Nigerian pension funds see plunge in new accounts as jobs dry up

Nigerian President Muhammadu Buhari addresses the nation on the coronavirus disease (COVID-19), in Abuja, Nigeria March 29, 2020. Nigeria Presidency/Handout via REUTERS ATTENTION EDITORS- THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY

Nigeria’s pension fund managers have seen a sharp decline in the number of new retirement savings accounts as employers cut back on recruitment.

Businesses, especially manufacturing firms, have largely been shut down since April after the country imposed movement restrictions to curb the spread of the coronavirus infections.

The economy of Africa’s largest oil producer has also been battered by a drop in crude prices this year.

This has hit hiring and the creation of new pension accounts, which is mandatory for all employers in Africa’s most populous nation.

New retirement savings accounts grew 85% less in April compared to the same period a year earlier, according to data from the West African nation’s pension body, an indication of a slowdown in the number of new jobs.

Still, total pension fund assets under management in Nigeria was steady at 10.6 trillion naira ($27.3 billion) in April, almost the same level as in February.

“If companies aren’t hiring we can’t sign people for pension plans,” said Wale Okunriboye, head of investment research at Sigma Pensions Ltd. in Lagos. “Businesses will go through a difficult time and try to manage costs, as a result, we expect unemployment numbers to increase.”

(With input from Bloomberg Africa)