By PETER EGWUATU

Crusader Pension Limited, a pension fund administrator has lamented the low number of people in the pension scheme in the country, as pension funds hit N4.5 trillion. The Managing Director, Crusader Pension Limited, Mr. Adeniyi Falade, who disclosed this at the NASD OTC Private Equity Conference held in Lagos said “ N4.5 trillion of Pension Fund is available at the moment and this money needs to be invested.

Imagine, it is only six million workers that are in the pension funds scheme at the moment and we have N4.5 trillion just in eight years that the new contributory pension scheme took off.

What will happen when we have all the workers in Nigeria in the pension scheme? It will be much more money.

It is very painful that we have only six million workers contributing to the fund in a country with over N160 million population” To this extent, he called on Private Equity operators to be active in terms of having well structured products that will require funds. “In fact, very few people understand the pension scheme. It is highly regulated.

So for this kind of funds to be invested in any firm, the firm must have proper documentation and good management in place, and well structured to guarantee returns. As you know, everybody that is employed ought to be contributors to the pension funds, but this is not the case with Nigeria. The contribution of pension funds to the Gross Domestic Product, GDP is seven per cent.

It is still very low. How is the fund going to be deployed? So the Private Equity, PE stands very favourable to get this fund once they are well structured” he emphasized. Falade, further noted the key concerns in Private Equity investments, saying lack of investor rights is a problem. According to him “General Partners, GPs cannot be held liable for performance, yet investors have no say.

Also, there is non alignment of goals between managers and investors. Other problem is that Private Equity charge excessive management fees perceived as locust and cats and there are substantial restrictions on sale or transfer of interest. There is no secondary private equity market in Nigeria to transfer limited partnership interest.

All these are what NASD OTC should consider and see how to tackle these issues.” In his presentation at the conference, Mr. Bisi Sanya, a Senior Partner, Ernst & Young, said “Over the last several years, say one to two decades, emerging market have evolved into major Private Equity Investments. Key findings for Africa show that PE in 2013 , which stood at US 3.2 billion was invested in 98 Private Equity investments.

Also, $3.3bilion was raised through PE funds closed, while US $13.18 billion invested by PE from 2009 to 2015. In this regard, he stated that private equity was entrenched in Africa and encouraged operators to work hard to invest in companies. According to him “Capacity for Nigerians to manage Private Equity fund is an issue as PE has become a major force in capital formation and participation of investment activity.”