Putting the accrued pension fund assets under management to work in Nigeria : the need for the review of regulatory-induced investment limits to promote equity market growth and development

Abstract

The Nigerian stock market has been underperforming in recent years partly due to the bias of the investors towards the issuance of bonds and other debt instruments by governments and corporate organisations. And over the years, Nigeria’s pension funds’ assets under management has grown massively into a potential investment capital capable of closing investment gap in the Nigerian stock market to deepen the market in terms of the depth and liquidity and promote the economic development of the nation. However, this is being curtailed by the extremely low investment limit of pension fund assets in the stock market, hampering the development of the market. Although a new regulatory regime was introduced recently, it has not made an impact in resolving the restrictive investment limits of the pension assets in the stock market. This research has therefore sought to investigate the how reform of the regulatory framework for the investment of pension assets could deepen the stock market, providing investment capital to revive the struggling stock market. The thesis of this research is that the overly restrictive regulation on the investment of pension assets should be re-examined to provide the much needed finance the stock market requires for development. The results of this proposed study will help inform the need for the legal reform to unlock pension fund assets as a source of finance to deepen stock market development.