Workers To FG, Don’t Borrow N620bn From Pension Funds

Workers To FG, Don’t Borrow N620bn From Pension Funds
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  • Proposal based on PFAs willingness to invest in transportation sector
  • FG.‘No sane union would take that’ – ASCSN President
  • We may become stranded if govt defaults, says NUP

Ladi Patrick, Abuja

Workers under the auspices of Association of Senior Civil Servants of Nigeria, ASCSN, have taken a swipe at the President Muhammadu Buhari APC-led Federal Government on its plan to borrow from pension funds.

The Association without mincing words asked the Federal Government to jettison its plan to source N620bn loans from Pension Funds to support its proposed N7.73 trn investment in transport infrastructure over the next five years, describing the proposal by the government as insensitive.

The ASCSN President, Tommy Okon, said the proposal is coming at a time when “some pensioners are even complaining about delayed payment of pension. No sane union would take that. Anyways, it is still in the realm of proposal because we have not received such suggestion but I believe they shouldn’t make such a proposal because no sane union would accept that.

The union also berated the FG on its borrowing spree, noting that this has put the nation under pressure.

Furthermore, Okon said, “I also believe that a very sensible government would know you cannot continue to do things the same way and expect a different result. They have been borrowing, putting Nigeria under intense pressure”.

 Besides, pensioners under the aegis of the Nigeria Union of Pensioners, NUP, stressed that the government needed to be careful about borrowing from the pension funds.

 Reacting to the plan, the NUP Information Officer, Mr Bunmi Ogunkolade, noted that retirees might become stranded if the government failed to repay the loan.

Ogunkolade stated, “From the NUP, we call for caution on the borrowing plan because what is happening today may not happen tomorrow. This money does not belong to the government; it belongs to the workers who will retire tomorrow. The pension fund does not even belong to the workers; it becomes a pension after the workers might have retired. So, people in service today that are contributing hope to retire one day and collect the money.

“Our fear is when they now retire and the money is not there, having been spent on construction of roads or electricity; so, what would be the fate of such retirees? So, we call for caution on the part of the government. They should please think twice. The total contribution, according to the Pension Commission, is over N13trn and the government wants to borrow $1.5bn. We express our strong reservation about such borrowing”.

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However, analysts believe that since the pension law allows PFAs to invest in Federal Government bonds, workers and pension unions may not have any legal grounds to stop the government or pension funds administration from going ahead with the proposal.

 Specifically, the government is seeking to obtain the facility to finance transport sector projects between 2021 and 2025, hoping that the over N13trn Pension Funds will grow at an average rate of 15% per annum during the period.

These were contained in the Federal Government’s ‘National Development Plan 2021-2025: Volume I’, which was launched recently.

The Federal Government also revealed in the NDP document that the N7.73trn infrastructure spending would be sourced from the capital market, the Presidential Infrastructure Development Fund portfolio, Pension Funds, among others.

The government, however, said the proposed N620bn facility would be based on the willingness of Pension Funds Administrators, PFAs, to invest in the transportation sector.

The NDP document read in part, “An additional $1.5bn ,N620bn, could be sourced from pension funds, assuming Nigeria’s pension funds assets valued at over $31.3bn in 2019 grows at an average rate of 15% per annum over the five years and pensions funds administrators opt to invest in infrastructure funds and infrastructure bonds up to the thresholds they are allowed to do”.

The National Development Plan describes transportation as vital to the economy, noting that it underpins development, delivers improvements in quality of life, and enables effective governance.

As such, the government said in the plan that it would upgrade the current transport infrastructure to a well-integrated multi-modal and intermodal transport system that is economically efficient, socially equitable, and environmentally sustainable.

The NDP further read in part, “To achieve the goals outlined in the transportation sector, the estimated public investment is N7.73trn from 2021 to 2025. Allocations will be made to priority projects in the sector as well as projects essential to the operations of the relevant MDAs at each level of government.

“In addition, the transportation sector plan and the infrastructure master plan have identified some available funding options. Aside from the public sector capital budget expenditure sources, the following options are available to the government: Capital market-raising the sum of N100bn on an annual basis via the sovereign Sukuk bonds. This will amount to a sum of N500bn that will be available for the funding of critical road projects. The Presidential Infrastructure Development Fund portfolio managed by the Nigeria Sovereign Investment Authority: The sum of $321m was made available to this fund from the proceeds of the last tranche of the ‘Abacha loot’ that was recovered. The proceeds of the fund will be applied to finance the execution of the Lagos–Ibadan Expressway, Abuja – Kaduna – Kano Expressway and the Second Niger Bridge.

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“The Central Bank of Nigeria is putting together an infrastructure company in collaboration with the NSIA and some private capital funding sources. It is expected that InfraCo will generate a total capital asset portfolio of about $40bn. Over the next five years, it is expected that InfraCo can generate up to at least 55% of its projected total portfolio of $22.5bn.

According to the document, with over 200 million people living across an area of over 900,000 square kilometres, the nation’s transport sector currently contributes an average of 3% to the Gross Domestic Product.

The sector’s contribution to the GDP is expected to increase to 5% in the next 5 to 10 years.

As such, the government said it would incentivise the private sector to attract alternative funding sources to the sector.

However, the APC led Federal Government had claimed in several fora that there is nothing wrong in borrowing especially when the loan is channeled to good use particularly to capital projects that would benefit the masses and improve quality living. From all indications the Federal government is willing to take any loan to fast track development so long as the lender is willing to lend and under better repayment plans.  President Buhari in his recent interview aired by some of the television stations stated clearly that his administration is ready to take loans from the People’s Republic of China even though Nigerians are not comfortable taking loans from China.

The Minister of Finance Mrs Zainab Ahmed recently said that Nigeria’s debt ratio is within the safety zone and there is no cause for alarm.  President Buhari led government, according to statistics owes China  $3.48bn as of the end of June 2021, and experts have forecasted that Nigeria risks losing assets to China over a certain amount of loans. Nevertheless, President Buhari also borrowed from the World Bank, IMF, and the US etc.

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Nigerians, CSOs, have raised the alarm over the borrowing spree of this government, SERAP on many occasions has sued the administration to court over certain borrowings.  You would agree that the 9th NASS that approves whatever loan request has joined other Nigerians in advising the Federal Government to cut down on borrowings. The Senate, two days ago, during the President of the Senate 63rd birthday anniversary celebration warned that the NASS would henceforth carry out oversight on the loans and its use. Lawan stated that: “Our revenue to GDP ratio is very low and the economists will tell you Nigeria’s problem is not debt, but revenue.

“So, if that is the case, it means those of us in government must focus on dealing with the challenges of revenue generation, collection and remittance.

“This year, we will be engaging with the revenue generating agencies such as Nigerian Ports Authority, NPA, Customs, Federal Inland Revenue Service, FIRS, and so on, on a quarterly basis, to have their targets set for them, and we want them to come and brief us on their performance every quarter.

“We hope to start the first meeting, which is an exploratory kind of meeting with them either this month or early February.

“We want to see how we can make a positive difference in the area of revenue generation.

“Nobody likes taking loans, borrowing or accumulating debts, whether as an individual, a family, a community or as a country.

“But what can you do when you’re not able to generate enough? We are as concerned as anybody else about our level of borrowing, even though we are not saturated, but if we can do better why not reduce, and the best way to reduce is to get more revenues from especially independent sources.

“The government owned enterprises are supposed to give us more money. In 2022, we are expecting maybe about a trillion, I’m not an economist, but I believe that we should be expecting maybe double or triple from them”.


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