Nigeria’s Infrastructure Gap Widens as Pension Funds Investment Declines

  

Despite Nigeria facing an estimated $100 billion funding gap in its critical infrastructure sector, the amount of pension funds allocated to this asset class has seen a recent decline. According to the latest data from the National Pension Commission (PenCom), the allocation of pension fund assets to infrastructure dropped by 0.92% to ₦218.9 billion as of October 2025.

This decline is particularly concerning given the sheer size of Nigeria’s retirement savings assets, which total over ₦26 trillion as of September 2025. Industry analysts point out that the current allocation to infrastructure represents a modest 0.9% of the total pension assets, falling significantly short of the regulatory maximum permitted by PenCom.

Regulatory Limits vs. Actual Investment

PenCom's investment guidelines are designed to encourage capital deployment into long-term, nation-building projects. The rules permit pension funds to allocate a maximum of 10% of their total assets to direct infrastructure funds and up to 35% into infrastructure bonds and related debt instruments. The fact that the industry is utilizing less than 1% of its capacity highlights significant hurdles.

Why Are Pension Funds Hesitant?

Experts attribute the consistently low allocation to cautiousness among Pension Fund Administrators (PFAs), who bear the overarching responsibility of safeguarding contributors' capital. The primary concerns cited include:

 Project Bankability: A lack of robust, financially viable, and "investable" project pipelines makes it difficult for PFAs to meet their fiduciary responsibilities.

 Regulatory Bottlenecks: Complex regulatory and administrative hurdles slow down the investment process for large-scale infrastructure projects.

 Need for Credit Enhancement: PFAs often seek guarantees or credit enhancements to mitigate risks, which are necessary for long-term projects in emerging markets.

The Way Forward

While the recent PenOp Infrastructure report confirms a strong interest among pension fund managers in vital sectors like power, transport, agriculture, and healthcare, the low investment figure underscores a fundamental disconnect. To effectively bridge the nation's massive infrastructure deficit, industry stakeholders emphasize that the focus must shift toward creating clearer policy consistency and developing a pipeline of investment-grade, de-risked projects that meet the strict criteria required to deploy retirement savings funds.