Impact investing: Leveraging pensions for primary mortgage equity contribution
Late Nelson Mandela, revered former South African President had in a quote played up by Catherine Duggan said “If you talk to a man in a language he understands, that goes to his head;if you talk to him in his language that goes into his heart”.
Duggan, professor of Management & Political Economy & Vice Dean for Strategy & Research, ALU University, Rwanda had reiterated this quote because of its significance in driving a message down.
This quote simply clarifies the strategy to winning people’s interest and belief in a particular project. For instance, it is possible to generate more interest and enthusiasm towards pension contribution, if it’s established thatpension contributors could actually help people secure residential mortgage, using Mandela’s communication model.
Duggan, speaking on Impact Investing: “The Outlook for African Pension Funds” at the last World Pension Summit: Africa Special held in Abuja underscored the link between solving people’s home ownership problem and winning their hearttowards saving for pension.
“Understanding what keeps people up at night, will make you understand why they do what they do, and what they might do next”.
This gives effective communication a place of importance in convincing individuals and organization in believing on a project. For instance, speaking people’s language could enhance appreciation and buying into the contributory pension scheme which enables people save for retirement and at the same time capable of helping participants’secure residential mortgage.
Today, pension funds could actually be used to provide mortgage for pension contributors. This is called impact investing. Impact investments are simply investments made with the intention to generate social and environmental impact alongside a financial return.
This therefore underscores why stakeholders in Nigeria’s Contributory Pension Scheme must as a matter of urgency fast -track the process of delivering primary mortgage by allowing use of part of the Retirement Savings Account (RSA) fund as equity contribution.
This is in line with the draft guidelines on withdrawals from Retirement Savings Account (RSA) towards equity contribution for payment of residential mortgage which has been exposed to operators by the National Pension Commission (PenCom).
Section 89 (2) of thePension Reform Act(PRA) 2014 provides that a Pension Fund Administrator may, subject to guidelines issued by the National Pension Commission (the Commission), apply a percentage of pension fund assets in the retirement savings account towards payment of equity contribution for payment of residential mortgage by a holder of Retirement Savings Account(RSA)
Pursuant to the referenced Section 89(2), these guidelines provide the framework for its implementation. The Guidelines seektoprovide the operational modalities for Pension Fund Administrators(PFAs)in determiningtheeligibility requirements, procedures and documentations required to enable RSA contributors to access and utilizepart oftheir RSA balances towards equity contribution in respect of first home ownership mortgages
Chinelo Anohu-Amazu, Director general, National Pension Commission(PenCom) at the recently concluded World Pension Summit Africa Special, told journalists that the commission is determined to ensure pension contributors have roofs over their heads, adding that all required modalities were being worked out to kick-start the initiative.
“We have seen that when people have a roof over their head, it lowers the need to engage in unwholesome practices. We are trying to prevent things that lead people into unethical practices by ensuring that housing, which is a critical survival requirement for every family is provided through pension contributions, she said.
The summit, which was well attended by delegation from many African countries deliberated extensively on strategies for developing an appropriate framework for leveraging pension funds acrossthe Continent to acceleratethe implementation of critical high-impact infrastructure projects.
Infrastructure development remains a key driver and a critical enabler of sustainable growth in Africa and the current favorable economic landscape on the Continent provides a unique opportunity for the public and private sectors to collectively address the infrastructural gaps. Focusing on Africa’s infrastructure challenges will indeed help in creating the economic pre-conditions needed for longer-term growth as well as to foster poverty alleviation.