever drops.
Lets start from Square One, and not try to jump in mid-stream.
I like Sanusi Lamido Sanusi. I do.
But he is still clearing up the mess in our banking system, a process that will cost the public treasury around $10 billion in direct transfers to the banking industry. Much of this (though not all of it) is attributable to the ephemeral nature of regulation in Nigeria. Sanusi is in a better position than I to realize that we have to fix the fundamentals ...
... and we have to do it quickly, because we do need pension funds invested long-term in infrastructure.
The thing that bothers me is there is no political party or political movement that represents reform, restructuring and transformative change. There is no candidate or party for whom to cast a vote in 2011, even if our votes actually decided the race, and even if one were to opt for pressurizing the political class from outside the (un)democratic process, there is no organization marshaling the resources and time of citizens interested in wide-ranging substantive reform. I'd like to donate money and time to the cause, but there is no cause. I'd like us to frighten the powers that be into making concrete changes, but they know and I know that they are under no pressure to change anything. And I'd like to be able to hold them accountable, to have early-warning structures and outlets for whistleblowers, so the moment the government started reneging on a promise the citizenry at large can be mobilized to hit the streets to scare them back in line.
Without anything we can grasp as a lever for the promotion and protection of reform, we are left as usual to just watch things happen. And because things in Nigeria are neither institutionalized or systemic, it will all depend on specific personalities. Charles Soludo issued a rule blocking foreign ownership of Nigerian banks; Sanusi encourages foreign ownership of Nigerian banks -- who knows what the next CBN Governor will do, or the next President.
It is weird to be optimistic about something ... and yet have a sense of foreboding.
The powers-that-be will ease the regulations on pension funds ... we will find out what happens next only with the passage of time.
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