Nigerian Government to Make Savings Compulsory for Citizens Between 18 - 50 Ages

 

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”.