Nigeria’s pension industry, valued at N32 trillion, faces persistent difficulties in redirecting its savings into productive investments, creating a widening gap between available capital and viable financial instruments. This shortfall was a central topic at the Association of Issuing Houses of Nigeria (AIHN) symposium, which celebrated its 30th anniversary. Participants stressed the urgent need for deeper capital market development and the introduction of more sophisticated financing mechanisms to address the mismatch.
Funds exist—but investable options do not
According to Ike Chioke, group managing director of Afrinvest (West Africa), the core issue is not a shortage of pension funds but the lack of suitable investment vehicles capable of absorbing long-term savings. While N32 trillion remains parked in pension accounts, the capital market currently lacks the specialized products required to channel these funds into critical sectors such as infrastructure, housing, or port development.
Chioke emphasized that Nigeria’s infrastructure demands, including roads, electricity, housing, and port facilities, represent major opportunities for issuing houses to design tailored financial products. These could include sector-specific bonds, state-level projects, or other structured instruments that avoid direct competition for a limited number of large-scale transactions.
The Securities and Exchange Commission (SEC) deputy director, Adama Babaduko, reinforced this view, stating that existing tools like infrastructure bonds, real estate investment trusts, and green bonds could effectively support infrastructure financing. However, the primary obstacle remains the shortage of well-prepared, financially sound deals ready for market execution.
Babaduko clarified that issuing houses serve as critical intermediaries, linking pension fund savings with high-potential projects. Their role is to transform abstract capital into actionable investments that drive economic growth.
Debt financing and SME access remain critical
The SEC’s director-general, Emomotimi Agama, highlighted that the capital market’s success hinges on two priorities: supporting wealth creation for Nigerian citizens and ensuring businesses, particularly small and medium-sized enterprises (SMEs), gain reliable access to funding. He noted that SMEs require long-term capital, flexible crowdfunding platforms, and listing pathways adapted to their operational scale.
Agama also showed the necessity for expanded market depth to support large-scale infrastructure projects, which often demand significant upfront capital. Kemi Awodein, president of AIHN, echoed this, pointing out that issuing houses have historically facilitated capital mobilization through public offerings, debt issuances, and corporate mergers. The next phase, she argued, must prioritize broadening financial inclusion for SMEs, infrastructure development, and emerging industries.
A discussion participant observed that many businesses overlook more affordable financing options beyond equity-based funding. Debt instruments, preference shares, and commercial paper provide lower-cost alternatives without diluting ownership stakes. Additionally, pooled private bonds, where multiple businesses within the same sector combine resources, can reduce individual risks, particularly for SMEs with limited financial histories or governance structures.
The panellist further explained that equity financing often represents the most expensive capital source for companies. In contrast, debt allows structured repayment over time while maintaining full control, while short-term tools like commercial paper enable scaling without immediate equity dilution.
AIHN’s strategic focus: structuring solutions
Speakers emphasized how issuing houses can play a key role in designing deals that align pension assets with infrastructure projects and SME expansion.
Alternative financing options and SME funding structures discussed
Panelists highlighted that equity is not the only viable capital source for companies, as other financing methods can reduce costs and preserve ownership. Debt instruments, including preference shares and commercial paper, were described as more affordable alternatives that allow businesses to repay funds over time without giving up control. These options were noted as particularly useful for companies seeking short-term capital to support growth.
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