The Ministry of Finance Incorporated (MOFI ) is optimistic that it will surpass the N100 trillion target set for it by the Federal Government, through managing national assets, in the next 10 years. MOFI’s Managing Director, Dr. Armstrong Takang, shares this vision, targets and aspirations of the asset-management agency in this interview with Assistant Editor, Nduka Chiejina.
How do you feel about the weight of the assignment you have ahead of you?
I think, for us, we are very excited. It is a very important assignment and the fact that the President and the Minister of Finance have deemed us worthy to be a part of this very great team, for us, it is a unique humbling experience. It is a privilege to serve our nation and we believe that the calibre of the board members makes it easier for us to not only engage in this assignment but to also do it diligently, successfully and to ensure we meet the expectations of the President as y can give you all the details of what we owe, who we owe and all the conditions of repayment. For us at the MOFI, our mandate is around what government owns, especially investment assets and that’s our focus to establish precisely what we own and how much it is worth, how we can optimise it, how we can monetise it and ensure that we are using it to support the governments programme to revitalise and reposition our economy.
What are the immediate plans or agenda after the inauguration?
We have a MOFI three-point agenda. Agenda number one is to work on our corporate assets to make sure that those corporate assets are delivering sustainable risk adjustment returns. And how do we measure that. For every share we own in any entity, we have to make sure there is capital appreciation, that those shares are improving in value.
Secondly, we want to make sure that each of those entities is delivering dividends to give us liquidity; that’s our first agenda in terms of corporate assets.
The second is to establish what the Federal Government owns, especially in terms of our investment assets and that involves us, first of all, identifying, enumerating, valuing, cataloging, managing, optimising and monetising our assets and those are in different assets classes. So, one of those, clearly, are the corporate assets; these are shares we own in entities whether we own them 100 per cent or partially.These include real estate assets; these are assets that are either in Nigeria or offshore. As you know, we have an incredible and large portfolio of real estate assets offshore. We will be enumerating those, valuing them and making a decision as to how to rationalise and optimise those to ensure that we are getting the most value from those.
The third category is around oil and gas assets. As you know, this is a country that is heavily endowed with oil and gas assets and for the last six to seven decades, we’ve made a lot of our foreign earnings from our oil and gas assets but there’s a huge headroom in terms of how we use the oil and gas assets. So that, clearly, is a third category of our assets that we would be tracking and ensuring that we find ways to do better.
There are the solid minerals assets as well. We have a lot of solid mineral assets so that’s a fourth category.
The fifth category is around our infrastructure assets, especially the ones that have concessions on them. We are interested in knowing where they are, to what extent are they being used, how can we improve, optimise and maximise the revenue that are accrued from those.
There are also intangible assets, if you look at our spectrum whether they are telecommunications spectrum, Right of Way even the name Nigeria has value, Abuja has value, copyright that has come from the work that we’ve done over decades, these are all assets.
The next category, we classify those as our green economy assets, carbon credits. Given what is going on around the world today, there is a huge opportunity for us to monetise our carbon credits from our forestry and even from our blue economy in terms of our aquatic resources in the sea.Those are resources that we can really leverage. But we need to have a structured way of identifying where they are, enumerating, valuing and having a policy in terms of how these are managed, so that they are not mismanaged. Because this is really the commonwealth of the people. We have a responsibility that we safeguard the commonwealth of the Nigerian people. So, that’s the seventh pillar in terms of our national assets register.
The third is around mobilising investment for priority sectors of the economy and even mobilising investments for our portfolio companies. A lot of them need to be recapitalised; many of them need working capital and the DFIs, which are the Development Finance Institutions, need capital for on lending. We need to mobilise that from various sources both domestic and overseas to give to them. And even for the assets that we are going to be cataloging, we need to invest in those assets so that we can derive the most value from them. And we see the national assets register as a way to create a database of bankable projects, projects that can attract investments not only for local investors but also from foreign investors and that will be a major part of our efforts in terms of mobilising investments capital to bring into Nigeria, to help unlock liquidity, to provide investment to the key and priority areas of economy and to ensure that we are creating jobs , we are making a difference and supporting government in what it’s doing. So, these are the three key areas of our focus within the next few years.
