Nigeria: Analysts Rate Nigeria's Pension Assets Under Management Low

16 December 2019

Analysts at the FBN Quest Research, an arm of the FBN Merchant Bank, have given a comparative view of Nigeria's pension assets under management indicating under performance of peers. According to their report, "The Assets Under Management (AUM) of the regulated pension industry increased by 16.1% y/y in October to N9.81trn (US$32.0bn), and by 2.4% m/m. They represent just 7.7% of 2018 GDP. This coverage lags peer emerging markets because the Nigerian industry, dating from 2004, is one of the newest.

"The latest figure for Kenya is 14.0 percent in December 2018, and its asset structure is diverse: 39.4 percent of the total in government paper, 19.7 percent in real estate and 17.3 percent in listed equities. The focus of Nigerian PFAs is concentrated on FI products.

"Their holdings of FGN paper totalled 69.5% of AUM in October, compared with 70.9 percent one year earlier. This masks, however, a shift in their exposure to NTBs, the share of which rose from 19.6% to 22.8% of the total in the period.

"The PFAs are core participants at the monthly auctions held by the Debt Management Office. Their holdings of FGN bonds at end-October represented 47.3% of the stock of the instruments at end-June.

"For the first time in three months, both sales and the total bid were the strongest for the long bond (Apr '49) at the auction in November. It is generally seen as the favourite of the PFAs for the matching of their assets with their liabilities."

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