Credit And Liquidity Risks Hinder Deployment Of Nigeria’s N22.8 Trillion Pension Capital For Infrastructure.
Nigeria’s vast pension assets, totalling N23.26 trillion as of January 2025, hold immense potential to drive infrastructure development across Africa’s largest economy, yet credit and liquidity risks are stifling their effective deployment, according to a new report. The State of Africa’s Infrastructure (SAI) Report, released by the Africa Finance Corporation (AFC), highlights that despite amassing over N22.8 trillion (approximately US$14.2 billion) in assets under management, structural challenges are keeping much of this capital sidelined.
The report, a comprehensive analysis of the continent’s infrastructure landscape, notes that Nigeria’s pension funds represent one of Africa’s largest pools of institutional capital. However, “credit and liquidity risks” have constrained the ability to channel these funds into long-term infrastructure projects, leaving a significant portion idle. “As of early 2025, Nigeria’s pension assets under management exceeded N22.8 trillion… However, the effective deployment of this capital in long-term infrastructure had been constrained by credit and liquidity risks,” the AFC stated in its findings.
In a bid to address this bottleneck, Nigeria established InfraCredit in 2017, a public-private institution backed by the Nigeria Sovereign Investment Authority (NSIA), GuarantCo, the AFC, and other partners. InfraCredit provides local currency guarantees to enhance the credit quality of infrastructure bonds, making them investment-grade and suitable for pension fund investment. Since its inception, the organisation has facilitated bond issuances across sectors such as renewable energy, gas distribution, logistics, and industrial infrastructure, bridging a critical gap between Nigeria’s urgent infrastructure needs and its vast pension capital.
The impact is evident: pension fund allocations to infrastructure have risen sharply, from a mere N1.2 billion (0.02% of total assets) to over N242 billion (1% of total assets under management), equivalent to roughly US$155 million. While this remains a small fraction of the total, it underscores the potential of credit enhancement tools like InfraCredit. The AFC praises this market-driven approach, noting that rather than relying on government-mandated allocations, Nigeria’s strategy encourages voluntary participation through risk-mitigation structures—a model that could inspire other African nations.
Nigeria’s infrastructure deficit remains stark, with estimates suggesting a need for $100 billion to $150 billion annually over the next 30 years to close the gap. Pension funds, with their long-term investment horizon, are seen as a vital resource to address this challenge. The SAI Report highlights the broader context, estimating that Africa’s $777 billion in pension and insurance assets could fuel transformative growth if effectively mobilised.
Experts commend Nigeria’s progress but call for further reforms. Regulatory guidelines from the National Pension Commission (PenCom) and the National Insurance Commission (NAICOM) often limit exposure to credit assets like corporate bonds and infrastructure securities, pushing funds towards safer, short-term government securities. To unlock this “patient capital,” the AFC suggests clearer criteria for infrastructure-linked bonds and guidelines for asset-backed securities, alongside collaboration with capital market operators to expand eligible instruments.
As Nigeria strives to bolster its roads, power, and transport networks, the innovative work of institutions like InfraCredit offers a glimmer of hope. By mitigating risks and boosting investor confidence, the country is taking steps to harness its N22.8 trillion pension capital, paving the way for a stronger, more connected future.
