Federal Government Considers Mandatory Savings Scheme For Nigerians

Just recently, the federal government of Nigeria is considering making savings compulsory for Nigerians and introducing new inflation-resistant investment products that will incentivize savings. The scheme will be strictly for Nigerians between the age of 18 – 50 years, as the government seeks ways of mobilizing funds to boost the national economy. However, the working group, displeased with this initiative, presented a report to the Minister of finance, budget, and national planning advising the government to desist from making it mandatory for corporate bodies to save.

Dr. Ore Sofekun, CEO foothold advisors, who presented the report on behalf of the committee chairman, Mr. Fola Adeola, said implementing mandatory national savings was feasible but noted that it has to be driven by incentives, primarily tax. According to the Federal Government, they stated that the absence of inflation-resistant savings and investments products has been identified as one of the driving forces behind the continuous emergence of Ponzi schemes and other unsafe products with dubious claims to high returns.

The proposed national savings scheme is conceived as an open-ended scheme, applicable to various categories of Nigerians with various investment products that provide depth and variety for risk levels. As an open-ended scheme, the savings scheme is proposed to allow anyone to continuously invest through the scheme. According to the government, the proposed savings scheme has been structured in a way that loopholes and disincentives will be properly addressed, also providing reasonable rationales for the average Nigerian to embrace the scheme.

The actual goal of the scheme is to incentivize the population to save, have access to various savings-investment products, and provide a pool of funds to finance capital investments. According to the minister of Finance, budget, and national planning, Mrs. Zainab Ahmed, she stated that savings is very important as it aids in capital formation and sustainable investment, which are critical success factors for harnessing the true growth potential of any economy.

Seeing reactions from Nigerians on Social media, I can deduce that this initiative is heavily frowned at, and doesn’t sit well with them. Considering the high cost of things in the country, the minimum wage alone does not even cover the cost of feeding for a lot of Nigerians. Pelting out such initiative seems out of place. The scheme is seen as ridiculous because a third of Nigerians are unemployed and therefore the government saying that the scheme will be a tool to boost the country’s economy seems like a misplaced priority.

Looking at these mandatory schemes mulled out by the government, I have got two questions that have been on my mind.

1.  If the government can mismanage and borrow from its pension funds, how can we count on them to regulate private funds effectively?
2. If the government regulates the scheme, won’t they eventually end up either controlling or bailing out these funds?

Considering the high level of corruption and lack of transparency the government has shown over the years, it will be very difficult for the citizens to entrust their savings to a government that has shown gross incompetence for the past years. Of course, some working-class Nigerians save, but I don’t think they would ever want to consider the government mandatory savings scheme as an option. Also looking at the meager pay a large majority of Nigerians earn, savings will be very impossible, as the funds are not even enough to cater for certain basic needs.

Amidst the high cost of living, without the increase of minimum wage, the savings scheme shouldn’t even be considered, but jettisoned. This is a case of the government putting the cart before the horse. The needs of the people have not properly been met, yet they expect the same people to save. It is not possible! Considering the fact that China has refused to give Nigeria loan, one can only imagine if this initiative is a strategy mapped out to extort helpless Nigerians in the guise of a mandatory savings scheme.

Entrusting one’s hard-earned money all in the name of savings to a country that constantly borrows is very unsafe.