Don’t squander pension funds, reform budget process — Uwaleke, Capital Market Prof

A professor of Capital Market at Nasarawa State University, Keffi, and President of the Capital Market Academics of Nigeria (CMAN), Uche Uwaleke, says Nigeria’s growing pension assets should drive infrastructure development and deepen the capital market rather than merely boost government finances. In this interview with ANTHONY OTARU, he also discusses budget implementation, inflation, economic reforms, and why stronger fiscal institutions remain critical to sustainable national development

Nigeria’s pension assets have grown to about ₦31.48 trillion. What does this mean for the country’s pension system and the wider economy?

The growth of pension assets to about ₦31.48 trillion is a significant milestone for Nigeria’s pension industry. It reflects the maturity of the Contributory Pension Scheme (CPS), stronger compliance by employers, increased participation by workers and prudent regulation by the National Pension Commission (PenCom). Beyond strengthening retirement security, these funds are an important source of long-term domestic capital to support national development. Around the world, pension funds finance infrastructure, housing and corporate expansion because they provide patient capital suited for long-term investments. Nigeria should continue in that direction. As pension assets expand, they can be channelled into critical infrastructure such as roads, railways, power projects and affordable housing, provided contributors’ funds remain adequately protected through strict regulation and sound governance. The growth is also beneficial to the capital market. Pension Fund Administrators have become major institutional investors whose investments in equities, bonds and government securities improve market liquidity, deepen the market and boost investor confidence. The impressive performance of the Nigerian stock market in the first half of 2026 owes much to the growing participation of institutional investors, including pension funds. Unlike speculative investors, pension funds invest with a long-term outlook, thereby enhancing market stability. That said, rapid asset growth also demands stronger governance, risk management, transparency and accountability. Contributors must remain confident that their retirement savings are secure and professionally managed. Attention should equally focus on expanding pension coverage, particularly within the informal sector, where millions of Nigerians remain outside the scheme. Wider participation will strengthen financial inclusion and further deepen the pension system. Overall, the continued growth of pension assets is positive. It strengthens retirement security, supports capital market development, provides long-term financing for economic growth and contributes to macroeconomic stability.

Many stakeholders are worried about the simultaneous implementation of the 2024, 2025 and 2026 budgets. Should Nigerians be concerned?

Yes. The concerns are legitimate because budgets are designed to operate within a defined fiscal year. When projects spill into subsequent years, it raises serious questions about planning efficiency, fiscal discipline and public financial management. One major reason is the persistent gap between projected and actual government revenue. Budgets are often based on optimistic assumptions about oil production, oil prices, exchange rates and non-oil revenues. When these projections fall short, the government struggles to finance planned projects, resulting in delays and budget rollovers. The procurement process is another challenge. Bureaucratic bottlenecks and administrative inefficiencies often delay the commencement of capital projects, causing implementation to extend beyond the intended fiscal year. Nigeria therefore needs comprehensive reforms in its budgeting process. Revenue projections must become more realistic and conservative. Budget credibility depends largely on the reliability of revenue estimates. Procurement systems should also be modernised through digital platforms that promote efficiency without compromising transparency. Faster procurement will improve project execution and reduce unnecessary carry-overs. I also believe Artificial Intelligence can significantly improve budgeting. AI can enhance revenue forecasting, monitor project implementation in real time, detect spending irregularities and identify projects falling behind schedule. Technology should also strengthen monitoring and evaluation by enabling policymakers to continuously assess budget performance rather than waiting until the end of the fiscal year. Beyond technology, Nigeria requires a comprehensive Budget Law. At present, the budget process is governed by several fragmented laws and regulations, resulting in overlaps and inconsistencies. A single Budget Law should clearly define timelines for budget preparation, legislative approval, implementation, monitoring and evaluation, while prescribing sanctions for unnecessary delays. Ultimately, the success of any budget should be measured not by the size of appropriations but by its impact on infrastructure, employment, poverty reduction, and citizens’ welfare. The recurring implementation of multiple budgets is therefore symptomatic of deeper institutional weaknesses that require urgent reform.

