The Nigeria Sovereign Investment Authority (NSIA), manager of Nigeria’s Sovereign Wealth Fund has reaffirmed its commitment to supporting the government’s quest for improved infrastructure and investment in the economy. The agency, which posted N649.84 billion assets in 2019 has channelled funding to key infrastructural projects like the ongoing construction of the Second Niger Bridge, Lagos-Ibadan Expressway and Abuja-Zaria Kaduna-Kano road projects. Its investment in the Presidential Fertiliser Initiative, healthcare funding to the deployment of N181.9 billion into Presidential Infrastructure Development Fund (PIDF) has bridged Nigeria’s infrastructural gap and supported economic growth, writes COLLINS NWEZE.
Investment in infrastructure is one of the most crucial input any organisation can make to the economy. Such input not only revives the economy but creates rooms for a better life and improved livelihood for the populace.
Although Nigeria still has a huge infrastructure gap estimated at $10 billion yearly, there are several initiates by the government that are angling speedily to bridge the gap.
There are equally government agencies that have giving priority to seeing these projects’ realisation and their impact felt by the people, businesses and economy.
The Nigeria Sovereign Investment Authority (NSIA) has made key investments in infrastructure especially road construction, agriculture, solar power and healthcare, among others.
The agency, which posted N649.84 billion assets and declared N34.46 billion profit after tax in 2019 financial says its focus on key sectors of the economy is part of a broader strategic plan to stimulate economic growth and development.
The NSIA also said it recorded a total comprehensive income of N36.15 billion in 2019 as against the N44.34 billion it recorded in 2018.
Excluding foreign exchange gain of N18 billion in 2018 and N1.28 in 2019, the net income in 2019 was N34.87 billion compared to N26.28 billion in 2018.
Also, it closed key transactions and increased capital deployment on domestic infrastructure projects specifically in agriculture, healthcare, and infrastructure enabling financial institutions.
In the healthcare sector, the NSIA operationalised the Cancer Centre at the Lagos University Teaching Hospital in May 2019 and recorded significant progress on the civil and construction works at the Advanced Diagnostic Centres at both the Federal Medical Centre Umuahia and Aminu Kano Teaching Hospital.
The construction works, it said, were subsequently completed in 2020.
On the Presidential Fertiliser Initiative, the NSIA said it delivered 6.5 million bags of 50kg bags of NPK 20:10:10 while accredited participating blending plants increased from 18 to 31 in 2019.
For the Presidential Infrastructure Development Fund (PIDF), the Authority said it received N90 billion from government and deployed capital across three of the major road projects.
The three major road projects are the Second Niger Bridge, Lagos –Ibadan Expressway and Abuja-Zaria-Kaduna-Kano Road.
As of the end of 2019, it said a total of N181.9 billion had been deployed across all the three projects.
Speaking on the financial performance, the Managing Director, NSIA, Uche Orji, said the outlook for the Fund remains promising.
He explained: “The onset of the Covid-19 pandemic has caused an unprecedented human and health crisis with significant impact on global markets. As such, it may be difficult to predict the markets overall reaction to the development.
“It is predictable that the volatility introduces by the onset of the pandemic may linger. However, the Authority continues to monitor the market conditions with the view to leverage the upside risks that avail themselves in the market.
“We expect that our investment strategy will continue to deliver positive returns in the long term in 2020 as the markets normalise and new opportunities emerge.”
The NSIA boss said asset allocation strategy remains stable across the various funds adding that Future generations fund remains 25 per cent public equities, 25 per cent private equity, 25 per cent Absolute Returns and 25 per cent Other diversifiers.
He gave the areas of focus for the Nigeria Infrastructure Fund to include agriculture, healthcare, power, toll roads and gas industrialisation.
Orji said the NSIA closed key transactions and increased capital deployment on domestic infrastructure projects specifically in motorways, agriculture, healthcare, and power.
He added: “Operationalising several subsidiaries of the NSIA will be a key focus especially in the healthcare sector where we have several projects in the pipeline.
NSIA has invested in several financial companies that help develop the capital markets including Nigeria Mortgage Refinancing Company, InfraCredit, NG Clearing, Development Bank of Nigeria, and Family Homes Funds.
We will continue to work on strengthening these entities and making new investments in companies that strengthen financial market infrastructure”.
The NSIA boss said the agency would continue to deploy capital into vital sectors of the economy with an increased focus on sectors that will engineer real growth.
Lagos-based financial expert, Michael Obi, said 2019 was a mostly favourable year for the NSIA.
He explained that in the first instance, its diversified asset strategy was buoyed by positive returns from the international markets as almost all the investments made in equities, hedge funds and private equity outperformed.
Secondly, domestic developments also favoured the Authority and enabled our infrastructure investment strategy to deliver value to the Nigerian people as more capital was deployed in key projects leading to the attainment of significant milestones.
