The closer one looks at the events surrounding the recent happenings at PenCom, it is hard to escape the feeling that the federal government may have needlessly shot itself in the foot.
For a man who has been relatively quiet since returning to the country in March, President Muhammadu Buhari on April 13 appointed twenty-three (23) new executives into a bevy of federal government agencies, including such non-flashy but critical bodies like the National Agency for the Prohibition of Traffic in Persons, the National Parks Service and the Federal Mortgage Bank of Nigeria. The undoubted headline grabbing shake up, however, was at the National Pension Commission, known by its fancy and convenient shorthand, PenCom, where six members of its Executive Board – its Director-General, Dr. Chinelo Anohu-Amazu, the Chairman and four executive commissioners were replaced. Originally announced as a suspension of the old board, that Thursday’s appointments essentially confirmed what many had thought of the exercise – it appears that the president had gotten rid of a competent and generally well regarded public servant for decidedly political reasons.
Before I press ahead, I must, in the interest of openness, mention that I have done work for the Pension Fund Operators Association of Nigeria (PENOP), which is the association of pension fund administrators. This is distinct from PenCom, which is the regulator of the industry, although the functions of both organisations tend to overlap from time to time.
Media speculation suggests that Ahonu-Amazu, who was was yet to serve out her full term, was sacked due to a number of issues that have dogged her tenure as Pencom boss – a perceived lack of focus in the pension industry, an alleged high-handedness in dealing with staffers and rather curiously, “an inability to understand the future of the pension industry” if a Daily Times source in the regulatory agency is to be believed. The one controversy that has persistently stood out as the most ranking of her tenure is the still unresolved issue around First Guarantee Pension Limited, one of the country’s Pension Fund Administrators (PFAs). According to the proprietors of FGPL, Ahonu-Amazu sought to transfer the asset under management by the PFA to a company allegedly owed by her mother, embezzling ₦3 billion and falsifying FGPL documents in the process.
The beginning of Mrs. Ahonu-Amazu’s time in charge of PenCom started with a bit of a bang. She was accused, among others, of not possessing the requisite qualification, especially the 20-year industry experience requirement demanded by the Pension Reform Act 2004. Her confirmation process in the Senate was a fraught, drawn out battle, one which kept her functioning in an acting capacity from December 2012 till her substantive confirmation in October 2014. When she got down to work though, she was a tour de force. It is worth reminding (or educating, if this is fresh news) that the now-ex DG was an inaugural member of the Pension Reform Committee of 2004 that set up the widely lauded pension architecture that the country currently enjoys, a system that introduced the Contributory Pension Scheme in these shores for the first time. Under her stewardship, the pension industry was one of the blazing bright spots in the economy – tripling in asset size from about ₦2.5 trillion in 2014 to ₦6.7 trillion today, acting as a sort of buffer in uncertain times, though she did draw some hard lines, such as refusing to permit retiree fund pools be tapped for deficit infrastructure financing, thus subjecting them to the precarious public procurement process, while enjoying the respect of industry operators, market watchers, fund managers and the global pensions community.
Naturally, industry operators are worried that her sudden removal will destroy the sector and jeopardise the hard worn confidence of pensioners in the system and stifle investors’ confidence in the industry. They regret that “at a time, our country is witnessing economic recession, the pension industry has given our financial system a boost by ensuring that pensioners collect their entitlements as at when due; it has also rekindled the hopes and aspirations of workers, investors and shareholders, in addition to growing the economy for the much-needed relief,” outcomes that have become uncertain with Ms. Anohu-Amazu’s unceremonious exit. Furthermore, news reports suggest that the presidency may not have substantially complied with the provisions of the law in showing her the exit door.
Multiple news reports quote unnamed PenCom staffers as saying the new appointment “runs contrary to the spirit and letters of the Pension Reform Act, 2014, and, therefore, it is null and void.” They argue that the former DG ought to have been formally informed in a letter of her dismissal and it appears that was not done. The former DG was axed during a critical time for the commission – it is seeking the appropriation of over ₦113 billion for 2017 federal government retirees, against the initial ₦50.2 billion submitted in the 2017 Appropriation Bill, plugging in a ₦63 billion hole and ensuring that the most critical challenge facing the implementation of the Contributory Pension Scheme, the non-payment of retirement benefits of Federal Government employees who retired in 2016 due to insufficient appropriation and the late release of appropriated funds for the payment of accrued pension rights, does not snowball into a full blown crisis of confidence.
Away from the legal niceties surrounding her removal from office – the president is empowered by s. 18 of the Act to remove any member of the board, including the DG, if he “is satisfied that it is not in the interest of the Commission or in the interest of the public for the person to continue in office and notifies the member in writing to that effect” – the surprise removal of a government official widely regarded as assured, competent and relatively apolitical with a solid track record of delivering stellar and stable results within the limits of her mandate is not likely to allay the fears of investors and private sector players. These are folks who have spent the last twenty-three months navigating a near constant stream of policy flip-flops, about-faces and in some cases, sheer economic irrationality. The government will be hard pressed to explain how it fired an official, who along with her board, were committed to openness, transparency and robust industry-wide disclosure mechanisms in light of its public and often dramatic obeisance to its ‘war against corruption’. The closer one looks at the events surrounding the recent happenings at PenCom, it is hard to escape the feeling that the federal government may have needlessly shot itself in the foot.