Nigeria Stock Exchange wants more of $22bn pension market

The Nigerian Stock Exchange is seeking to have rules on pension-fund investing relaxed to attract funds and boost Africa’s third-best performing gauge this year, Chief Executive Officer Oscar Onyema said.
Nigeria has more than 3.5 trillion naira ($22 billion) in invested retirement savings, according to the National Pension Commission, known as Pencom. Investors should be able to put that money into companies with at least three years of financial statements, less than the five required now, he said in an interview in the commercial capital, Lagos, on Oct. 23.
“Most of Pencom’s regulations are designed to protect investors, but investors are becoming more sophisticated,” Onyema said. “We are working very closely with them, the National Assembly, and other appropriate bodies to highlight areas where we believe there is a need for enhancement.
Onyema wants reforms to boost stocks, which have led the market’s all-share index 32 percent higher this year, and bolster an economy set to expand 6.2 percent this year and 7.4 percent in 2014, according to the International Monetary Fund. Nigeria is Africa’s biggest oil producer and most populous country, with about 160 million residents.
South Africa’s pension assets were worth about 3 trillion rand ($307 billion) by the second quarter, according to Bloomberg calculations made using Reserve Bank data, while the Johannesburg Stock Exchange’s all-share index gained 15 percent this year. Ghana, which ended the state pension fund’s monopoly on retirement savings, had assets of 1.06 billion cedis ($484 million) last year, according to the country’s pensions regulator. Ghana’s Composite Index is Africa’s best performer this year, jumping 75 percent. The exchange is targeting a market capitalization of $1 trillion by 2016 from its current $74 billion, Africa’s biggest after Johannesburg. The Nigerian gauge is still down 43 percent from a March 2008 record, tumbling after a debt crisis caused by investors borrowing to buy stocks before prices crashed.
“Unless the market depth or more quality stocks listed improves, more pension funds going into the equity market will just drive up valuations across the board, especially in blue-chip names which tend to represent core holdings of long-term focused fund managers,” Olubunmi Asaolu, an analyst at Lagos-based FBN Capital Ltd., said today in an e-mailed response to questions. The 193-member All Share Index fell 0.5 percent to 37,434.90 by the close in Lagos.
Pension funds are only able to invest in listed companies which have paid dividends or issued bonus shares for at least one year out of the five they have financial statements for, according to Pencom’s website.