FG to raise N758b bond to clear backlog of pension liabilities

The Federal Executive Council (FEC) on Tuesday approved the Debt Management Office to raise a N758 billion bond to clear the backlog of pension liabilities for all categories of pensioners.

FEC also approved a €30 million long-term concessional financing by the French Development Agency to support students in the area of accommodation, in conjunction with Family Homes Limited as the partner and implementer.

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, disclosed this while briefing newsmen at the end of the Council meeting presided over by President Bola Tinubu at the Presidential Villa, Abuja.

The minister said that the N758 billion approval to clear pension liabilities will provide relief to the beneficiaries who were owed funds under the defined benefit system that preceded the contributory pension scheme, which came into force in 2004 and was updated with a new act in 2014.

He explained that people who were on a defined benefit scheme yet to retire would need a top-up of their contributions or the amount due to them every time there was a wage increase every five years.

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He said, “Secondly, and equally important in addressing the issue of social interventions, is one regarding pensions. There was an approval for the government, through the Debt Management Office, to raise a Federal Government bond of about N758 billion.

“And that is to clear up the backlog of pension liabilities owed to various categories of pensioners who are owed funds under the defined benefit system that preceded the defined contributory pension scheme, which came into force in 2004 and, of course, was updated with a new act in 2014.

“There were some accrued liabilities that had been building up over time. So, for example, someone who was on a defined benefit scheme yet to retire would need a top-up of their contributions or the amount due to them every time there was a wage increase, every five years or so.

“This liability built up to a point where it was not going to be easy to pay them down on an ongoing basis. So, to clean up that important area and to give people their right, which is the payment of pension liabilities as and when due, the government has put in place an approval for the Debt Management Office to raise N758 billion that will pay down all these liabilities and, of course, be a tremendous relief to the beneficiaries.”

The minister said quite a large number of memos were presented for approval, which had to do with completing or implementing the draft borrowing plan yet to be finalized but to be implemented during the course of the year after the finalization of appropriation.

He said: “I will just highlight particular approvals. First of all, a €30 million long-term concessional financing by Axon France, the French Development Agency, which is supporting student housing in conjunction with Family Homes Limited as the partner and implementer.

“It is for tertiary student accommodation at project sites throughout the country to provide sustainable and clean energy-based accommodation for students.

“We all know what an important intervention that is for the educational sector and for students, given the shortage.”

On economic growth and economic resilience, he said, “An approval has been given for the all-important National Single Window Project. The technology providers and hardware suppliers have been approved for the implementation of the project.

“Some aspects will take 12 months for the delivery of the hardware and for complete implementation, including the software solutions, the technology solutions, and the e-government solutions, which will take up to 24 months. This project not only speaks to improving economic competitiveness and the international ability to export efficiently but also to increasing government revenue.

“So, on the fiscal side, it is both revenue-earning in terms of foreign exchange and government revenue. It speaks to the increased productivity of the Nigerian economy, as I said before, and increased international competitiveness at a time when, under the African Continental Free Trade Agreement, Nigeria is pushing to be a big player, both in the ECOWAS region and on the African continent.

“Why that is particularly important is that we are all seeing that the world is moving away from open trade and from a rules-based World Trade Organization-led world trading environment to a more closed environment. Therefore, regional and continental markets will be much more important for Nigeria.

“Finally, we also commented that, given the plethora of approvals granted today, there was also an assurance that the economic management team is going to harmonize, synthesize, synchronize, and very much prioritize these different approvals in an orderly fashion in line with Mr. President’s priorities.

“First of all, to attract investment that will grow the economy, create jobs, and reduce poverty. But more importantly, to also focus on his immediate priorities for stabilizing the economy now and implementing measures that will strengthen the Nigerian economy and create jobs in the near term.

“Such as strengthening food security, enhancing the fiscal condition—including, as we have seen, the revenue benefits that can come from the National Single Window Project—improving energy security, strengthening social protection, and enhancing economic competitiveness, as I said earlier.

“And finally, ensuring the timely implementation of the new national development plan so that we all have a framework within which to implement various government programs and policies, and also to be able to show all stakeholders the direction in which the government is going.

“As we clearly know, the benefits of the reforms are beginning to come through. There is greater fiscal strength and increased competitiveness of the Nigerian economy.”