Dwindling Economy: How Pension Funds can Boost Development by Babatunde Raji Fashola (Power, Works and Housing Minister)

POWER, Works and Housing Minister, Mr Babatunde Raji Fashola 

Power, Works and Housing Minister, Mr Babatunde Raji Fashola (SAN), yesterday, decried the age-long lip service Nigerian governments had paid to diversification of the country’s economy from crude oil, noting that the mistake has caught up with Nigeria following the prevailing slump in crude oil prices. As much as the government would like to diversify, Fashola saw a challenge in paucity of funds, regretting that little or nothing was done during the various cycles of oil boom in the last four decades.

However, the immediate past Lagos State governor said there is light at the end of the tunnel, if the huge pension funds can be channelled into critical and profitable ventures waiting to be tapped in the polity.

Fashola spoke while delivering a keynote speech at the Nigerian Pension Industry Strategy Implementation Roadmap. His speech was entitled: “Overcoming the Challenges and Managing the Risks and Constraints that Inhibit the Investment of Private Capital and Funds in Nigeria’s Infrastructure Landscape in Order to Make a Visible Economic Impact,”

Noting that the Nigerian Pension law has been invigorated with the amendments of 2014, leading to accumulation  of huge funds through the contributions of employees and employers, Fashola said the funds could be invested in a litany of profitable ventures to the benefit of pensioners, other citizenry and the country.

He said: ‘’Those investible vehicles exist. They are in roads that can be tolled, like housing, the 4th Mainland Bridge, the Coastal Road linking several coastal states from Lagos to Bayelsa; the new seaport in Lekki and Badagry, the refinery by Dangote, Ajaokuta Steel, a petrochemical plant in the Niger Delta; the broken textile mills in the North and South of Nigeria that require new equipments and disciplined fiscal, technical and organizational management; prison in each of the six geopolitical zones of Nigeria that can help strengthen our justice system and decongest the colonial prisons we have kept as relics of our own sense of justice; they are in hostels for students in Nigerian universities, embedded power plants in the universities, most of which have teaching hospitals and provide an opportunity to power education and healthcare and the list is endless. ‘

’It is as long as we can imagine. The time for it is now. This is the biggest opportunity to act towards diversification rather than sloganize about it. This is the time to show that our Nation and our National economy is bigger than the challenges posed by the dwindling oil prices. This is the time to diversify and change the face of our economy once and for all.’’

Lamenting our missed opportunities to diversify the Nigerian economy, he said: For over three decades we have mouthed the need to diversify our economy in order to open up more sectors for productive activities, income, economic growth and jobs. But we failed to follow through because of oil resources. It was quick and bountiful income even though there were boom and burst cycles.

Every time the cycle burst, we scampered, and promised to diversify, we take tentative steps, we feel pain. We do not endure, and it is easy to escape because not too far on the horizon is a boom in oil prices and we go back to an old life. ‘’Remember 1970s up to 1976; remember the early 1980s and the burst. Remember the late 80s and Gulf War boom, remember the 1990s and the drop, remember the period of 2009-2014 when oil sold for over $100 per barrel for almost five years.

‘’What did we do? We went on a spending spree. Politicians promised everything free. Everyone got a wage increase, sometimes up to 80 per cent (minimum wage from N7,500 – N10,000 raised to N18,000.00). Did our income as a Nation increase by 80 per cent?

‘’As we sought after free health, free education, free fuel, free housing and free everything, we refused to confront the reality that life is not free. It was difficult to get private capital into critical sectors of our economy like infrastructure. Private capital and fund managers were not going to invest funds entrusted to them in infrastructure if we wanted to use them for free. As a people, we were willing to pay for these services outside our country but demanded that they be provided for free in our country.

‘’The new pension fund has shown what can happen if people resolve to contribute and pay their way. Health insurance is another area that can open up access to top class health service for even the poor, if people are ready to contribute and save for their well being. Insurance will give them a choice and access to the best medical service when they need it. “It will give them a second highway away from public health service, which even with its best intentions cannot provide every service free.” (Vanguard)