The Federal Executive Council (FEC) has approved a N758 billion bond to address the backlog of pension arrears owed to retirees under the Defined Benefit Scheme.
The decision was made during the FEC meeting held at the State House in Abuja, chaired by President Bola Ahmed Tinubu. Additionally, the council approved a €30 million concessional loan to support student housing projects across the country.
The Debt Management Office (DMO) has been tasked with raising the N758 billion bond to settle the pension liabilities, which have accumulated over the years. The Defined Benefit Scheme, which was replaced by the Contributory Pension Scheme in 2004 and updated in 2014, left behind significant arrears that have yet to be cleared.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, explained the rationale behind the approval during a briefing with journalists. “There was an approval for the government, through the Debt Management Office, to raise a Federal Government bond of about N758 billion. That is to clear up the backlog of pension liabilities owed various categories of pensioners under the Defined Benefit System that preceded the Contributory Pension Scheme, which came into force in 2004 and was updated with a new act in 2014,” he said.
Edun further elaborated on the challenges posed by the accrued liabilities. “There were some accrued liabilities which were building up over time. For example, someone who was on a defined benefit scheme yet to retire would need a top-up of their contributions or the amount due to them every time there was a wage increase, every five years or so. This liability built up to a point where it was not going to be easy to pay them down on an ongoing basis. To clean up that important area and to give people their right, which is payment of the pension liabilities as and when due, the government has put in place an approval for the Debt Management Office to raise N758 billion that will pay down all these liabilities and, of course, be a tremendous relief to the beneficiaries.”
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In addition to the pension bond, the FEC approved a €30 million concessional loan from the French Development Agency (AFD) to fund student housing projects. The initiative, to be implemented in collaboration with Family Homes Limited, aims to provide sustainable and clean energy-based accommodation for students across Nigeria.
Edun highlighted the significance of the student housing project. “A €30 million financing, long-term concessional financing by Agence Française de Développement (AFD), the French development agency, is supporting student housing in conjunction with Family Homes Limited, the partner and implementer. It is for student tertiary accommodation project sites throughout the country to provide sustainable and clean energy-based accommodation for students.”
The FEC also approved the National Single Window Project, a technology-driven initiative designed to enhance Nigeria’s economic competitiveness and streamline trade processes. The project, which includes hardware and software solutions, is expected to improve government revenue and boost the country’s export efficiency.
Edun emphasized the importance of the project in the context of global trade dynamics. “The National Single Window Project not only speaks to improving the economic competitiveness and the international ability to export efficiently but also to increasing government revenue. It is both revenue-earning in terms of foreign exchange and government revenue. It speaks to the increased productivity of the Nigerian economy. At a time when, under the African Continental Free Trade Agreement, Nigeria is pushing to be a big player both in the ECOWAS region and on the African continent, this project is particularly important.”
He added, “The world is moving away from open trade, from the rules-based World Trade Organization-led trading environment, to a more closed environment. Therefore, regional and continental markets will be much more important for Nigeria.”
Edun concluded by assuring that the Economic Management Team would prioritize and synchronize the approved projects in line with President Tinubu’s agenda. “Given the large number of approvals granted today, there was also an assurance that the Economic Management Team will harmonize, synthesize, synchronize, and prioritize these different approvals in line with Mr. President’s priorities. These include attracting investment to grow the economy, create jobs, reduce poverty, strengthen food security, enhance fiscal conditions, increase energy security, improve social protection, and boost economic competitiveness. The timely implementation of the new National Development Plan will provide a framework for these initiatives and demonstrate the government’s direction to all stakeholders.”
The approvals mark a significant step in addressing long-standing pension liabilities and improving infrastructure in the education sector, while also positioning Nigeria for greater economic competitiveness on the global stage.
Source: Ripples Nigeria
