PFAs collaborate with local investors to hedge against foreign dominance

Pension Fund Administrators (PFAs) are discussing with domestic institutional investors and listed companies to institute council that would strengthen the country’s capital market and hedge against foreign dominance.

The PFAs describing themselves as the only credible minority shareholders by virtue of their management of workers contributions covering generality of Nigerian workers said this has become necessary in view of consistent volatility in the capital market resulting from foreign portfolio investor dominance.

PFAs currently managing pension fund assets well in excess of N3 trillion arising from workers contribution following the Pension Reform Act 2004, believe this move will bring market confidence and protect investors equity from capital erosion.

Available data from Nigerian Stock Exchange (NSE) reveals that Foreign Portfolio Investment which had increased from 14.8 percent in 2007 to 66.8 percent in 2011, has since dropped to 61.4 percent in 2012 and currently 42.7 percent as at March 2013.Where as domestic investors’ stake which dropped from 85.2 percent in 2007 to 33.2 percent in 2011 rose to 38.6 percent in 2012 and 57.3 percent as at March 2013.

Dave Uduanu, chairman, Pension Fund Operators Association of Nigeria (PenOp) said during an interview that the PFAs have commenced active engagement with listed companies in the Nigerian capital market, stating that it has had one successful, and another one is ongoing.

“We want to institutionalise a council of institutional investors which the PFAs will lead alongside other similar investors like fund managers, insurance investors so that we can speak with one voice.

“What you find now is that foreign investors come into the country and still behave as if we are still in the 1970/80’s and they think they are doing the country a favour. The rule has reversed; there are no growth opportunities in Europe any more. It’s moved to Africa and Nigeria is at the forefront.”

According to him, the new regime with the support of regulatory authorities will make sure that people that come to do business in Nigeria play by the rules. “We want to ensure listed companies take the issue of corporate governance and minority shareholders interest very seriously.”

We want to work with regulators to get Nigeria companies listed on the exchange so that we can take over and grow our market together, rather than leaving to those who want to gain capital appreciation and pull out. “We don’t want to continue to see foreign dominance in our market. If you go to South Africa, the leading listed companies are South African Companies, and this must happen here, Uduan promised.