Pension Investment in Nigeria Securities surges by 20.6% to N10.9 Trillion

According to data from the National Pension Commission (PenCom), Pension Fund Administrators (PFAs) of Nigeria has increased their investment in Federal Government (FG) securities due to the relatively high interest rates in the financial market over the past six months.

The investment in FG securities saw a significant YoY increase of 20.6%, reaching N10.858 trillion in the first half of 2023 (H1’23) compared to N9.007 trillion in the corresponding period of 2022 (H1’22). These securities include FG Bonds, Treasury Bills, Agency Bonds, and Green Bonds. The Central Bank of Nigeria’s (CBN) Monetary Policy Rate (MPR) has remained between 17.5% and 18.75% from January to July this year.

The CBN’s benchmark interest rate, MPR, serves as the foundation for all other interest rates in the money market and the economy. An analysis of the data reveals that Green Bonds experienced the highest growth, increasing by 40.3% to N96.722 billion in H1’23 from N68.949 billion in H1’22. FGN Bonds followed with a surge of 25.2% to N10.404 billion from N8.313 billion. Agency Bonds ranked third, showing a growth of 11.6% to N152.338 billion in H1’23 from N136.506 billion in H1’22. However, Treasury Bills faced a decline of 59% to N192.429 billion in H1’23 from N475.636 billion in H1’22, and Agency Bonds also decreased by 12.1% to N12.154 billion from N13.825 billion in H1’22.

Mr. Victor Chiazor, the Head of Investment and Research at Fidelity Securities Limited (FSL), expressed that the increase in PFAs’ investments in Government Securities is a direct result of the interest-friendly rate environment observed during this period.

According to Mallam Garba Kurfi, the Managing Director/CEO of APT Securities and Funds Limited, PFAs’ investment in FGN Bonds is essential due to their low risk and high availability compared to other investment options. He also mentioned that over N10.0 trillion has been invested in FGN Bonds in the Nigerian financial market. Considering the ongoing increase in inflation rate, he anticipates further growth in this investment in the second half of the year.