Impact of Contributory Pension Investment on Economic Growth in Nigeria (2007-2019)

This study examined impact of contributory pension fund on economic growth in Nigeria from 2007- 2019. Its specific objectives were to examine the impact of pension industry investment in foreign money market security on gross domestic product in Nigeria; to assess the impact of pension industry investment in local money market security on gross domestic product in Nigeria; and to examine the impact of pension industry investment in quoted ordinary shares on gross domestic product in Nigeria. The study adopted ex-post facto design. Three hypotheses formulated were analyzed using autoregressive distributed lag model. The results reveal that pension industry investment in foreign money market security had significant impact on gross domestic product in Nigeria. Next was that pension industry investment in local money market security had no significant impact on gross domestic product in Nigeria. Also, pension industry investment in quoted ordinary shares had no significant impact on gross domestic product in Nigeria. The implication of the findings is that pension industry investment in foreign money market security facilitated economic growth in Nigeria. On the other hand, pension industry investment in local money market security did not enhance the capacity of domestic firms invested in to engender economic growth. Finally, economic growth was not enhanced through the institutional investment of pension industry in companies quoted on the Nigerian stock exchange. Based on the findings of the study it was concluded that investments of pension industry through short term financial instruments had mixed significance on economic growth in Nigeria. In line with the findings of the study it was recommended that the pension industry investment in foreign financial instrument should be in instruments offered by firms and governments with proven capacity to fulfill their obligations as and when due. Also, investments in local money market instruments should be in such that are proven to be highly liquid, and can be converted to cash at a relatively low cost with low risk premia. Lastly, the investment of the pension industry in quoted companies should tend towards reducing dependence on foreign manufacturers by their investing in cottage factories. This will stir up manufacturing development in the economy.