NSIA Attracts $500m FDI, Creates Over 560,000 Jobs In Ten Years

The Nigeria Sovereign Investment Authority (NSIA) has revealed that it attracted over $500 million in foreign direct investments over the past 10 years.

The NSIA, which is responsible for managing and investing surplus income from the country’s excess oil revenues, said it also created 560, 300 jobs between 2013 and 2023.

Aminu Umar-Sadiq, NSIA’s Managing Director and Chief Executive Officer, disclosed this during his formal presentation of the Authority’s 2022 Audited Financial Statements on Thursday in Abuja.

In his presentation, Umar-Sadiq delivered a historical highlight of activities and milestones of the Authority to also include the investment of over $500 million in domestic infrastructure.

Others include 10-year consistent positive returns, growing net assets by 552% from N156 billion in 2013 to N1.02 trillion in 2022, 34.5% growth in its non-volatile revenue streams, and development/co-development of over 10 institutions and platforms to improve the financial market ecosystem.

Umar-Sadiq said despite numerous challenges posed by the global economic environment, the Authority remains committed to growing the country’s sovereign wealth fund in 2023.

The Authority plans further growth of its net assets through strategic asset allocation and diversification, portfolio selection, and other options to enhance the risk/ return profile and liquidity.

Its five focus areas in 2023 include ‘driving growth through platform, assessing exit opportunities from existing investments, attracting local currency capital, increasing third-party asset management portfolio and, leveraging ESG (Environmental, Social and Governance) as an asset class’

Umar-Sadiq said, “For the last ten years, the NSIA has been consistently positive in terms of Net Comprehensive Income irrespective of the volatilities that have ensued both in the global and the local markets. The NSIA, through its asset management expertise and its ability to balance risk versus reward, has always turned a profit for the Sovereign Wealth Fund.

The Authority said $1.6 billion contributed by the government since 2013 were efficiently utilized to generate Net Asset Value (NAV) of $2.27 billion as of 31st December 2022.

IMPACT IN 10 YEARS

“Our core AuM (Assets under Management) has been grown from $1.6 billion net contributions by the government to over $2.2 billion. We have catalyzed or created, both on the direct and indirect basis, over 200,000 jobs. On an estimated bases, we have also catalyzed over 300,000 indirect jobs,” said Umar-Sadiq.

“For all of the focus sectors that we have been engaged in, we have on an estimated basis stimulated about $20 billion, which is a substantial thing to say for a government institution, that through the capital that has been allocated to the NSIA, through expertise and robustness of its governance process, and trust that it has been able to engender with partners, the NSIA has been able to catalyze a substantial amount of capitals into the Nigerian economy.

“Whether it’s the amount of kilometers or length of roads, with regards to our PIDFs (Presidential Infrastructure Development Fund), whether it’s through the farmers that we have been able to affect, through PFI, whether it’s the amount of youths and women that have been engaged through projects that we are undertaking, whether it’s through the hospitals, diagnostic centers and oncology centers that we currently have on ground, or the amount of power that through our projects we have been able to generate, NSIA’s addition to Nigeria has been substantial,” Umar-Sadiq stated, attributing the Authority’s achievements to the robustness of its governance structure.”

IMPACT OF MACROECONOMIC MARKET CONDITIONS

Umar-Sadiq explained factors responsible for drop in some of NSIA’s income sources in the 2022 fiscal year to include inflation, the COVID-19 pandemic and effects of the Russia-Ukrain war.

“For the 2022, it obvious. The first off course is inflation and off course the consequent actions of our monetary authorities in terms of the direction of interest rates and the consequent impact on the capital market. No matter who you are, no matter your level of expertise, no matter the debt of years that you have been operating, when inflation goes high, there is absolutely nothing you can do.

“The second of course is that not only COVID-19, but China’s reaction to COVID-19. That basically has had a substantial impact on the supply chain and also on the demand side, when you have China at sleep, it substantially impacts a lot of other facets of the economy.

“And then off course war between Russia and Ukrain. Yes, Russia is not U.S or China, but importantly, all of the fertilizers and all of the food, and crops that come out of China have substantial effect on NSIA’s business.”

Shedding more light on NSIA’s financial performance for year, Mrs. Olubisi Makoju, Executive Director, Corporate Services and Operations, said the slight decline in the Authority’s total comprehensive income was attributable to the effect of market factors on portfolio’s that aren’t under the Authority’s control.

“So, our stabilization and future generation funds are asset that are exposed to the market and therefore, because the global headwinds were very tough in the period, we did marginally lose some value there.

“But like the MD explained, these are fair valuations and as long as those assets are not sold, when the market recovers, we are definitely certain that these fair valuations would improve and we’d make back what may seem to have dropped.

“But it is important to note that the Authority’s earnings from the infrastructure business and other fiduciary activities, actually grew year on year by 34.5%, which shows that the investments for which the Authority had total control actually grew because these were non-volatile earnings and therefore were completely within the ability of the management to control.

Makoju added, “Even though between 2020 and 2022, the Authority didn’t have any additional government contribution, the Net Asset still grew by 32%. So, utilizing the existing assets without additional contributions, we have still managed to grow the assets of the NSIA.”