E-Financial
Pension Funds Recorded Significant Growth in 2022
The sound regulation and supervision of the Contributory Pension Scheme (CPS) in Nigeria by the National Pension Commission (PenCom) has yielded positive results, as evidenced by significant growth in pension assets. Pension assets increased by N1.56 trillion in 2022 to stand at N14.99 trillion as of 31 December 2022. In 2021, pension assets increased by N1.12 trillion to end the year at N13.43 trillion.
PenCom oversees Pension Fund Administrators (PFAs) to ensure that employees’ pension funds are managed professionally, and their benefits are guaranteed. Under the CPS, pension assets have witnessed growth through pension contributions and investment returns.
In terms of pension contributions, the CPS, established by the Pension Reform Act (PRA) 2014, is an arrangement where both the employer and the employee contribute a portion of an employee’s monthly emolument towards the payment of the employee’s pension at retirement.
The PRA 2014 provides a minimum contribution rate of 18 percent of the employee’s monthly emoluments comprising 10 percent by the employer and 8 percent by the employee. An employee may also decide to add to his contribution by voluntarily making additional contributions through his employer.
PFAs invest pension contributions on behalf of the employees. In 2022, the CPS recorded 333,002 new contributors, bringing the total CPS membership to 9.86 million. Pension contributions from the new RSA holders contributed to the overall growth in pension assets in the year.
For investment returns, PFAs invest pension contributions in a diversified portfolio of assets, including government bonds, stocks, real estate, and other asset classes such as private equity funds. The returns generated from investments in the above assets contribute to the growth of pension funds.
Consequently, workers participating in the CPS are assured of adequate funds to cater for their pension at retirement. Section 85(1) of the PRA 2014 states that “All Contributions made under this Act shall be invested by the Pension Fund Administrator with the objectives of safety and maintenance of fair returns on the amount invested”.
Furthermore, section 85(2) states, “Pension funds and assets shall only be invested in accordance with regulations and guidelines issued by the Commission, from time to time”.
It is instructive to note that the returns on all pension fund investments are apportioned directly to the RSAs of pension contributors.
Consequently, PFAs must indicate clearly in the RSA Statement of Accounts the total monthly pension contributions from the inception of the account and the returns on investment accrued to the contributor during the reporting period.
In addition, to ensure transparency, PenCom requires PFAs to publish on their websites the daily value of an accounting unit for the RSA Funds and disclose the three-year rolling average rates of returns on pension funds.
Meanwhile, a vital benefit of the CPS is that the investment returns generated from pension contributions are compounded over the years, thus resulting in increased RSA balances that avail the contributor of financial security during retirement.
Indeed, due to the sound investment regulatory framework established by PenCom, returns on investment have been good over time, such that it contributes a significant proportion of the RSA balances of contributors.
Accordingly, the CPS provides an opportunity to the contributor for higher retirement income, unlike the Defined Benefits Scheme, where retirement benefit payments are fixed upfront.
Due to the apparent benefits that pension contributors get from the investments of their pension savings, employees need to monitor their employers and ensure prompt remittance of their monthly pension contributions.
Employers are obliged by law to deduct and remit pension contributions into their employees’ RSAs not later than seven working days from the date salaries are paid. Consequently, employers that delay remitting pension contributions will eventually pay the delayed contribution plus a penalty of not less than 2 percent of the total unpaid contributions monthly.
Overall, the CPS provide employees with a stable source of income during their retirement through a combination of contributions and investment returns. PenCom is committed to the effective regulation of the pension industry in Nigeria to ensure that employees under the CPS receive their retirement benefits as and when due.
Despite lingering regulatory uncertainty, Nigeria processed an estimated $92.1 billion in cryptocurrency transactions between July 2024 and June 2025, reaffirming its position as Sub-Saharan Africa’s largest crypto market, according to PricewaterhouseCoopers (PwC).
The figure, published in PwC’s Nigeria Economic Outlook 2026 titled “Turning Macroeconomic Stability into Sustainable Growth”, shows that Nigeria received nearly three times the crypto transaction value recorded in South Africa over the same period.
PwC attributed Nigeria’s dominance to its large population, youthful and digitally savvy users, persistent inflation, and continued foreign exchange (FX) access constraints, which have pushed many individuals and businesses toward crypto and stablecoins as alternative financial channels.
The report noted that crypto adoption in Nigeria reflects both economic necessity and structural transformation in financial behaviour.