Although headline inflation fell to 15.91 per cent in June 2026, many Nigerians say the cost of living remains unbearable. Why is that so?

The first point to clarify is that a lower inflation rate does not mean prices have fallen. It simply means prices are rising at a slower pace. This distinction explains why many Nigerians still feel the impact of the cost-of-living crisis despite the moderation in inflation. After several years of high inflation, the general price level remains elevated, meaning households are still paying far more for goods and services than they did before the reforms. Even at 15.91 per cent, inflation remains relatively high and continues to erode purchasing power. Workers whose incomes have not kept pace with rising prices are particularly affected, making it increasingly difficult for many families to maintain their standard of living. The greatest pressure continues to come from food inflation. Food accounts for a significant share of household spending, especially among low- and middle-income earners. As long as food prices remain high, many Nigerians will continue to struggle. Recent NBS figures show average food inflation at about 17 per cent, with some states recording much higher rates. In states such as Kogi, Niger and Benue, food inflation exceeds 40 per cent, while Kogi records over 50 per cent. These figures highlight the uneven but severe impact of inflation across the country. Food, transportation, housing and accommodation remain the major drivers of inflation because they are essential expenses that households cannot easily avoid. This reinforces my long-held position that Nigeria’s inflation is not purely a monetary problem. While monetary policy is important, many of the current inflationary pressures are structural. Insecurity in farming communities, poor logistics, rising energy costs, exchange rate fluctuations and infrastructure deficits continue to drive prices upward. For example, insecurity reduces agricultural output, while high transport and energy costs increase production costs that are ultimately passed on to consumers. Addressing inflation therefore requires close coordination between the Central Bank and fiscal authorities. While the CBN maintains price stability through monetary policy, the government must simultaneously improve security, infrastructure, energy supply and domestic production. The encouraging news is that macroeconomic indicators are improving. Inflation has moderated, exchange rate volatility has eased, external reserves have strengthened, and investor confidence is gradually returning. However, Nigerians will judge these reforms not by economic statistics alone but by improvements in their daily lives. Economic success must ultimately translate into affordable food, more jobs and higher household incomes.

The Federal Government recently inaugurated a Ministerial Advisory Committee on economic reforms. Is this initiative coming too late?

I wouldn’t describe it as late. Rather, I see it as timely and necessary. Economic reforms are continuous processes that require regular evaluation and adjustment. Every successful reform programme needs mechanisms to assess implementation, identify emerging challenges and refine policy where necessary. Establishing an advisory committee aligns with global best practice. It is also important to understand the context. Recent reforms—including exchange rate liberalisation, fuel subsidy removal, fiscal consolidation and tighter monetary policy—were designed primarily to correct long-standing macroeconomic distortions. They were never expected to deliver immediate relief but to restore economic stability. To a considerable extent, those objectives are beginning to yield results. Investor confidence has improved, capital inflows have increased, and Nigeria’s external reserves have strengthened significantly. Gross external reserves now stand at about $52 billion, while net reserves have risen to over $40 billion, compared with less than $4 billion in 2023. That represents a remarkable improvement in the country’s external position. The capital market has also responded positively. Nigeria’s stock market has emerged as one of the world’s strongest performers in dollar terms, reflecting renewed investor confidence. The economy has equally maintained positive GDP growth despite domestic and global challenges. These achievements deserve recognition, but macroeconomic stability alone is not enough. Stable exchange rates, stronger reserves and improved fiscal indicators create the foundation for growth, but they do not automatically improve living standards. The next phase of reform must ensure that these gains translate into higher incomes, lower poverty, more jobs and broader prosperity. That is where the advisory committee can make a valuable contribution. By bringing together experts from academia, the private sector and public institutions, the government is acknowledging that complex economic challenges require diverse perspectives and evidence-based policymaking. The committee can identify implementation gaps, assess the social impact of reforms and recommend practical measures that make growth more inclusive. Ultimately, reforms should be judged not only by economic indicators but by whether they improve citizens’ quality of life through better jobs, affordable food, quality healthcare and improved educational opportunities. If the committee is allowed to work independently and professionally, it can help ensure that Nigeria’s macroeconomic gains translate into sustainable and inclusive development.

