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The Pension Fund Operators Association of Nigeria (PenOp) has reaffirmed that pension funds remain critical to financing Nigeria’s vast infrastructure needs, describing the industry as the nation’s largest and most stable source of long-term capital.
This position was highlighted during the launch of PenOp’s maiden Infrastructure Report in Lagos on Friday, which explores how pension assets can be strategically deployed to close Nigeria’s estimated $3 trillion infrastructure gapover the next three decades.
According to data from Agusto & Co., meeting Nigeria’s infrastructure financing needs would require the Federal Government to allocate the equivalent of its entire 2021 budget — ₦13.58 trillion — to capital expenditure every year for a century, underscoring the urgency of mobilising private capital.
Speaking at the event, PenOp’s Head of Research and Investment Relations, Akinbola Akintola, explained that the report seeks to guide policymakers, financial market operators, and infrastructure developers on structuring projects that meet the investment criteria of pension funds.
“We asked ourselves how the pension industry — which manages the largest pool of investable long-term capital — can actively support infrastructure development while safeguarding contributors’ funds. This report aims to bridge that gap by helping stakeholders make projects more bankable and attractive to institutional investors,” Akintola said.
He noted that the publication targets a broad audience, including project promoters, policymakers, and the investing public, adding that contributors deserve greater transparency regarding how their funds are deployed.
Akintola emphasised that pension fund administrators (PFAs) favour investments in core sectors such as power and telecommunications, given their stability and impact potential.
“The power and telecom sectors continue to attract strong interest because they offer consistent returns and address urgent national needs. Nigeria’s persistent energy deficit and young, tech-savvy population make these areas particularly promising,” he added.
Citing examples of successful infrastructure participation, Akintola revealed that pension funds have indirectly supported the Lagos Blue Line rail project through bonds, as regulations currently restrict direct construction financing but allow for investments via project-linked securities and infrastructure funds.
He called for stronger public-private collaboration to unlock more opportunities, urging the government to de-risk projects through guarantees, policy stability, and blended finance models.
“Government involvement through risk-sharing mechanisms such as first-loss capital or guarantees can significantly boost investor confidence. Initiatives like the proposed MOFI Real Estate Investment Fundshow how blended finance can drive infrastructure delivery,” he said.
In the report’s foreword, PenOp described Nigeria’s infrastructure deficit as one of the major constraints to economic development, pointing to inadequate roads, weak rail systems, unreliable power supply, and outdated airports and water systems.
“Government efforts through budgetary allocations and borrowing have proven insufficient. The private sector must take a leading role in sustainable infrastructure financing — and pension funds, with their long-term horizon, are best suited for this purpose,” the report noted.
While pension fund investment in infrastructure has grown from near zero in 2004 to 1.3% of total assets, PenOp stressed that significant room remains for expansion, particularly with the National Pension Commission (PenCom)recently issuing new investment guidelines to widen eligible asset classes.
The revised framework introduces new opportunities in commodities, agriculture funds, securities lending, private placements, derivatives (for risk management), and gold-backed instruments, creating a more flexible investment landscape.
As of August 2025, Nigeria’s total pension fund assets stood at ₦25.89 trillion, up from ₦25.79 trillion in July, according to PenCom’s monthly report.
PenOp expressed optimism that its new Infrastructure Report would catalyse deeper collaboration between pension fund managers and infrastructure promoters, ultimately channeling long-term domestic capital into projects that drive inclusive and sustainable growth.
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