New Telegraph

NSIA’s 2021 performance boosts prospects for economic transformation

The strong performance recorded by the Nigeria Sovereign Investment Authority (NSIA) last year and in recent years, is boosting hopes in many quarters that the country’s economy can still be transformed, despite current challenges occasioned by Russia’s invasion of Ukraine, writes TONY CHUKWUNYEM


With Nigeria currently clearly struggling to benefit from higher oil prices despite being the largest exporter of the commodity on the continent, business activities of the Nigeria Sovereign Investment Authority (NSIA) will, expectedly, be attracting a lot of attention, given the key mandates of the Authority.

The NSIA is an investment institution of the federation, which was established in 2012 to manage funds in excess of budgeted hydrocarbon revenues.


The Authority’s mission is to play a leading role in driving sustained economic development for the benefit of all Nigerians through building a savings base for the Nigerian people, enhancing the development of Nigeria’s infrastructure and providing stabilisation support in times of economic stress.


The NSIA operates three mandate funds – The Stabilisation Fund, the Future Generations Fund, and the Nigeria Infrastructure Fund. A statement on the Authority’s website reads in part: “The role of the Stabilisation Fund is to provide budget support in times of economic stress; the Future Generations Fund is an intergenerational savings fund for future generations of Nigerians while the Nigeria Infrastructure Fund is to invest in domestic infrastructure.”


2021 result


Last week, the Authority released its results for the 2021 financial period, which showed that despite the tough economy, it posted its nine consecutive year profit of N153.56 billion in the period under review.


New Telegraph’s analysis of the results indicates that despite a volatile market and unpredictable economic environment, the NSIA’s investment strategy continues to yield positive results. For instance, the Authority, which manages Nigeria’s Sovereign Wealth Fund, recorded core income of N100.8 billionn in 2021 compared to N109.6 billion in 2020. This excludes foreign exchange gains of N45.8 billion in 2021 and N51.2 billion in 2020.


The NSIA also achieved a 19.02 per cent growth in Net Assets to N919.73 billion in 2021 from the N772.75 billion recorded in the preceding period of 2020. Total assets rose by 25 per cent to close at N1.228 trillion up from a position of N981.78billion in 2020.


Further analysis of the pervalue    footformance shows that the funds performed excellently on an individual basis with the Future Generation Fund (FGF) growing by 11.98 per cent to N976.868 billion in 2021, while the Stabilisation Fund (SF) and Nigeria Infrastructure Fund (NIF) grew by 1.60 per cent and 4.64 per cent to hit N278.827 billion and N962.778 billion respectively.


MD’s comments


Commenting on the financial performance, the Managing Director of NSIA, Uche Orji, said despite the challenging year, the Fund was able to finish strong with a solid financial outcome for its contributors.


Specifically, he stated that Presidential Fertiliser Initiative ran successfully in 2021 and further eliminated the need for government subsidy.


He noted further that as backward integration strategy, the Authority made significant progress on the joint development of the $1.4 billion Ammonia and Di-Ammonium Phosphate production plants set for construction in Ikot-Abasi in partnership with OCP under the Authority’s gas industrialisation programme. He disclosed that at completion, the project will bolster food security and enable full domestic production of fertilizer which is a major input in Nigeria’s food production value chain.


Speaking on the 2022 investment year, Orji stated that the rising global inflation would require delicate management by central banks, noting that the ongoing Ukraine-Russia conflict could ensure that surge in global commodity prices is sustained.


He said: “2021 marked the end of another solid fiscal year at NSIA. In the period, the Authority delivered a strong performance. While the results are in line with the Authority’s expectations, strong performance of our developed market investments were offset by challenges in our emerging market asset allocation, particularly in China equities, which saw significant underperformance by technology company stocks.


“Looking ahead to 2022 and beyond, we believe inflationary pressures will persist for much of this year, affecting the performance of all asset classes. We remain committed to strengthening the Authority’s performance by strengthening our risk management teams.


“In addition to expanding our direct investment footprint in innovation and technology in Nigeria, we have also designated ESG as an investment focus area. We will remain unrelenting in our quest to deliver the Authority’s clear three-fold mandate. I am confident that the actions we are taking will create value for all our stakeholders in the medium to long term.”


According to him, NSIA is transforming itself from being a Fund Manager to an Asset Manager. To achieve this, he said the Authority is being positioned to take over, manage and create  pervalue in critical assets for the both the federal and state governments.


For instance, he said that NSIA has opened discussions with the Federal Government to manage some of its assets in the power sector, real estate, and industrial sector among others. Some of these assets, according to him, have been underutilised for many years without adding any economic value to Nigeria. He announced that asset transfers will be an important component of the NSIA growth strategy in the medium to long term as the Authority sees significant opportunities in the Federal Government’s portfolio of power and real estate assets.


He said: “The NSIA is transitioning itself now from a fund management company to an asset management company. We are hoping to engage with the government to look at certain assets that we can manage on their behalf, and we believe that we have shown a lot of competence in asset management because that is some of the things we have done with some of the presidential programmes that we have run.”


The NSIA boss also stated that abandoned power plants would be looked into so that more profit can be maximized for government. He said NSIA is being positioned as an Asset Management Company in line with one of Singaporean Sovereign Wealth Fund Temasek Holdings, which manages about $405 billion worth of assets.


As he put it: “So, there are quite a number of things that looks like opportunity for the NSIA to do to expand its foot    prints and grow its assets as opposed to its cash. Power for example, watch the space and there is one or two power plants that is almost near completion but abandoned.


So, we hope to take over those power plants, finish it, run it, create value and that value comes back to the NSIA. “Real estate is another area where we are going to be very active. The Federal Government owns a lot of real estates in many parts of the world and many of them under-utilised, under managed and even locally not well managed.


So, we are approaching them to run it. These are assets that should be managed. And then industrial assets that are just allowed to rot away, many of them are still in decent position. “So, there are things that can be done with regards to asset management and I think this, for us, remain something to pursue. “Singapore has two Sovereign Wealth Funds.


One is GIC and the other one is Temasec, which manages their assets and that is the model many of us want to copy. So, instead of asking for cash, we ask you to give us your assets, attract capital and fix those assets.” He also said that the NSIA, as an asset manager, would be open to managing the assets of state governments since they have almost the same ownership of the Authority as the Federal Government.


Second Niger Bridge

Commenting on road projects being funded by the Authority, he said: “The three road projects being implemented by NSIA under the Presidential Infrastructure Development Fund (PIDF) namely the Lagos-Ibadan Expressway, Second Niger Bridge and Abuja-Kaduna-Kano Highway, have reached 66 per cent, 53 per cent and 66 per cent completion, respectively.


The target completion date for the first two projects is 2022 with 2025 set as the target date for the original scope on Abuja-Kaduna-Kano Highway. “The second Niger bride is 95 percent completed. Fourth quarter of this year is our target, December to be precise we will want to make it useable. The phase two of this project, which is road, has to be done, that is the bypass.”


New Telegraph reports that the Authority’s activities have also significantly impacted the healthcare sector positively.


For instance, as part of the its COVID-19 relief programme, the NSIA Board, in January last year, handed over 126 units of patient monitors, and 63 units of oxygen concentrators to 21 healthcare institutions across the country’s six geopolitical zones. Conclusion According to analysts, the strong performance posted by NSIA as well as the Authority’s effective investment strategy, stir optimism for the country’s economic transformation.

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