Nigeria eyes reform of $17 billion pension industry to drive infrastructure and increase returns

Nigeria is preparing to loosen restrictions on how its $17 billion pension industry can invest, a move that could redirect more capital into infrastructure and private equity while offering savers some relief from the country’s harsh economic climate.

A Bloomberg report disclosed that the National Pension Commission (PenCom) is in the final stages of reviewing regulations that currently cap pension fund managers’ exposure to infrastructure and private equity at just 5%.

The new limits, expected before the end of the quarter, will give administrators greater flexibility to diversify beyond traditional fixed-income securities, which currently soak up 62% of pension assets.

“This review is important because we are not really okay with returns the way they are,” said PenCom spokesperson Ibrahim Buwai. “Inflation is having a significant negative impact. We really want to see traction in those alternative assets to complement returns from fixed income and the traditional assets.”

For pensioners, the timing is critical. Inflation in Africa’s most populous country has remained above 20% for two straight years, steadily eroding household savings. At the same time, the naira has shed around 70% of its value against the U.S. dollar, squeezing purchasing power further.

The planned reforms will not only raise the ceiling for investments but also ease one of the most restrictive clauses in the existing rules — that infrastructure funds must allocate at least 60% of their portfolio to projects domiciled in Nigeria. PenCom says this threshold will be “significantly” reduced, potentially widening the pool of viable projects.

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This shift could serve a dual purpose: offering pension funds better returns while unlocking billions of dollars for critical infrastructure projects in power, transport, and housing. Nigerian fund managers have long argued that rigid regulations limited their ability to respond to market realities, keeping them overexposed to government bonds and other low-yield securities.

By expanding investment options, the government hopes to bridge the financing gap in infrastructure while protecting the long-term value of workers’ retirement savings. The reform could mark a turning point for a sector that sits at the intersection of Nigeria’s economic stability and its development ambitions.