Omolola Oloworaran: Financial Round Peg In PenCom’s Round Hole

By Ikechukwu Amaechi 

As Nigeria battles, unarguably, its worst financial crisis since independence, it is only apposite that the most pragmatic way to pull the country's chestnuts out of the raging economic inferno, to borrow a cliché, is to put round pegs in round holes. The appointment of Ms. Omolola Oloworaran as the new Director-General of the National Pension Commission (PenCom) ticks that box. 

To understand why her appointment matters, there is need to appreciate what is at stake and the centrality of the pension industry in resolving Nigeria’s extant economic quagmire even if not wholly, at least partially. 

Prior to the introduction of the Contributory Pension Scheme (CPS) by President Olusegun Obasanjo in 2004, daunting problems, including inadequate and untimely budgetary provision, beset the discarded Defined Pension Scheme (DBS). With rising life expectancy and poor implementation, particularly in the private sector, it was not surprising that government’s budgetary pension deficit climbed to over N2 trillion by June 2004. That was unsustainable and at that point, the pension industry had collapsed, literally. 

So, the 2004 Pension Reform Act, which established a uniform contributory, private sector managed and fully funded pension system for both the public and private sectors, was a bold fiscal policy to cure the malaises in the industry. Being mandatory, the Contributory Pension Scheme (CPS) compelled employees and employers in the public and private sectors to collectively save a minimum of 18 per cent of an employee’s monthly emolument – 10 per cent by the employer and 8 per cent by the employee – into a Retirement Savings Account (RSA), from where employees will be paid retirement benefits. 

The Act established the National Pension Commission (PenCom) as the body to regulate, supervise and ensure the effective administration of pension matters in Nigeria. The result was phenomenal. National savings increased dramatically leading to a jump from a N2 trillion budgetary pension deficit two decades ago to a N19. 787 trillion Assets under Management (AuM) as at April 30, 2024. Not only that, data from PenCom indicated a record total monthly inflows of N8.18 trillion. With the proportion of total pension assets to Nigeria's Gross Domestic Product (GDP) standing at 8.39 per cent as at March 31, 2024, the success of the CPS is staggering.   

Today, PenCom is the most thriving government’s fiscal agency and it is imperative, particularly at a time like this, that the chief regulator must be someone with the axiomatic Midas touch. 

This is where Ms. Oloworaran steps in. Reputed for her visionary leadership, analytical mindset and strong work ethic, she is a financial expert. An accounting graduate from the University of Ilorin, she not only holds a Master degree in Business Administration (MBA) from the Manchester Business School, she is also a member of the Chartered Institute of Securities and Investment (CISI) and a Fellow of the Association of Chartered Certified Accountants (ACCA). She recently completed the Transforming Business Using AI (TBAI) program at the Institut Européen d'Administration des Affaires (INSEAD), a non-profit graduate business school that maintains campuses in France, Singapore, and the United Arab Emirates. 

With over 20 years of cognate experience in the financial services industry, she began her career at Citibank and subsequently worked at Renaissance Capital (RenCap - an investment bank), FDHL Limited (a consulting firm), and Stanbic IBTC Bank before joining First Bank of Nigeria Ltd, where she is currently the Group Head of First Shared Services (FSS). 

In all these institutions, she carved a niche for herself as a strong advocate for business growth through innovation, process reengineering, and client service reimagining by instituting strategic business solution-based operations. Whether it is establishing startup operational processes or managing internal, industry, or regulatory-driven initiatives in the banking industry, she has the knack for excellence. 

For instance, she is reputed for strengthening collaboration with stakeholders, playing a pivotal role in several industry and Central Bank initiatives at the various banks she worked, including the introduction of federal government’s bonds and treasury bills trading in 2006, implementing internal policy documents for margin trading in 2008, developing market guidelines and accounting entries for repo trading in 2013, deploying the improved Real-Time Gross Settlement (RTGS) SWIFT-based settlement system, the Scripless Securities Settlement System (S4) in 2013, and the introduction of the e-Naira, among other initiatives. 

