Nigeria to loosen pension rules, unlock billions for infrastructure and private equity

Nigeria’s pension regulator, the National Pension Commission (PenCom), is set to change the game for the country’s $17 billion pension industry. It plans to increase how much can be invested in infrastructure and private equity.

At present, pension funds can invest only 5% of their assets in infrastructure and private equity. PenCom has confirmed it is raising this ceiling. New limits are expected before the end of Q3 2025, spokesperson Ibrahim Buwai told Bloomberg.

Nigeria’s pension funds remain heavily skewed toward safe investments like government bonds, making up about 62% of total assets. But with inflation hovering above 20% for the past two years and the naira losing around 70% of its value since mid-2023, those fixed-income returns are being worn away.

Fund managers have long called for broader flexibility, and now Buwai notes:

“We are not really okay with returns the way they are because inflation is having a significant negative impact. We really want to see traction in those alternative assets to complement returns from the fixed income and the traditional assets.”

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Even before formal rule changes, pension funds are already expanding their reach. Private equity allocations more than doubled, reaching ₦229.4 billion in H1 2025 compared to H1 2024. Infrastructure investments rose 49%, to about ₦242.8 billion in the same period.

Yet, despite these jumps, such investments account for barely 1% of the pensions’ total net asset value around ₦24.6 trillion.

The review will also ease a major restriction: infrastructure funds are currently required to invest at least 60% of their portfolios in Nigerian projects. Cutting this rule will give managers more flexibility to diversify across markets, while still channelling capital into Nigeria’s infrastructure gap.

This shift comes at a critical moment. Nigeria is facing a massive infrastructure deficit, estimated at $878 billion by 2040, spanning unpaved roads, outdated utilities, and more. Redirecting even a fraction of pension assets could help bridge this gap. As PenCom has noted, “It’s safer to have more options in the mix that guarantee real returns.”