There are several challenges being faced by the pension fund industry in Nigeria.
The first challenge is the lack of awareness in the general public and a limited distribution network.
The general state of poor financial education and limited reach of financial markets is hurting growth of the sector.
The second challenge complying with the strict regulatory requirements running such funds as some companies remit funds later than they should.
| “Nigerians are coming to understand what pension is all about. With this in mind, they’re accepting the principles and rationale behind it. As more Nigerians embrace it, the industry will continue to grow and of course, this industry has a potential to grow big. – APT Pension Fund CEO” |
Other questions that arise for the industry experts and the rest of Nigeria are: Is there a lack of trained professionals and absence of training opportunities? How can these affect the funds’ performance? How friendly is the investment climate in the pension fund sector, and what can be done about it?
An Approved Standing before Nigerians
Reacting to questions from Business & Economy Review, MD/CEO APT Pension Funds Managers Ltd. Dr. Al- Mujtaba Abubakar Gumi said that Nigerians are beginning to see positives in pension fund industry and that they are embracing it more than they did in the past.
“The acceptance of Nigerians for fund managers is actually improving. There are still a lot of challenges but with time and communications, more Nigerians are coming to understand what pension is all about. With this in mind, they’re accepting the principles and rationale behind it. As more Nigerians embrace it, the industry will continue to grow and of course, this industry has a potential to grow big.
“You’re aware of the countries from which we copied the system. Argentina, UK, Australia, Canada, South Africa, India, even the USA. In these countries, the principles for pension funds are highly successful. We believe that in view of this, it can be highly successful in Nigeria too.
It goes without saying that pension fund managers abroad are not at all time having a rosy period. There are always challenges to grapple with.
In Pakistan for example, challenging issues are being addressed by a joint effort of all stakeholders: fund managers, investors, regulators, academia and the government. Fund managers in that country agree that they need to create a holistic awareness campaign to attract the retail investors and educate the general public on the benefits of investing in pension funds.
The same applies to Nigeria.
No matter what progress has been made through communication, investors need to be taken into confidence for long term commitment of funds by promising them an attractive rate of return.
What Pension Fund Managers Do
“Those establishments in both public and private sectors encourage their employees to take up a certain pension manager for financial purposes. Ten percent goes to the employee and eight percent goes to employer from their salaries. These are often contributed from basic allowances such as transport and housing allowances. This money is not held by the pension fund administrator. It is contributed to pension fund custodians. In Nigeria, there are four custodians and twenty fund administrators that are serving the masses now.
“The Fund custodian handles the money, while the fund administrator administers or invests it, determining the rate of returns that will be generated. At the end, the administrator determines and administers payment to retirees,” Guma told BER.
APT Pension Fund Governance
All in all, the APT team has over 120 years of experience. However, Guma’s experience and dexterity in the sector over the years is remarkable. A chartered account by profession, Guma has garnered several experiences in the financial sector for many years before setting up his own outfit APT Pension Fund Managers; of which he is the second managing director, chief executive officer. His job in the financial sector has meant working in the banks, and rising up to the position of managing director of Assurance Bank—the name of which he gave to the bank when it was recapitalized with NICON. He also worked with Akintola Williams till the year 2000, when he decided to start managing his own investments.
Mode of operations
Everything about APT is financial. APT Group consists of APT Securities. This is the stock broking and issuing part of the business. This securities branch generated APT Pensions. There’s also the Bureau de Change and the Arewa Metal Construction in Kaduna. Guma is a Board member of all these companies and also the managing director of APT Pension Funds Managers, which today is one of the foremost fund managing administrators in Nigeria.
Being an expert who had worked with Akintola Williams Deloitte at the Abuja Chamber of Commerce and Industry, Guma in time persuaded APT to join the Chamber, which has grown from a few memberships to a large group today. The Chamber influences government thinking and how things can be done. Soon it will be analyzing the budget and making recommendations to the federal government.
Wonderful Nigeria
Guma’s love for the Nigerian landscape will never wane. He travels often as the case or need may be, either personally or in conjunction with members of staff or for other reasons.
“I like to travel a lot and I do all my travelling by road just to see what Nigeria has to offer. There aren’t many state capitals I haven’t seen. I’ve gone from Sokoto to Maiduguri by road; I’ve gone to Calabar, to Lagos and seen many places. We have a lot in this country. What we need is dedication and steadfastness and we have to be true to ourselves. Everybody should be enjoying what they have sown not what they haven’t sown. Take the Chinese for example. They have worked very hard to get to where they are today.”