Operators eye private equity as pension funds hit N31trn

Operators in Nigeria’s pension sector are exploring private equity investments as part of a new drive to expand pension funds which currently stand at N31 trillion as checks by Daily Trust have shown.  The figure is more than the entire 2024 federal budget, and contributed by 11.27 million working Nigerians. The amount has nearly tripled in size since 2019, which signals consistency in investment tools and regulatory architecture. Already the industry regulator, the National Pension Commission (PenCom) in 2025 had advocated widening the lane for pension capital to do more, raising equity ceilings, expanding alternative asset allocation rules, and building dedicated frameworks for private equity and infrastructure co-investment. With regulations allowing pension funds to allocate up to 15 per cent of their assets to private equity, current utilisation underscores the untapped potential within the asset class. Pension assets have also been projected to approach N100 trillion within five years as contributors’ participation deepens.   Challenge lies in market readiness not investor willingness Further checks by Daily Trust as highlighted in PenCom’s regulatory assessments, has shown that the key challenge is not investor willingness but market readiness. It highlighted that the constraint lies in the limited availability of qualifying, investable and PenCom-compliant private equity funds capable of attracting pension capital. Further analysis has shown that at the end of 2019, Federal Government securities accounted for 70.8 percent of total pension assets. By mid-2026, that share had declined to the high -50 percent range, even as total industry assets nearly tripled. Much of the capital reallocated from government securities flowed into domestic equities, now valued at over N6 trillion, and money market instruments, which exceed N3 trillion. This trend demonstrates that Pension Fund Administrators (PFAs) are both willing and capable of reallocating capital when suitable investment opportunities are available. Private equity, infrastructure funds, and Real Estate Investment Trusts (REITs) remain relatively small components of this diversification journey. In a 2022 internal review, PenCom identified private equity as one of the industry’s most underutilized asset classes. However, rather than viewing this as a structural weakness, the regulator responded by introducing a dedicated co-investment framework designed to strengthen the private equity ecosystem. This was followed by further regulatory reforms in September 2025 and February 2026, which broadened the eligibility criteria for investment vehicles and eased allocation requirements. Collectively, these measures signal that the regulatory foundation needed to support greater pension investment in private markets is steadily taking shape.   What Nigeria stands to gain Industry statistics showed that private equity investment in pension funds is not unique to Nigeria; but reflects a broader pattern across Africa’s leading pension markets. According to a 2024 estimate by the African Private Capital Association (AVCA), Nigerian pension funds allocate a larger share of their total assets to private equity (1.7 percent) than their counterparts in South Africa (0.8 percent), Kenya (0.7 percent), and Ghana (0.5 percent). The same pattern emerges when private equity allocations are assessed relative to each country’s regulatory limit for alternative investments. Subsequently, Nigerian pension funds utilized about 1.7 per cent of their 10 percent private equity allocation limit. By comparison, Ghanaian pension funds utilized approximately 1.1 percent of their 25 percent alternatives ceiling, South African funds about 0.8 percent of their 15 percent limit, while Kenyan funds utilized roughly 0.7 percent of their 10 percent limit. These comparisons suggest that the challenge is not unique to Nigeria but reflects a wider continental reality: across Africa’s major pension systems, regulatory capacity has generally outpaced the availability of investable private market opportunities.       A 2026 joint report by Stears and the African Private Capital Association (AVCA) reinforces this pattern across the four markets: pension systems have expanded significantly, while the private capital ecosystem is still evolving to match the scale of available institutional capital.       Among its continental peers, Nigeria holds the largest pool of pension assets, positioning it to benefit the most from a deeper private equity market.       As the pipeline of qualifying for PenCom-compliant investment funds expands, the country has the potential to unlock substantial pension capital for productive long-term investments, accelerating both private sector growth and broader economic development.       Why PFAs are cautious       Despite the huge potentials of private equity investments, Pension F

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