Given the rising cost of living, should the ₦70,000 national minimum wage be reviewed?

Yes. In my view, the current national minimum wage has already been overtaken by economic realities and deserves an urgent review. Although the increase to ₦70,000 represented a significant improvement at the time, subsequent developments—including exchange rate depreciation, fuel subsidy removal and sustained inflation—have substantially eroded workers’ purchasing power. Today, what ₦70,000 could buy when the wage was introduced is markedly different from what it can purchase now. While nominal incomes have risen, real incomes have declined because wages have not kept pace with the rising cost of living. Food prices remain high, transportation costs have increased, electricity tariffs have risen for many consumers, rents continue to climb, while healthcare and education have become more expensive. These pressures have left many households struggling to cope. This explains why many Nigerians are yet to feel the benefits of the ongoing economic reforms. Although the reforms are beginning to produce encouraging macroeconomic outcomes, household incomes have not adjusted at the same pace as prices. There is also a strong macroeconomic case for reviewing wages. Household consumption accounts for a significant share of economic activity. When workers earn barely enough to meet basic needs, consumer spending weakens, businesses record lower sales, and economic growth slows. Some argue that increasing wages will fuel inflation. While that concern is understandable, I do not believe a moderate upward adjustment would significantly worsen inflation under current Nigerian conditions.

The major drivers of inflation today are structural—food supply constraints, insecurity, high transportation costs, energy prices and exchange rate movements—not excessive consumer demand. Besides, only a relatively small proportion of Nigeria’s workforce earns the statutory minimum wage. A carefully calibrated increase is therefore unlikely to trigger widespread inflationary pressure. Instead, it would restore some purchasing power, reduce poverty and improve living standards for low-income workers. Personally, I believe the minimum wage should be reviewed to at least ₦120,000, taking into account prevailing economic realities. Such a review should, however, follow the established tripartite process involving government, organised labour and employers. The government also has the fiscal capacity to sustain a higher wage bill if public resources are managed efficiently. Since the removal of fuel subsidies and exchange rate reforms, revenues accruing to the Federation Account have increased substantially. Recent FAAC distributions of over ₦2.5 trillion demonstrate that governments now have greater fiscal space to prioritise workers’ welfare. However, higher wages must be accompanied by fiscal discipline, improved revenue mobilisation and prudent public spending. Ultimately, the purpose of economic policy is to improve citizens’ welfare. Reviewing the minimum wage would be an important step towards ensuring Nigerians benefit more directly from ongoing reforms.

Despite recent gains in the capital market, many Nigerians still do not invest. What is responsible for this, and how can participation be improved?

The Nigerian capital market has recorded remarkable progress in recent years, but retail participation remains far below its potential. The first challenge is income. Investment depends largely on disposable income. For many Nigerians, virtually all earnings are spent on food, transportation, housing, healthcare and education, leaving little room for savings or investment. Improving household incomes is therefore fundamental to expanding participation in the capital market. The second challenge is financial literacy. Although awareness has improved, many Nigerians still believe investing in shares is only for the wealthy or that the market is excessively risky. Others remain discouraged by losses suffered during the 2008 financial crisis. Sustained investor education is therefore essential. People need to understand the available investment options, the relationship between risk and return and the importance of long-term investing and portfolio diversification. Encouragingly, the Securities and Exchange Commission (SEC), the Nigerian Exchange Group and other market operators have intensified investor education programmes across the country. One particularly commendable initiative is the proposal to introduce capital market education into secondary school and university curricula. Financial literacy should begin early, not after graduation. Countries with high levels of retail investment generally embed financial education from a young age. Technology is another game changer. Nigeria’s youthful population expects financial services to be fast, simple and technology-driven. The capital market has responded positively. Digital onboarding has improved, online trading platforms have become more efficient, and transaction processing is much faster than before. Nigeria’s migration to a T+1 settlement cycle—the first in Africa—is another significant milestone. Faster settlement improves efficiency, reduces risk and boosts investor confidence. Equally important is the enactment of the Investments and Securities Act (ISA) 2025, which strengthens investor protection and modernises the legal framework governing the market. In the future, financial literacy must continue to improve across all geopolitical zones. Market participation remains heavily concentrated in Lagos and the South-West, and deliberate efforts should be made to broaden access nationwide. Technology should continue to simplify investment processes through user-friendly digital platforms, while regulators must maintain strong investor protections to build public confidence. Ultimately, stronger economic growth remains the biggest catalyst. As employment rises, incomes improve and poverty declines, more Nigerians will naturally save and invest. The capital market is not merely a platform for trading securities; it is a vital engine of national development. It mobilises long-term savings, finances businesses, supports infrastructure and creates wealth. Deepening participation will therefore benefit both individual investors and the broader Nigerian economy.

