Expert Says Pension Funds Hold Key To Africa’s Growth

9th African Development Forum

The narrative of “Africa rising” continues to be written through different angles, with the latest finding vent through pension funds. David Ashiagbor, Stakeholder Relationship Officer at the African Development Bank(AfDB), believes that, innovative factor about pensions is the way in which they “are growing and looking for outlets.”

Speaking to ADF Daily Bulletin on the sidelines of the African Development Forum, he said that “unlike banks that mobilise short-term savings towards investments, pension funds play the same role for long-term investments.”

Given the multiplicity of Africa's needs, which include infrastructure, there is, he said, at least a source of long-term funds that offer some “stability”.

Closely linked to this-said stability is the fact that, pension systems in Africa are working in markets that have done what Ashiagbor calls “reforms”. Pressed on what reforms meant, he elaborated that it referred to markets that had opened up their pension systems to the private sector, and had managed to improve regulation.

Ashiagbor maintains there is “outstanding growth in some markets” on pension funds, and this African Development Forum was therefore an opportunity to raise awareness of this sector. When asked whether one of those regions that is poised for growth is the West African sub-region; he said that if the figures for Nigeria were anything to go by, it was looking good, for Nigerian pension fund authorities were collecting a cool USD150m a month. Ghana, however, is expected to grow four-fold between 2014 and 2018. Any kind of growth Ghana goes through will come back to the reforms the country is able to make, he added.

While there remain challenges in terms of where people put their money, Ashiagbor believes pension funds are expected to grow, and that “the future is bright in terms of opening up the universe of assets” pension administrators can invest in.

Ashiagbor works for the Making Finance Work for Africa section at the AfDB, which is a multi-donor initiative that supports financial sector development across Africa, and is managed by the Bank at its headquarters in Abidjan.