Nigeria wants pension funds to put $750 million into infrastructure

Nigeria is looking to its pension industry for money to build infrastructure. The country wants pension fund managers to invest more in projects that could improve electricity supply, transport networks and digital connectivity. The plan is being developed by the Pension Industry Leadership Council (PILC) and FSD Africa, a UK-funded development agency. They are working on an investment platform with a target of $750 million.

Nineteen Nigerian pension funds have expressed interest so far. The first fundraising target is $350 million, with the initial close expected in 2027. The thinking is fairly straightforward. Nigeria needs long-term investment for infrastructure, while its pension industry manages savings that are invested over many years. Bringing the two together could give project developers another source of funding.

Where the money could go

The proposed fund will focus on energy, transport and digital infrastructure. These are areas where the cost of poor infrastructure is felt directly by businesses. A manufacturer running generators because of unreliable electricity has higher production costs. Transport operators spend more moving goods when roads and logistics networks are in poor condition. Digital businesses also need reliable infrastructure to serve customers and expand.

An initial assessment has identified 39 potential projects requiring about $20 billion in total investment. The fund aims to raise approximately $600 million from Nigerian pension funds and at least $150 million from development finance institutions. At least 60% of its investments will be directed towards Nigeria, with the remainder available for selected projects elsewhere in the region. FSD Africa will assist with setting up the platform, including finding an investment manager and working with potential investors.

Pension money comes with responsibilities

There is a reason pension funds have to be careful about where they invest. The money belongs to workers who will depend on it when they retire. Infrastructure projects can take years to generate returns. Some face construction delays, cost increases, changes in government policy and difficulties collecting revenue. Fund managers will therefore need to look beyond the infrastructure needs of the country. The projects must have workable business models and a clear way of paying investors back.

Can this work elsewhere in Africa?

Nigeria's approach raises an interesting question for other African markets. Pension funds across the continent manage substantial pools of long-term savings, yet infrastructure developers continue to struggle to secure patient capital. Getting pension funds involved could help finance projects that governments cannot afford to fund alone. But this will depend on whether suitable projects are available and whether investors are comfortable with the risks. For Nigerian businesses, the projects that eventually receive funding will matter more than the size of the announcement. Better electricity, roads and digital networks would make a practical difference to operating costs. The first milestone is raising the initial $350 million. Until that happens, the $750 million remains a target rather than money ready to be spent.