Some experts advocate targeted subsidies for critical sectors such as energy and agriculture. Do you agree?

The subsidy debate is often oversimplified. The real issue is not whether government should subsidise, but what it should subsidise and the outcomes it hopes to achieve. I supported the removal of the fuel subsidy and still believe it was the right decision. My position has always been that subsidies should support production rather than consumption. The former fuel subsidy regime kept petrol prices artificially low but became fiscally unsustainable. It encouraged smuggling, fuelled corruption, discouraged investment in local refining and placed an enormous burden on public finances. More importantly, its benefits were unevenly distributed. Wealthier households, which consumed more fuel, benefited far more than poorer Nigerians. Removing the subsidy has created more fiscal space for the government to invest in critical sectors. That, however, does not mean government should abandon subsidies altogether. I strongly support targeted subsidies that improve productivity and stimulate economic growth. Agriculture should be the priority because food inflation remains the biggest driver of the cost-of-living crisis. Government should subsidise fertilisers, improved seedlings, irrigation systems, mechanised farming equipment and other essential inputs that lower production costs and increase food output. Investment should also extend to rural roads, storage facilities, agricultural extension services and logistics. Nigeria loses a significant proportion of its agricultural produce after harvest because of poor storage and transportation infrastructure. Beyond agriculture, strategic subsidies should support education, healthcare and renewable energy. Education and healthcare are investments in human capital. A well-educated and healthy population is more productive, innovative and competitive. Renewable energy also deserves greater attention. Supporting solar power, mini-grids and other clean-energy solutions will reduce production costs, improve electricity access and lessen dependence on fossil fuels. The government should avoid indiscriminate subsidies that distort markets and encourage inefficiency. Ultimately, subsidy policy should focus on sectors that deliver the greatest economic and social returns. Investing in production rather than consumption will strengthen food security, create jobs, moderate inflation and promote long-term economic growth.

There are growing concerns that doctoral degrees have become too easy to obtain, with some people parading questionable PhD qualifications. How can this trend be addressed?

The integrity of higher education deserves serious attention because universities exist to generate knowledge, promote research and develop highly skilled professionals. However, it is important to separate perception from reality. While there have been isolated cases involving questionable qualifications, it would be unfair to conclude that Nigerian universities have generally compromised the standards for awarding doctoral degrees. From nearly three decades in academia and interactions with universities within and outside Nigeria, I can confidently say that earning a PhD from a reputable Nigerian university remains a rigorous and demanding process. In many respects, it is even more demanding than what obtains in some institutions abroad. A full-time PhD programme typically lasts at least three academic sessions, while part-time programmes run for a minimum of five. Candidates undergo advanced coursework before progressing to the research phase. The research stage requires candidates to prepare original proposals, present seminar papers, defend their work before academic panels and produce research that makes an original contribution to knowledge. At institutions such as Nasarawa State University, Keffi, seminar papers are expected to attain publishable quality before candidates can proceed. The doctoral thesis itself passes through several layers of scrutiny involving supervisors, internal assessors, independent external examiners and, finally, an oral defence before senior academics. This rigorous quality assurance process ensures that an earned PhD reflects intellectual competence rather than financial capacity.

Where, then, do the concerns originate?