Pension Funds, FSD Africa Team Up On $750m Infrastructure Fund
…Plan to channel pension savings into energy, transport, digital projects
By Patience Ikpeme
Nigeria’s pension industry has taken a step towards putting more of its long-term savings into roads, power, and digital networks.
The Pension Industry Leadership Council (PILC) has signed an agreement with FSD Africa, a specialist development agency funded by the United Kingdom, to help set up a proposed $750 million infrastructure fund.
The fund will pool money from Nigerian pension funds and development finance institutions. It will invest in infrastructure projects in Nigeria and a few other selected markets in the region.
The UK and Nigeria say the arrangement fits a shared goal of strengthening Nigeria’s capital markets, attracting more local investment, and directing long-term money into the real economy.
Under the agreement, FSD Africa will give PILC expert advice and technical support. This includes running a competitive process to choose a fund manager, talking to possible investors and development finance institutions, training and building the skills of the people involved, and supporting any regulatory changes needed.
The plan was developed by Nigeria’s Pension Fund Administrators, with backing from the National Pension Commission (PenCom) and FSD Africa. So far, 19 Nigerian pension funds have shown interest, which points to a strong appetite to invest more local long-term money in infrastructure.
Jonny Baxter, the UK Deputy High Commissioner in Lagos, said both countries want to attract more local capital, including pension money, into the real economy. “It is great to see Nigeria making concrete progress on its efforts and be a part of those opportunities to turn this ambition into investment, jobs, and economic growth,” he said.
Ms Omolola Oloworaran, who chairs PILC and is also Director General of PenCom, welcomed the proposed fund and said its timing and ambition could not be better. She said the pension industry holds the country’s largest pool of long-term savings. “We are committed to mobilising it to deepen infrastructure development, while safeguarding the retirement savings of contributors,” she said. She described the agreement as “the first step we are taking as an industry,” adding that “it is just the beginning.”
Mark Napier, Chief Executive of FSD Africa, described the planned investment structure as one with great promise for Nigeria and the rest of Africa. He pointed to a long-running contradiction on the continent. “We have observed for several years now the paradox of Africa having significant institutional capital while at the same time facing big infrastructure funding deficits,” he said. He added that FSD Africa is eager to work with PenCom and the pension industry to unlock that capital for Nigeria’s priority infrastructure.
The proposed platform, known as PIIP, aims to raise an initial $350 million by its first close, which is expected in 2027. It will then grow to $750 million. At that final size, about $600 million is expected to come from Nigerian pension funds and at least $150 million from development finance institutions.
The agreement comes at a time of rising demand for infrastructure across Nigeria and the wider region, especially in energy, transport, and digital connectivity. An early review of Nigeria’s infrastructure pipeline found 39 projects that could suit the platform, with total investment needs of about $20 billion.
PIIP will put money into equity and quasi-equity, which are ownership-type investments, in these projects. At least 60 per cent of its portfolio will go to projects in Nigeria, while the rest may be used for selected investments elsewhere in the region.
The platform is planned to have two parts: a core investment fund denominated in Naira, and a separate co-investment vehicle. The second will let participating pension funds invest alongside the core fund in chosen projects. A parallel fund in foreign currency may also be set up for international investors. The design is meant to give institutional investors access to professionally managed, long-term investments while helping to finance infrastructure that supports economic growth.