In doing all this, she demonstrated vision and leadership, overseeing the effective, efficient, and optimal utilisation of resources – human and capital – in responding to competitive pressures and in the process, earning for herself nomination and subsequently winning the First Bank Group CEO’s Award – 2022 and the Beyond Excellence Award in Stanbic IBTC. 

With good industry experience encompassing regulatory compliance and operational risk, inflow management including pension receipts, strategic planning and policy development, client services, transaction banking operationalisation, treasury and investment banking operations, document and records management, she spearheaded initiatives that enhanced various innovation and automation projects, including Straight Through Processing (STP) initiatives, Robotic Process Automation (RPA), Client Services Transformation, records digitisation, and system/process redesign. 

These skill sets will, no doubt, serve her well at PenCom. As someone who is very passionate about people and has been involved in mentorship programmes and direct interventions, nurturing exceptional talents and enabling an empowered workforce in the banking industry, Omotola, will indubitably bring her strategic thinking skill, visionary leadership, strong work ethic, integrity and ethical standards to bear on her new job.               

Notwithstanding the successes already recorded by her predecessors – Muhammed Ahmad (pioneer DG), Chinelo Anohu-Amazu and Aisha Dahir-Umar-Oloworaran, who has the advantage of two decades cognate experience in Nigeria’s financial sector, has her job cut out as so much is expected of her. 

The pension industry has become the bulwark of the country’s flailing economy and has the capacity of providing answers to most of Nigeria’s economic woes because pension funds contribution has significant positive effect on the Gross Domestic Product (GDP). Besides, the scheme mobilises long term savings for investment thus providing capital for infrastructure projects, business expansion, and job creation. By stimulating entrepreneurship and creating jobs, the Contributory Pension Scheme is the only recipe for economic stability and development. 

Not only that, experts aver that pension funds serve as a buffer against the corrosive impact of inflation, with diversified investment portfolios outpacing inflation over the long term. At a time when headline inflation is 34.2 per cent, a 28-year high, the resilience of the CPS ensures that retirees maintain their quality of life despite economic fluctuations. 

The tasks before Oloworaran, therefore, include deepening the market by pulling more people into the pension net. In October 2023, the Chartered Institute of Personnel Management disclosed that out of 73 million Nigerian workers, only 10 million have enrolled in the CPS leaving out about 63 million workers. 

There is also need to review the contribution rates in accordance with the Act to ensure that retirees maintain their desired standard of living. Though the Pension Act stipulates a minimum contribution of 10 per cent by the employer and 8 per cent by the employee, presently the employers only contribute 7.5 per cent, same with employees bringing the total to 15 per cent. 

The issue of non-payment of accrued rights by government is one problem that has deleterious impact on the scheme. Right now, the government is owing almost a two-year backlog of accrued rights, which means that no worker who retired within same period has been paid retirement benefits. While the issue remains a slippery slope, the incoming DG must deploy all her skills in persuading an obviously illiquid government to timeously release the accrued rights to mitigate the sufferings of retirees. 

To blunt the edge of the incessant agitation by the police for exit, Oloworaran must seek, urgently, presidential approval of special gratuity for police retirees at the rate of 300 per cent of their last annual gross pay so that the balances in their Retirement Savings Accounts (RSAs) will be channeled towards their monthly pension payments. Fortunately, all stakeholders in the industry are agreed on this and the request letter has been on the presidential desk since the time of Muhammadu Buhari. 

Managing the country’s huge pension assets is no mean feat. The good news is that Ms. Omolola Oloworaran has what it takes to excel. All she needs do is apply herself to the job. Fortunately, she has a solid reputation for doing just that. Nigeria’s economy and her longsuffering retirees will be better for it.

*Amaechi is the publisher of TheNiche (ikechukwuamaechi@yahoo.com)