Expert prescribes measures for industrial, economic growth

A pension expert has underscored the need to replicate the successes achieved in the industry to other struggling sectors to boost economic growth.

Specifically, the Managing Director of Sigma Pensions, Dave Uduanu, listed the reforms that transformed the pension industry to include: adequate capitalisation, good corporate governance, the right policies, and a renewed interest in enhancing domestic investments.

Speaking at a webinar on digital dialogue, he pointed out that the power sector is one of the sectors that are currently in dire need of adequate recapitalisation.

He explained that insufficient electricity production/distribution is the biggest infrastructural challenge facing Nigeria, which has lingered for many years, adversely affecting the economy.

He recalled that countless attempts have been made to resolve the problem, but these attempts have, however, failed to yield any result.
 
He said: “On the power sector, I think one of the things we have seen is that we have players who are not well-capitalised but overleveraged. One of the things regulators must do beyond the technical assessment is also the commercial assessment of these players.

“But more importantly is to encourage players and companies who are already successful to either come into this sector or support entrepreneurs coming to this sector with capital.

“I think ensuring well-capitalised operators are very important to the growth of this sector; we have seen that happen in the banking and in the pension industry.”

On what would prompt growth in other sectors across the spectrum, he said: “We need to encourage domestic investors; we need to grow local firms to boost scale. This is important because we have a lot of fragmentation in some of these industries, and we have companies that have achieved scale and they can become national and regional leaders.

“We can see what Dangote is doing in the area of cement and also what Nigerian banks are doing. We can also have Nigerian insurance and pension companies dominate the local environment, and then go regional.”

“So, it is important to encourage domestic investors. We always talk about foreign investors and we do not give incentives for domestic investors to come in.”

Furthermore, he stressed the need for local firms to operate with high levels of corporate governance to reduce business collapses.

“What is needed is a combination of well-capitalised operators and domestic operators who are building businesses of scale.  Also, we need to encourage companies to build strong corporate governance standards.
 
“Today, we have about $30 billion of pension assets and with 8.5 million contributors; and more importantly, we have about 256,000 retirees who receive their pensions regularly, and I can say unfailingly before the 24th of every month.
 
“Indeed, it is a success story to be celebrated and I do not think we should take it for granted because our national savings has increased from practically zero to five per cent of GDP and it could be more.”