PwC said Bitcoin continues to dominate fiat-to-crypto purchases in Sub-Saharan Africa, accounting for 89 per cent of transactions in Nigeria and 74 per cent in South Africa, underscoring its role as a default hedge and entry asset in volatile or constrained financial environments.
It added that stablecoin usage is structurally higher in Nigeria, signalling reliance on crypto rails as an informal FX market and dollar-substitute channel.
However, PwC cautioned that the data reflects only centralised exchange activity and excludes peer-to-peer transactions and informal flows, suggesting that actual volumes may be significantly higher.
PwC projected that Nigeria is likely to retain its position as the region’s largest crypto market in 2026, driven by FX access challenges, inflation sensitivity, and sustained demand for stablecoins as a store of value and settlement mechanism.
The firm also noted that Nigeria had earlier processed about $59 billion in crypto transactions, largely driven by young, tech-savvy users, highlighting deepening adoption momentum.
“The rising usage of crypto, especially among Nigeria’s youth, underscores the urgent need to accelerate regulatory cohesion in the near term,” the report stated.
PwC identified several key issues that will shape Nigeria’s crypto landscape in 2026, including industry adoption and compliance challenges, licensing and regulatory frameworks, a structural shift in crypto taxation, capital flow management, and market surveillance.
On licensing and regulation, PwC observed that progress remains slow, with only two exchanges granted provisional approval so far.
This, it said, highlights capacity and sequencing challenges within the regulatory framework. The firm warned that the planned rollout of crypto-asset taxation could outpace supervisory readiness, raising concerns about effective enforcement without a fully operational licensing regime.
In terms of taxation, PwC disclosed that the new Tax and Tax Administration Acts, effective from 2026, will treat crypto profits as income taxed up to 25 per cent, replacing the previous 10 per cent capital gains tax.
This represents a significant increase in tax burden and complexity for crypto users. It also noted that Virtual Asset Service Providers (VASPs) will face higher compliance and reporting obligations, raising operating costs for licensed platforms and potentially pushing more activity into informal or offshore channels
Renaissance Capital Africa (Rencap) has named Zenith Bank Plc its top conviction pick among Nigerian banks, ahead of GTCO and AccessCorp, in a fresh research report highlighting the lender’s robust balance sheet and dividend potential despite sector headwinds.
Zenith Bank
The comprehensive review of the Nigerian banking industry notes that Zenith’s current market valuation lags its improving fundamentals, even as the NGX Banking Index posts strong gains recently.
Rencap upgraded Zenith from HOLD to BUY, lifting its target price by 96 per cent based on a lower risk-free rate from falling government bond yields, refined beta estimates, and expectations of cleaner assets post-forybearance resolutions.
Balance Sheet Strength Drives Outlook
Analysts project challenges to earnings growth from anticipated Central Bank of Nigeria (CBN) rate cuts but foresee higher dividend payouts from resolved forbearance and single obligor loan (SOL) exposures alongside rising cash profits.
“Although we expect banks to face challenges in growing earnings… the balance sheet clean-up… will support higher dividend payouts relative to prior years,” the report states, ranking Zenith first, followed by GTCO and AccessCorp.
Key positives include loan write-offs that bolstered asset quality, enabling sustainable growth amid financial system reforms.
Dividend Recovery in Focus
Sector profitability from 2023-2024 was inflated by unrealised foreign exchange gains, which regulations barred from cash dividends, capping payouts despite headline profits.
Zenith historically led payout ratios in 2021-2022 via strong cash generation and capital discipline; Rencap expects a rebound as pressures ease, attracting income-focused investors.
Tier-1 Leadership Reinforced
Zenith Bank recently topped Nigeria’s tier-1 capital rankings for the 16th straight year, per The Banker magazine (Financial Times), affirming its resilience and positioning for long-term value creation.
CBN
- Access Bank Plc
- Fidelity Bank Plc
- First Bank of Nigeria Ltd
- Guaranty Trust Bank (GTBank)
- United Bank for Africa (UBA)
- Zenith Bank Plc
- FCMB (First City Monument Bank) – currently pushing to raise additional capital to secure its international licence.
- Wema Bank
- Standard Chartered Bank (Nigeria)
- Citibank Nigeria
- Stanbic IBTC Bank
- Sterling Bank
- Globus Bank
- Premium Trust Bank
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