Pension or perish – The Nation
Government must calm the fears of unions about borrowing pension funds
The agitated response of organised labour to the Buhari administration’s intention to borrow N2 trillion from Nigeria’s Contributory Pension Scheme (CPS) for infrastructural development could set the stage for a widespread industrial crisis if it is not handled carefully.
President of the Nigeria Labour Congress (NLC), Ayuba Wabba, expressed his organisation’s disquiet in no uncertain terms: “The safety of the fund, first and foremost, is paramount to us. If you say you want to borrow the money to build infrastructure, if the infrastructure fails, who pays?”
Wabba clearly has a point. Governments which are notorious for wasteful and misplaced spending cannot be trusted with funds that do not in fact belong to them. The examples are legion, including the long-running petroleum subsidy debacle, where subsidy payments reached an estimated US $3.5 billion in 2019, as well as a host of ludicrous prestige projects, including stadia, airports, hotels, shopping malls and Government Houses scattered across the 36 states.
Even the N10.33 trillion 2020 national budget is bloated by expenditures totalling N150.07 billion that are deemed to be frivolous, unclear and inappropriate. The Aso Rock Villa is budgetting N4.06 billion for routine maintenance; N526.23 million is to be spent by it on replacing vehicle spare parts and tyres; the concessioning of the Ajaokuta Steel Company is to cost N625 million.
Far too many projects in the 2020 budget are described in imprecise terms; many lack clearly-stated deliverables; there is too much emphasis on “empowerment,” “capacity-building” and “skills acquisition” as opposed to concretely-defined goals.
An administration that has signally failed to demonstrate a capacity for shrewd economic management cannot reasonably expect organised labour not to be alarmed that it is planning to get its hands on hard-earned pension funds.
In spite of labour’s justified fears, however, it must be realised that the realities of Nigeria’s infrastructural crisis must be tackled innovatively.
In March 2019, the finance minister, Mrs. Zainab Ahmed, said that the Federal Government would require about N36 trillion ($100 billion) annually to properly address the country’s infrastructure deficit. This projection cannot be addressed by budgetary allocations such as the N200 billion in the 2019 budget or the N169 billion in the 2020 budget.
This is where the N10 trillion in CPS cash becomes a workable alternative. The money is already there; investment mechanisms are already in place to facilitate investment in profitable schemes; the Pension Reform Act of 2014 ostensibly allows government to borrow up to 20 per cent of funds lodged in the CPS under prescribed conditions.
If government wants to access these funds, it must first take several confidence-building measures aimed at reassuring organised labour and the nation as a whole that its intentions are honest and that its actions will be characterised by competence and altruism.
The first step must be to constitute the Board of the Nigerian Pension Commission. This would enable representatives of the major stakeholders to participate in decisions of the commission and achieve consensus on vital issues such as the imminent loan deal. The absence of the board is a major grouse of the NLC.
The next thing would be to ensure that all proposed investments are properly vetted to ascertain their social benefit, ensure their economic viability, and establish clear repayment schedules.
It is obvious that there will have to be a partnership with trusted private-sector institutions to ensure that the disbursement of funds and the implementation of contracts are carried out in an efficient manner. This is simply too important to be left to the self-interested bureaucrats of Nigeria’s heavily-compromised civil service.
Consensus, honesty and efficiency are non-negotiable if Nigeria’s pension funds are to help in solving the country’s infrastructure deficit.