Highlights of NSIA’s activities and performance during the period shows that asset allocation strategy remains stable across the various funds: Future generations fund remains 25 per cent public equities, 25 per cent private equity, 25 per cent absolute returns and 25 per cent other diversifiers.
Areas of focus for the Nigeria Infrastructure Fund remain, Agriculture, Healthcare, Power, Toll Roads and Gas Industrialization while there are closed key transactions and increased capital deployment on domestic infrastructure projects specifically in motorways, agriculture, healthcare, and power.
Strategic Intervention Areas
NSIA has intervened in the Panda Farms- Pandagric, a fully integrated farm, is a joint venture investment between NSIA and UFF African Agri Investments, a Dutch-based agriculture investment firm.
The Kano Solar, where the agency has invested commenced the development of a 10MW solar power plant in Kumbotso Local Government Area, Kano State.
The Basic Chemical Industry also commenced development of the Basic Chemicals platform with OCP of Morocco to produce Ammonia and other fertilizer products.
At completion, the plant is expected to catalyze the re-introduction of a basic chemicals industry in Nigeria.
NISA’s assets under management stood $1.5 billion as of year-end 2019 with the National Economic Council voting for an additional capital contribution of $250 million in 2019 which was received on the 8th of April 2020.
Analysts said the NSIA’s performance for 2019 reflected the strength of the Authority’s strategy across all the funds as the Authority, on the aggregate outperformed its benchmarks on all three funds within the period.
Markets experienced a strong bullish run in 2019 due to the accommodative interest rate environment, sheathing of swords by US and China in the trade war and the signing of the Brexit agreement.
On this account, the markets experienced fewer bouts of volatility. The Authority’s fund performed favourably by generating aggregate returns of 6.43 per cent.
Total comprehensive income generated in the periods was N36.15 billion which is an 18 per cent reduction relative to the 2018 income of N44.37 billion.
However, real performance on core activities of the Authority was better than 2018 by 32 per cent when considered excluding the foreign exchange revaluation income earned in 2018.
Considering the volatile global and generally challenging local investment environment, this performance reflects the strength and capability of portfolio and risk management within the institution.
Partnerships for growth
In 2019, NSIA partnered with OCP of Morocco to develop a Basic Chemicals Platform Project (BCP) in Nigeria.
The BCP seeks to develop an integrated Ammonia and fertilizer production plant that will benefit both the Kingdom of Morocco and Nigeria by commercializing Nigeria’s vast natural gas resources and satisfying Morocco’s demand for cost-competitive Ammonia.
The Project will be developed to produce 1.5MTPA of Ammonia in two phases; about 60 per cent to 70 per cent of the Ammonia produced will be allocated for export to Morocco, and the balance will be routed to the production of Di-ammonium Phosphate and NPK fertilizers to feed domestic demand.
Also, in 2019, NSIA operationalised the NSIA-LUTH Cancer Centre (NLCC), a full-service out-patient cancer centre, aimed at supporting the eradication of the growing cancer disease burden across Nigeria.
The centre was commissioned by His Excellency President Muhammadu Buhari and became operational on May 29th, 2019.
Operationalisation of the centre has increased access to quality oncology care and treatment in Nigeria as over 2000 patients have received treatment.
Having increased the radiotherapy equipment-to-people ratio in the country, it is expected that Nigeria will begin to see a reversal in foreign exchange demand on account of medical tourism.
PIDF, Motorways, Agriculture Investments
Across the three PIDF projects under construction and government has disbursed the sum of N181.9 billion to the end of 2019.
The Second Niger Bridge is a greenfield construction for an 11.9km, 2×3 lane Greenfield highway connecting Asaba (Delta State) and Onitsha (Anambra State) which has reached significant levels in terms of construction and civil works.
Recently, negotiations were concluded on a Trilateral Agreement amongst the governments of Nigeria, Bailiwick of Jersey and the United States on the $311 million recovered assets that are to be invested across the three PIDF projects under construction.
With these, the PIDF will be able to fund its activities through Q3 2021. Operationally, NSIA continues to oversee the projects ensuring strict cost control measures are in place.
The NSIA’s agriculture joint venture was established to invest in the development of agriculture in Nigeria, with a focus on primary agriculture and directly related assets, including associated downstream infrastructure.
The Fund is also focused on rural development, food security, sustainable investments through the inclusion of smallholder farmers and directing investments towards import substitution cash crops.
Other Investments in Agriculture include the Fund for Agriculture Finance in Nigeria (FAFIN)and Babban Gona; with several other projects in the pipeline.
Outlook for 2020
The onset of the Covid-19 pandemic has caused an unprecedented human and health crisis with significant impact on global markets.
As such, it may be difficult to predict the markets overall reaction to the development. It is predictable that the volatility introduces by the onset of the pandemic may linger.
However, the Authority continues to monitor the market conditions with the view to leverage the upside risks that avail themselves in the market.
We expect that our investment strategy will continue to deliver positive returns in the long term in 2020 as the markets normalize and new opportunities emerge.
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