The Nigerian government is reflecting on the report of the National Savings Scheme Task Force which has proposed a compulsory savings scheme for all Nigerians between the ages of 18 and 50.
This comes as the Nigerian government looks for ways to raise funds in order to boost the national economy.
The working group, which presented its report to the Minister of Finance, Budget and National Planning, Zainab Ahmed, on Wednesday, however, advised the government against forcing legal persons to save.
Dr Ore Sofekun, CEO of Foothold Advisors, who presented the report on behalf of committee chair Fola Adeola, said implementing a mandatory national savings scheme was doable, but noted that it had to be motivated by incentives, mainly fiscal ones.
The group said that “the program will be open and given its medium to long-term focus, participants will have the ability to decide how their contributions will be invested and may make periodic reallocations.
“To enable product diversification and offer savers flexibility and choice, several risk/reward profiles for investors have been designed with corresponding savings products. These products will enable service providers to offer a range of diverse product options tailored to customer needs.
“New government-issued savings instruments that have features to protect savers from rising inflation have been recommended and a number of special products have also been offered with the needs of Nigerians in mind.”
Additionally, the group recommended that the scheme be overseen by the Securities and Exchange Commission and should begin as a department of the commission.
“With the Investments and Securities Act (ISA) of 2007 being revised, a new section should be introduced into the Investments and Securities Bill (ISB) to provide for the creation of the regime of national savings as a compulsory scheme and other related issues.
“The new BSI arrangements should be articulated to give the NSS its own advisory board. The governance structure of the scheme must be strong and transparent with strict measures in place to protect the assets of the scheme,” he added.
The Committee has suggested a fund of 1.26 billion naira to start the program.
Upon receiving the report, Ahmed praised the committee members, saying the government would review the report and present a position.
She described the mobilization of domestic savings for capital formation and investment “as a critical success factor in harnessing the true growth potential of the Nigerian economy”.
“The just-launched 2021-2025 Medium-Term National Development Plan recognizes the role of a deep financial market in supporting the high and sustainable growth the plan aims to achieve,” she said.
“I hope that the proposals made in this report will guide the government in taking concrete measures to achieve the stated objectives.”
Meanwhile, Securities and Exchange Commission (SEC) chief executive Lamido Yuguda explained that the need for a national savings strategy was described in the 10-year capital market master plan “as the ‘one of the key strategies to enhance capital formation by mobilizing domestic funds for investment to stimulate rapid economic growth’.