UK backs Nigeria’s proposed $750m pension infrastructure fund

The United Kingdom has backed plans by Nigeria’s pension industry to establish a $750m infrastructure investment fund aimed at mobilising retirement savings and development finance for energy, transport and digital infrastructure projects.

The initiative, which has attracted interest from 19 Nigerian pension funds, is expected to mobilise about $600m from domestic pension funds and at least $150m from development finance institutions.

The partnership was formalised through an agreement signed between the Pension Industry Leadership Council and UK-funded development agency FSD Africa, according to a statement issued on Tuesday.

Speaking on the partnership, the UK Deputy High Commissioner in Lagos, Jonny Baxter, said, “The UK is proud to partner with the Nigeria’s Pension Industry and the pensions regulator Pencom to progress this investment. Both our countries are prioritising tacking the challenge of attracting more domestic capital, including from pension funds, into the real economy.”

He added, “It is great to see Nigeria making concrete progress on its efforts and be a part of those opportunities to turn this ambition into investment, jobs, and economic growth.”

Under the agreement, FSD Africa will provide technical assistance and expert advice to support the establishment of the fund, including the competitive selection of a fund manager, engagement with prospective investors and development finance institutions, capacity building and necessary regulatory reforms.

The proposed investment platform, developed by Nigerian Pension Fund Administrators with support from the National Pension Commission and FSD Africa, is targeting an initial capital mobilisation of $350m by its first close in 2027, before expanding to $750m.

At its final target size, Nigerian pension funds are expected to provide approximately 80 per cent of the capital, while development finance institutions will contribute at least 20 per cent.

The Director-General of PenCom and Chair of the Pension Industry Leadership Council, Omolola Oloworaran, said the initiative would provide an opportunity to deploy long-term pension capital into productive infrastructure investments without compromising contributors’ retirement savings.

The pension industry holds the largest pool of long-term savings capital in the country, and we are committed to mobilising it to deepen infrastructure development, while safeguarding the retirement savings of contributors. This MoU is the first step we are taking as an industry, and it is just the beginning,” she said.

According to the statement, an initial assessment of Nigeria’s infrastructure pipeline identified 39 projects with potential relevance to the proposed investment platform, representing approximately $20bn in financing needs.

The fund, identified as PIIP, will focus on equity and quasi-equity investments, with at least 60 per cent of its portfolio allocated to Nigerian infrastructure projects, while the balance may be invested in selected regional markets.

The proposed structure will comprise a naira-denominated core investment fund and a separate co-investment vehicle, allowing participating pension funds to invest alongside the main fund in selected projects.

A parallel foreign-currency investment vehicle may also be established to accommodate international investors.

The Chief Executive Officer of FSD Africa, Mark Napier, said the initiative was intended to address the gap between Africa’s substantial institutional savings and its infrastructure financing requirements.

“We have observed for several years now the paradox of Africa having significant institutional capital while at the same time facing big infrastructure funding deficits,” Napier said.

He added, “We are keen to work with PenCom and the pension industry in Nigeria to address this and unlock the capital they manage towards Nigeria’s priority infrastructure.”

The partnership forms part of broader UK-Nigeria efforts to deepen capital markets, mobilise domestic investment and direct long-term financing towards infrastructure development and economic growth.