Despite Nigeria holding one of the largest pools of institutional capital in Africa, the effective deployment of its pension assets, now totaling N23.26 trillion, is still constrained by structural challenges, chiefly credit and liquidity risks.
This is according to the newly released State of Africa’s Infrastructure (SAI) Report by the Africa Finance Corporation (AFC).
The report reveals that, as of January 2025, Nigeria’s pension system had amassed over N22.8 trillion (approximately US$14.2 billion) in assets under management, underscoring its potential as a major driver of infrastructure development. However, most of this capital remains idle in the face of persistent financial bottlenecks.
“As of early 2025, Nigeria’s pension assets under management exceeded N22.8 trillion… However, the effective deployment of this capital in long-term infrastructure had been constrained by credit and liquidity risks,” the report states.
In response to these challenges, Nigeria established InfraCredit in 2017—a public-private institution designed to unlock domestic capital for infrastructure by providing guarantees that make infrastructure bonds investment-grade. Backed by the Nigeria Sovereign Investment Authority (NSIA), GuarantCo
, AFC, and other partners, InfraCredit has become a cornerstone of the country’s infrastructure financing strategy.
InfraCredit’s key role lies in providing local currency guarantees for corporate infrastructure bonds, enabling them to meet the regulatory thresholds for pension fund investments. Since its inception, the organization has catalyzed numerous local currency bond issuances across sectors like renewable energy, gas distribution, logistics, and industrial infrastructure.
By enhancing credit profiles and mitigating perceived investment risks, InfraCredit has succeeded in bridging a critical gap between vast pension capital and Nigeria’s urgent infrastructure needs.
The report highlights the tangible impact of this approach. Pension fund allocation to infrastructure rose sharply—from just N1.2 billion (0.02% of total assets) to over N242 billion (1% of total AUM), roughly equivalent to $155 million.
This leap, though still a small portion of total assets, demonstrates the catalytic potential of credit enhancement tools like InfraCredit.
Rather than relying on government-mandated allocations, Nigeria’s strategy hinges on voluntary market participation enabled by risk-mitigation structures. The AFC notes this model could serve as a blueprint for other African nations seeking to mobilize long-term capital for development without distorting investment mandates.
As Nigeria continues to strengthen its financial and regulatory frameworks, the report urges policymakers to scale up these market-based de-risking tools to deepen pension fund engagement and empower Africa to finance its own growth from within.