The Nigeria Labour Congress ( NLC ) is opposed to the federal government’s decision to borrow N2 trillion from the contributory pension fund. It stands at N10 trn. The government wants to use the money to redress the nation’s infrastructure deficit. However, the labour movement thinks the government is going about it the wrong way.
NLC president Ayuba Wabba, speaking during the week, said there had not been a prior consultation with relevant stakeholders. “It is curious that labour, as a critical stakeholder as provided in the Act, was not consulted. It is equally a violation of the provision of the Pension Act 5 years down the line, the board of PenCom statutorily saddled with taking or approving decisions as weighty as this has not been consulted. PenCom is a very critical labour market institution.” He said the government should know that pension fund was a joint contribution by workers and the employers, and so it could not be borrowed at will. He said he was “strongly advising” the government to not do anything that would undermine the integrity of the pension scheme.
The National Economic Council (NEC), comprising the federal and state governments, took the decision to borrow from the pension fund late January.
Briefing newsmen at the end of the NEC meeting in Abuja, presided over by Vice President Yemi Osinbajo, Kaduna State governor, Malam Nasir el-Rufai, said the decision to pull N2 trillion out of the pension fund was reached by a NEC committee that he chaired. He said the decision of NEC was consistent with the Pension Reform Act 2004, which empowers the government to borrow 20 per cent of the fund to address national issues.
El Rufai said many nations, including Chile and South Africa, fund their infrastructure growth by borrowing money from workers’ pension funds. He explained that with a paltry N200 billion allocation to road construction and maintenance in the 2019 budget and N169 billion in the 2020 budget, the country would never be able to address its road infrastructure deficit. According to him, with the pension fund owned mainly by youths in their 30s who still have several years ahead of retirement, utilising the funds for infrastructure would not generate any problem.
“We need to unlock funds to construct highways,” El Rufai said. “We will never be able to construct and maintain highways with N200 billion every year. Highway infrastructure and maintenance can only be done with long term funds.” He said the committee identified three areas where the pension fund borrowing would be invested. They are rail, road and power. The loan will be through bond issues to private companies investing in road and rail infrastructure. Repayment is over a 20-year period.
We understand Labour’s discomfiture over the Buhari federal government’s decision to dip into the pension fund. It is right to question why it should be easier for the government to access the fund than retired workers who created the fund in the first place. Many have not laid their hands on their money several years after retirement. Others have even died without getting a kobo. All that because some managers of the fund have itchy palms and are helping themselves to it. Now this begs the question whether it is better to let the government borrow from the fund development purposes and repay later or keep the money only for crooks in the system to steal. The answer is obvious, isn’t it?