As a major indicator of wealth distribution in Nigeria across income groups, a mere two per cent of Nigerians own 90 per cent of total deposits in Nigerian banks. This represents the wide gap between the rich and the poor in Nigeria, which continues to pose major socio-economic development challenges to the nation.
Director of Research and International Relations at the Nigeria Deposit Insurance Corporation, NDIC, Alhaji Mohammed Umar, disclosed this at the Businessday Capital Market Development Annual Conference in Abuja, yesterday.
His words: “Our current deposit insurance coverage is N500, 000 for the Deposit Money Banks. And some people have said that it is low. I can tell you that it is very adequate for the majority of accounts.
“It will interest you to know that it covers over 90 per cent of accounts in the country. Indeed, Nigerians who have more than N500, 000 in their accounts are just two per cent.
“What we found is that this two per cent Nigerians have 90 per cent of banks’ total deposits. Look at that – two per cent Nigerians own 90 per cent of total banks deposits, while the remaining 98 per cent have just 10 per cent of total deposits. What that tells you is that the gap between the rich and the poor has continued in this country.”
Alhaji Umar added that there were about 70 million bank account holders in the country. The total bank deposits stood at N17.2 trillion, as at December 2015, according to a post on the Central Bank of Nigeria, CBN, website.
Earlier in his address, the Director-General of the Securities and Exchange Commission, SEC, Mr. Mounir Gwarzo, urged Pension Fund Administrators, PFAs, to invest more in the nation’s capital market, with a view to deepening it and ensuring better returns on contributor’s funds.
He said: “Deepening Nigeria’s Capital Market through Maximum Utilization of Pension Funds is a conversation our country must continue to have in order to ensure that the impressive pool of savings we have been able to mobilize over the last decade is put to productive use for inclusive economic growth.
“We are confident that with greater participation by PFAs and return of retail investors, our capital market will emerge as one of the world’s biggest and most liquid market capable of supporting the socio-economic development of our country.
“We are delighted that the National Pension Commission, PenCom, has been very proactive in making the necessary adjustments to the guidelines that allow PFAs sufficient flexibility to determine their optimal strategic asset allocation.
“The draft new regulation on investment of pension fund assets allow the investment of up to 30% in equities (for Fund type 1) and up to 45% in corporate debt securities (for Fund types 3 and 4). As a whole, we believe the adoption of a multi-fund structure is a very positive development that should produce economies of scale, risk diversification and further deepen the Nigerian capital market through pension portfolios and management strategies of PFAs.
“There is, therefore, an urgent need for the draft guidelines on multi-fund structure to be approved.
“The question is: Based on the current asset allocation by Nigerian PFAs, are they paying sufficient attention to generating the necessary returns to provide sustainable benefits to contributors? Can we say that Nigerian PFAs have achieved an optimal strategic asset allocation or explored all viable investment outlets?
“March 2016 data from PenCom shows that Nigerian PFAs invest only 8.16% of their assets in the domestic listed equities market and 1.24% of their assets in foreign equities."