Mallam Sanusi Lamido Sanusi
The Central Bank of Nigeria (CBN) governor, Mallam Sanusi Lamido Sanusi has said the N3 trillion pension fund assets should be invested in infrastructural bonds instead equities that carry high risk.
The National Pension Commission (PENCOM) act is being reviewed to enable more of its assets be invested in the capital market.
But speaking at the Second Annual Capital Market Committee (CMC) retreat organised by the Securities and Exchange Commission (SEC) in Warri, Delta State, Sanusi said that instead of investing the funds in equities, the money should be channeled towards bonds meant for infrastructural development.
According to him, given the downturn the capital market witnessed in 2008 and 2009, if the funds were invested in equities significant part of it would have been lost.
“Personally, I will not advise that the pension funds be invested in equities market for now, although there had been recent amendment to the PenCom Act.”
He emphasised the need for the governments at all levels to reduce recurrent expenditure and channel the fund to infrastructural development.
“The various tiers of government should cut down their recurrent expenditure and use the fund to provide basic infrastructure like schools, hospital, among others. How can we be using the proceeds from our major source of revenue to service recurrent expenditure, by paying salaries, allowances, etc. The country should be thinking of enhancing its productivity base rather than spending on things that cannot create wealth,” Sanusi said.
The CBN governor opposed the clamour the creation of more states, saying that would put more pressure on government resources. He declared that some of the existing states cannot sustain themselves yet people are clamouring for more states.
He said: “Do we need additional states and local governments now when some of the ones existing are borrowing to service their recurrent expenditure? Is it even proper for us to have the huge number of members in the national assembly that we are spending so much? If the constitution is going to be amended it will be better for us to think along unitary system where at least three or four people from each state would be elected to represent us in the national assembly and we conserve funds that can be use to enhance the productive base of our country. Therefore, I think it will be better if we reduce the number of states and local government as well.”
Responding to the calls for lower interest rates, he said it would come down at the appropriate time, explaining that the poor performance of companies was not only due to the high interest rates but the challenges posed by infrastructure.
He added that interest rate cannot come down when the rate of inflation is high.
“Interest rate will come down at the appropriate time .The interest rate (Monetary Policy Rate (MPR) cannot remain at 12 per cent for ever. We are leaving the interest rate at this level because of the inflationary level. Our mandate as CBN is to maintain stability of the system. We cannot have sustainable growth with high inflationary rate,” he said.