Federal government of Nigeria proposes mandatory national savings scheme which will make savings compulsory for citizens of 18 to 50 years old.
The recommendation was made in a
report by the Working Group. In a report the group submitted to the Minister of
Finance, Budget and National Planning, Zainab Ahmed on Wednesday, however,
advised the government against including corporate bodies in the compulsory
savings scheme
“The scheme will be open-ended and considering its medium-term to long-term
objective, participants will have the opportunity to decide how their
contributions will be invested and will be able to make periodic
re-allocations.
“To allow for product diversification and provide savers flexibility and
choice, multiple investor risk/return profiles have been designed with
corresponding savings products. These products will allow service providers to
offer an array of diversified product options tailored to match customer needs,”
the group said
The group explained it has recommended “new Government-issued savings
instruments that have features to protect savers from rising inflation.”
Another recommendation made by
the group is that the scheme should be supervised by the Securities and
Exchange Commission, and should start off as a department in the commission.
“With the Investment and Securities Act (ISA) of 2007 currently being
reviewed, a new section should be introduced in the proposed Investments and
Securities Bill (ISB) to provide for the establishment of the National Savings
Scheme as a mandatory scheme and other related matters.
“The new provisions in the ISB should be articulated to give the NSS its own
advisory board. The governance structure of the Scheme should be robust and
transparent with stringent measures in place to ring-fence the assets of the
Scheme,” it added.
The Committee suggested a N1.26
billion fund for the take-off of the scheme.
Dr. Ore Sofekun, CEO of Foothold
Advisors, Fola Adeola, who presented the report on behalf of the Committee
Chairman, said implementing a mandatory national savings scheme was feasible
but noted that it has to be driven by incentives, especially tax.
Minister of Finance, while receiving the report commended members of the committee, promising that the government would review the report and come up with a position.
She described the mobilisation of domestic savings for capital formation and
investment "as a critical success factor for harnessing the true growth
potential of the Nigerian economy".
"The just-launched Medium-Term National Development Plan 2021-2025
recognises the role of a deep financial market in supporting the high and
sustainable growth the plan aims to attain," she said.
“I hope the proposals made in this report will guide the Government in taking
actionable steps to actualise the objectives outlined.”
Meanwhile, the Director-General, Securities and Exchange Commission (SEC),
Lamido Yuguda had explained that the need to establish a National Savings
Strategy was outlined in the 10 Years Capital Market Master Plan “as one of the
key strategies to enhance capital formation by mobilising domestic funds for
investment to drive rapid economic growth”.
Tags
Business News