The infrastructure sector in Nigeria faces a substantial funding shortfall, estimated at $100 billion.
Against this challenging backdrop, the portion of pension funds allocated to the sector experienced a slight decline, falling by 0.92 per cent to N218.9 billion in October of this year.
However, according to Vanguard, findings from the latest pension funds industry portfolio report released by the Nigeria Pension Commission revealed a positive trend when viewed on a Year-on-Year basis.
Specifically, the total infrastructure funds grew by 1.3 % to N218.9 billion, compared to the N240.389 billion that was recorded in September 2024.
Industry experts have stressed that, despite the long-term suitability of infrastructure funds for pension assets, the current 0.92% allocation of the total pension fund assets to this crucial sector is inadequate if Nigeria is serious about closing the substantial sector funding gap. They largely attributed this persistently low allocation to ongoing concerns regarding project bankability and significant regulatory hurdles within the sector.
A recent report by the Pension Fund Operators Association of Nigeria on infrastructure indicates strong interest among pension fund managers across several key areas, including power, transport, agriculture, and healthcare. However, the report also highlights critical requirements, such as the need for credit enhancements, policy consistency, and the development of investable project pipelines.
Commenting on the low investment in infrastructure funds, Ambrose Omordion, the Chief Operating Officer of InvestData Consulting Limited, offered a detailed explanation, stating: “Historically, pension fund administrators have been cautious, citing concerns around project bankability, regulatory bottlenecks, and the overarching responsibility to safeguard contributors’ capital. So Nigeria’s pension funds currently invest a modest portion of their substantial assets in infrastructure, with significant potential for growth. While total pension assets are over N26 trillion as of September 2025, only about 0.9 % of this is allocated to infrastructure, well below the allowable regulatory limit of up to 10%. This is really not encouraging for a country that needed high fund to bridge infrastructural gap”.
Mr. Omordion further noted that PenCom has already established comprehensive investment guidelines which allow pension funds to invest in both infrastructure funds and bonds. He specifically clarified the regulatory limits, adding that “The current rules permit a maximum of 10% of pension assets in infrastructure funds and up to 35% in infrastructure bonds and other related debt instruments”.
