ABUJA, April 30 (Reuters) - Nigeria has increased the capital requirement for pension managers in an attempt to steer the biggest sector of its fund management industry to target untapped opportunities in the much larger, informal sector of small business. Three pension managers are in talks to merge to meet the new capital requirement of 5 billion naira ($13.14 million) by next year, two pension executives with knowledge of the matter told Reuters. Pension funds currently operate with 1 billion naira capital. Fund managers include Stanbic IBTC Pension Managers, a unit of Stanbic IBTC Holdings, Sigma Pensions, which sold a majority stake to private equity firm Actis, and several others with either banking or insurance parent companies. The National Pension Commission was not available for comment. Nigeria’s pension funds were worth around 12.3 trillion naira as of March, up from 10.5 trillion naira in 2019. Fund growth slowed in 2020 due to the COVID-19 pandemic but a strong rally on the equity market helped counter historically low bond yields. Africa’s most populous country faces a shrinking labour market, double-digit inflation and low growth in the face of mounting insecurity. So far, contributions are mainly from the millions working for the government or big companies. But there are untapped opportunities in the small business sector, the executives said, adding that the sector needed to overcome challenges on how to track them. The growth in pensions has lifted fund flow into equities and bonds in Nigeria. Current regulations allow Nigerian pension managers to invest up to 30% of their portfolio in equities and limit investment in government bonds to a maximum of 80%. ($1 = 380.5500 naira) (Reporting by Chijioke Ohuocha in Abuja Editing by Matthew Lewis)