MOFI seems to have an overlapping mandate with the BPE. Don’t you think there will be a conflict between the two agencies?
I think it is important that we go back to the legislation for each of these entities. MOFI has been around since 1959. MOFI was established precisely to hold shares on behalf of the Federal Government of Nigeria. It was on the basis of that that the shares for commercial entities that the Federal Government had an interest in were held by MOFI, that has not changed.That legislation is still relevant today as it was in 1959. It’s on the basis of that that even when BPE needed to carry out transactions against each of those assets that they privatised, it required a power of attorney to act as the MOFI’s attorney on those transactions. So, that clearly recognised the fact that MOFI is the owner of those assets on behalf of the Federal Government and that has not changed.
As early as 2021, when the Petroleum Industry Act (PIA) was passed, the shares for Federal Government of Nigeria (FGN) in the PIA were in the name of MOFI, the Federal Government shares in Nigeria Sovereign Investment Authority (NSIA) are in MOFI, the Federal Government shares in Bank of Industry (BoI) and indeed the commercial entities where the Federal Government has shares are in MOFI’s name. There is no doubt as to who ought to hold those shares on behalf of the Federal Government.
BPE’s mandate is very clear. It’s a transaction agency – privatisation and commercialisation. When you do privatisation, you would take an entity; if it’s a partial privatisation, which means that there will be residual shares left, the shares that belong to the private sector will be transferred to them and the residual shares that belong to the Federal Government ought to be transferred back to MOFI or to whoever owned it. The fact that that did not happen before is an anomaly and needs to be corrected given that MOFI is now a new operational entity.
So, in our view, there is really no basis to think of anyone encroaching into another’s territory, our roles and responsibilities are very clear, we are the custodian, shareholders on behalf of the Federal Government and we have responsibility that when we hold the shares of the Federal Government, we must take steps to manage those assets well.We must optimise them to safeguard them and look for ways to create value for those assets while we hold them. But paradventure we make a decision that those assets need to be privatised or commercialised, then we will get BPE involved in the privatisation and commercialisation and once they have completed the exercise, the shares that will go to private sector will be transferred to the private sector and the residual shares that belong to the federal government ought to be transferred back to MOFI for safe keeping, management, optimisation, monetisation and to ensure that government interest is safe guarded going forward. For us, that distinction is very clear; the legislation is also very clear for both entities.
You have had interactions with agencies like FMDQ, the capital market, etc. How would you describe these interactions so far? What hope for it bring to attaining your mandate?
That was an outing that we felt was quite remarkable and moved the needle, because remember MOFI has been around since 1959 but for a long time many people didn’t really know who or what MOFI was. They did not understand what it’s mandate was or what it stood for and what it plans to do. So, for us, the purpose of that visit was to: inform our key stakeholders, which the capital market operator are, with the view to educating them about the new MOFI and our mandate, and also to begin to discuss with them and see how we can work together because we strongly believe that success is partly based on the extent to which you can engage the private sector, to mobilise private capital, to leverage on their expertise, to see how we can manage our investments better.
So, that visit was useful in informing them and, today, we have a lot of interest in that community on how to partner together, many of them are expressing interest in some of the assets that we own, many of them have reached out to see how they can work with us to raise capital to invest in different sectors of the economy, so there are a whole lot of interest that has come out of that. And our view is that the level of engagement we are having with them now is at a higher and better quality than it was before as a result of those engagements and in the next coming month, we will see some transactions that will be coming through the partnership that we have or believe came from them through some of the discussions that we had with them.
How does MOFI come in to assist stakeholders raise capital?
