Nigeria can grow economy with pension funds, says Obasanjo
According to the former president of Nigeria Olusegun Obasanjo, pension funds should be used for development. CNBC Africa’s Arnold Segawa caught up with him in Kigali, and they discussed the future of Africa’s lenders and how Africa can derive funds for investment.
There is some money in Africa which we can have access to. For instance, most African countries have now established contributory pension schemes. I did that when I was President in Nigeria. We used to have the British type where you paid a pension as you retired. We were not doing contributory pensions and we had a backlog of unpaid pensions, so we introduced the contributory pension scheme, and that money has ballooned to almost $30 billion the last time I spoke to people about it, but if that money is properly managed, properly husbanded, it could be available for investment because it isn’t hot money. It is money that is there for when people want to retire, but it is also money that must not be allowed to fizzle out.
You cannot afford to give it out to people who will not bring it back, because when people who have contributed this money want to retire it must be available for them, but until then it can be used for development. There are also some countries like South Africa, where they have been running contributory pension schemes for longer than Nigeria has and the Nigerian one that I’m talking about has not covered more than 10 per cent of workers. If we cover 50 per cent, it will be a huge amount of money, so, that is one source of funds. There is also the insurance scheme, and there are also institutions like the Afrexim Bank, and we can look outside Africa as well. There is money that they can make available. But the point is this, in addition to all of these instruments, there is still a need for money from outside.
That’s where China comes in?
There must be money from not only China but foreign direct investment which is very important. It is an indication that, yes, our part of the world is good for investment and there is nothing wrong with that, so there will be our internally generated funds for investment, secondly, money from our friends and development partners who can give concessional and un-concessional loans for investment and then the foreign direct investment.
Your excellency I have to ask you this. Up till now, there is no road form Cape Town to Cairo crossing the continent, let alone Lagos to let’s say Mombassa but we are out here at the convention centre today talking about intra-African trade. Isn’t it that before we address intra-Africa trade, we should first address the continent’s infrastructure deficit?
I just said to people now that if you start talking of trade and you build the road from Cairo to Cape Town and there is no trade what do you do then? The two have to go together.