Sources: Pension system asset data sourced from national pension funds and financial authorities; Axco country reports. Note: Total pension assets are underestimated for several countries because national authorities do not compile data covering all funds (in some cases due to inadequate regulation of the sector). Pension funds assets data are for 2006 with the exception of Cape Verde, Niger, Nigeria, Tanzania (for NSSF), Uganda, Zambia, and comparator country Chile (2007); Rwanda and Madagascar (2005); Benin, Namibia, and South Africa (2004); Ethiopia (FY 2002-03). For Niger, $92 million in loans are loans to government. For Tanzania, direct investment in infrastructure projects took the form of the financing of a feasibility study for construction of the Kigamboni Bridge. — = Not available; Unsp. = Unspecified In some cases where time-series data are available, however, national pension systems have most recently been investing a smaller portion of their assets in real estate. In Tanzania, for example, 20 percent of the total investment portfolio of Tanzania’s Parastatal Pensions Fund (PPF) pension scheme, one of the larger state-run pension schemes, was invested in real estate as of year-end 2006, down from 40 percent a few years ago.<sup>30</sup> Tanzania’s largest state-owned insurance company, National Insurance Corporation (NIC), remained heavily invested in commercial and other real estate, according to the latest available data, however, at 42 percent of total assets. NIC was in the process of being privatized and restructured as of mid-2007, prompted by its inability to pay its claims on time, largely because of its lack of liquidity associated with its investment in real estate and other large illiquid assets.<sup>31</sup> In the absence of investment alternatives, a sizeable portion of pension system assets have been directed to government securities, which are mostly short-term in many countries (table 4.3). In five of the 12 focus countries for which specific data on portfolio investment allocation of pension system assets are available as of end-July 2007 (Ethiopia, Kenya, Uganda, Cape Verde, and Madagascar), investment in government securities accounted for more than 40 percent of total assets. Although specific data were not compiled/available for pension systems in Chad, Mozambique, and Rwanda, then-current investment practices were known to direct funds largely to short-term government securities and bank time deposits.<sup>32</sup> Madagascar’s public pension schemes, deemed “fiscally unsustainable” by a 2006 World Bank–IMF Financial Sector Assessment Program, held just over 90 percent of total assets in short-term government securities as of 2005 (IMF 2006e). In Niger, 92 percent of the assets of the Caisse Nationale de Securité Sociale (CNSS) were in the form of claims on Niger’s treasury, and discussions were underway as of September 2007 to decide whether the treasury would repay this amount gradually or issue a bond to the CNSS repayable over a 10-year period.<sup>33</sup> Deposits at commercial banks are another popular investment vehicle for pension system assets, according to the most recently available asset allocation data. Bank deposits as a proportion of total asset holdings exceeded 25 percent in three countries: Ethiopia, Ghana, and Uganda. For Ghana, 36 percent of state pension system assets were held as cash and deposits. In a fourth country, Cameroon, data estimates as of 2004 indicated pension investment holdings of nearly 61 percent in cash or bank deposits.<sup>34</sup> Considering the short-term tenors of bank time deposits, specifically reported at a maximum of one year

> 30 In Tanzania, the two main state-run pension funds, National Social Security Fund (NSSF) and Parastatal Pensions Fund (PPF), had been criticized in the past for their overinvestment in commercial and other real estate.

> 31 Government plans to privatize NIC have stalled and further delays have occurred most recently due to significant changes in the value of the company’s assets since the onset of the tendering process.

> 32 Axco reports for Chad and Mozambique; IMF (2005) for Rwanda.

> 33 IMF staff (mission for Fourth Review under the Poverty Reduction and Growth Facility, PRGF).

> 34 Axco report for Cameroon.

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