Usman Suleiman is the Managing Director and chief executive officer FUG Pensions, in an interactive session with journalist in Lagos, he believes that deregulation of petroleum pricing, exchange rate regime, investors will have direction and focus on investment in the economy, JOSHUA NSE was in attendance. Excerpts

What is your overview of the economic climate last year as it affects the pension industry
Future Unity Glanvills Pensions Limited (FUG Pensions) actually held a management and board retreat at the beginning of 2014 in which we came up with a medium term strategic plan for the company that was running through 2014 to 2016, with the intension of holding the session in the forth quarter to review how we have performed within the context of the medium term strategy. 2015 has generally been a difficult year for the economy as a whole for obvious reasons. The year was an election year and there was a lot of apprehension as to the future of the country.

In the political direction, there was a lot of fear about crisis arising from the election particularly when the election dates were shifted for a period of some weeks. However, as it turned out, the elections were concluded successfully. The country overcame crisis and the new administration took off. That doubt brought some tensions, but a lot of investors have confidence in the future. They began to look at the focus of the new administration. However, it took a little bit of time for the administration to fully settle, get the cabinet running and came up with clear political direction. That really dragged on to the end of the year and for that reason the economy was very slow. For us in the pension industry that will naturally affect our performance in terms of growth in registration. We are in the contributory pension, effectively meaning that unlike the defined benefits, it is totally and completely dependent on employment generation and employees opening their RSA.

As a consequence, the slow pace of economic activities, there was a loss in employment generation over the period, not only in the private sector which is supposed to be a major employer of labour but also in the public both Federal, states and for that reason there was no significant growth in employment generation into the system. However, in spite of the circumstance, for us in FUG Pensions, we have been able to weather the storm and move into 2016 with the confidence of being able to move towards meeting our projections in the medium term strategy.
Now at the beginning of first quarter of 2016, the direction was being identified particularly in relation to policies that have to do with exchange rate and petroleum prices, and by the beginning of the second quarter, even though without clear cut policy statement is clear that the exchange rate regime is now in place, petroleum pricing has also come into effect, therefore investors now have a direction, they would be able to anticipate and focus unlike the later part of 2015, with that we expect that the second half of 2016, that is, third quarter, fourth quarter of 2016, we are going to see regeneration of activities in the economy, we anticipate that investors having now seen that will bring in their funds, they now have window where the liberalized exchange regime will be able to trade their capital and profit, even then we anticipate that funds companies that have been looking for investment generating activities, will now be able to attract partners for investment. We also anticipate that portfolio investors will also look at staging a come back into the capital market in the third and fourth quarter of the year. We also anticipate that petroleum marketers will now be ready to really commence the importation of fuel particularly aviation fuel because they now can sell at N145 per litre. With the pricing regime, they have an avenue of taking care of both the import and transportation costs and their margin, we anticipate less pressure to that effect.

However, the main issue standing as obstacle to the overall commencement of economic activities is the issue of power generation, because of lack of fuel, that is, gas, of course power generation infrastructure is based on thermal system which is power from gas. The existing hydro power stations have not generated enough power to significantly service all the national grid, unfortunately we do not have other sources of power generation such as coal which we have in abundance in this country. There should have been power plant base on coal in Enugu, Kogi and Gombe states. Of course, Ashaka Cement is building small power plant in Gombe base on coal, but there should have been major plants base on coal. If other sources of power have been developed then we will not be so much tide to thermal plants as at the moment. What is happening now in Niger Delta where gas is sources from along the route where these pipes passed, it becomes a serious challenge because the issue of vandalism of our pipelines have to be addressed. It is not just the issue of vandalism, it has so many surrounding structures that is surrounding our economy.

For us in FUG, we continue to maintain our optimism to sustain the expectation that we will be able to achieve our medium term goals. In the second quarter of this year, we have seen that we have actually been able to cover part of what we have not been able to achieve in 2015.

Source: Guardian