Going back to the fundamentals, we are the managers of Federal Government’s investment assets, which are investments they already have. To continue to optimise those assets, you will have to provide investments to them and those investments can come from multiple sources. They could either come from the government which means the funds will be appropriated and then invested into those entities or they can come from the private sector. We believe that we need to begin to engage the private sector and crowd in private sector investment either in recapitalising existing entities or providing additional investments for projects that are for the government or projects to be owned by our portfolio companies and we believe there is sufficient liquidity in the private sector, and there is an opportunity for the private sector to get decent returns from these opportunities that the government is opening up, and that is why we have been engaging the private sector.
We also have the government’s capital projects that require massive amounts of capital either road projects, building new hospitals, new educational institutions etc, a lot of these projects that are on the platform of the Federal Government require massive capital that the government alone cannot provide. So, we need to engage the private sector, both domestic and foreign, to crowd in private sector capital, and that’s really the basis upon which we are engaging the private sector to do that. It is only when we are able to convince the private sector that these opportunities are bankable and they will make good returns, then can we crowd in a larger amount of capital than any government can ever provide. If we can get these projects going, we can create more jobs, grow the economy, increase liquidity and also increase our exports proceed.These are things that the private sector is better positioned to do but we need to create the enabling environment. We need to catalyse that, make sure we take away the bottlenecks that prevent the private sector from engaging with the government and we need that capital.
How confident are you that MOFI will meet this ambitious N100 trillion target in 10 years?
I actually believe without sounding immodest. I believe in 10 years that figure will be more than that. For example, when we talk about assets management, the NNPCL alone based on valuation is $60 billion, and we own 50 per cent of it.The Federal Government’s shares in NLNG are not included in that calculation. The value of our infrastructure assets on airport, seaports, highways, bridges is not included in that figure. By the time we incorporate those assets, and monetise them, you can begin to imagine what value we are talking about. And even for those infrastructure assets we have not talked about the concessions that are on top them and the monetary value that come from those concessions. You know the president recently created the blue economy, which talks about our marine infrastructure as well as the resources and natural endowments.Those are not included in there. By the time you start looking at the monetary value of those assets in the blue economy, you begin to get an idea of what we are talking about. We’ve talked about the creative economy.The valuation we had when we started did not include any of the assets in the creative economy. You can begin to talk about our solid mineral assets which were not included in that estimate. So, by the time you begin to quantify our solid mineral assets nationwide and the Federal Government’s interests in all of them, you will begin to get a sense of the quantum we are talking about. Real estate assets East to West, North to South of this country, whether residential, commercial, industrial were not included in the estimate. Our real estate assets offshore, almost every major city in the world that the Federal Government owns assets, were not included in the estimate and in most cities around the world that we own assets, we own them in prime location. These assets are high value assets. So, by the time you identify, enumerate, and value, you can begin to get a sense of what we are talking about.
So, our view is that this country is too endowed to be poor, but we need to change our mind set, strategy of how we manage, rationalize, monetize our assets, and the value we create from those assets. And that for us is a clarion call, not only for us but to all MDAs who are currently sitting on those assets or superintending over those assets. Let me make one thing very clear, MOFI’s mandate or goal is not to take away those assets from anyone, it is to make sure we have a single view, single source of truth as to what federal government owns because it is through that we can begin to take steps to optimize those assets to the benefit of Nigeria and Nigerians.
This N100 trillion target, is it both liquid and solid assets?
Yes it is , you have financial assets and non financial assets.
The world is gradually moving from fossil fuel and going green, are you making projections in that direction, whatever plans you have for NNPCL, have you put this into consideration that things will change?
Absolutely and I think it’s already happening but you will be surprised to know that even NNPCL itself is at the vanguard of that transition, transition doesn’t happen over night, the movement to non fossil fuel did not happen over night and that is why we are focused a lot on issues such as gas, Compressed Natural Gas (CNG) as an example because its a transition and we are really a gas nation rather than oil so we are leveraging on our gas endowment for clean energy. That’s why steps are being taken to ensure we have that transition and optimize the returns from our oil and gas so we can invest those in other sectors of the economy, in clean energy projects that are already on the table
