The NSIA Figures Have Something To Prove

The audited financial results for the year 2018 announced by the Nigeria Sovereign Investment Authority (NSIA), manager of Nigeria’s sovereign wealth fund, on Monday, sends a clear message to the financial world: Nigeria is ready to be a global economic player.

The NSIA results show a strong performance at a time when expectations were less, domestically and globally; in a year when many international markets struggled, and the global economy experienced a moderate pace of expansion.

By the results it posted for 2018-a year acknowledged as a difficult one globally- the Authority has invited the world to under-study its investment strategy and the robustness of his operations.

Within a year, the Authority was able to grow its total assets by 16 per cent, from N533.88 billion in 2017 to N617.70 by the end of 2018. Total income, including the impact of foreign exchange gains, moved up to N44.34 billion from N27.93 billion of the previous year.

The impressive figures made nonsense of concerns over international trade flows, slow growth in key economic indicators and increased volatility across financial markets. It showed, more importantly that NSIA is one of the best well run sovereign wealth funds in the world.

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Its operations and investment strategy have undoubtedly proved robust with headline numbers maintaining a favourable trajectory across the three funds – The Stabilization Fund, Future Generations Fund and Nigeria Infrastructure Fund.

The NSIA is a corporate body established by the Nigeria Sovereign Investment Authority (Establishment, etc.) Act 2011 mandated to manage funds in excess of budgeted hydrocarbon revenues. Its 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 stabilization support in times of economic stress.

There is no doubt that this is a serious mandate that, rightly, puts the Authority in the limelight. When Vice President Yemi Osinbajo inaugurated the board of the Authority in May 2017, he re-iterated NSIA mandate and what the Federal Government expected from the board chaired by Babajide Zeitlin.

“As we navigate the pathway out of recession and into a self-sufficient and diversified economy it is our expectation that the NSIA will remain increasingly strategic to our nation’s growth and development.

“As representatives of the people, our charge is simple: we require you to fundamentally improve the performance of the authority and strengthen its operations.”

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The vice president also noted that members of the board were carefully chosen because “the bar” set for them was high, but the government and the people expected them to deliver.

Two years on, it would seem, neither the board nor the management of the Authority had disappointed. NSIA has raised the bar for public enterprises and shown that profitability and efficiency are not operational ethos for the private sector alone. It has demonstrated that given the right political atmosphere and highly skilled manpower, state enterprises can be more efficiently and transparently managed for profitability.

The three mandate funds of the Authority: the Stabilization Fund, the Future Generations Fund and the Nigeria Infrastructure Fund were deployed in varying quantities to meet domestic infrastructure targets in agriculture, healthcare, and infrastructure enabling financial institutions.

A comprehensive strategy for manager selection has ensured that investments from the Stabilization and the Future Generation Fund were effective and profitable despite market volatility and softening that characterized most markets during the year. By end of 2018, the SF had been fully invested.

On the other hand, a sophisticated deployment strategy also ensured the FGF remained evenly apportioned across global public equities, private equity, hedge funds and ‘other diversifiers. By December 2018, the Authority had deployed about 81% of its capital across all the strategic asset classes of the FGF.

In healthcare, completed projects include a Cancer Centre at Lagos University Teaching Hospital (LUTH), Advanced Diagnostic Centres at Federal Medical Centre Umuahia (FMCU) and Aminu Kano Teaching Hospital (AKTH). The LUTH cancer Centre had already been commissioned and the world class facility would soon be fully open for clinical operations.

In agriculture, the Presidential Fertilizer Initiative has increased output by approximately 12 million bags of fertilizer produced to date with a total of 18 blending plants participating. As at end of 2018, an addition 5.5 million bags of NPK 20:10:10 fertilizer had been produced and sold in Nigeria bringing the total project output from inception to date at over 12 million bags.

Furthermore, 2 additional blending plants were accredited in Kaduna and Zamfara respectively bringing the number of plants to 18 in total. With PFI, NSIA is helping to reduce input induced food price inflation. This has enormously facilitated the revolution in agriculture in the last two years, especially in rice production.

In addition, under a joint venture with UFF Agric Fund, the NSIA reached financial close on Novum Agric Industries Ltd which acquired a fully integrated farm located in Panda, Nasarawa State. Development of the farm land has commenced. Farming activities are expected to start in late 2019 with the completion of irrigation facilities expected to be finalized soon.

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The National Economic Council (NEC) also appointed the NSIA as the programme manager of the Presidential Infrastructure Development Fund (PIDF) and provided the sum of US$650 million. From this, funds were disbursed for construction works on; (i) Lagos-Ibadan Expressway, (ii) Second Niger Bridge; and (iii) Abuja-Kaduna-Zaria-Kano Road.

To date, NSIA has disbursed ₦77.6 billion under the PIDF programme. Other projects being undertaken under PIDF include Mambila Hydro-Power Project and East West Road. The NSIA’s involvement is principally to ensure an increased inland road stock while creating cross-country arterial roads to catalyze the flow of economic activities.

The programme is an initiative of President Muhammadu Buhari which is designed to facilitate the rapid completion of key infrastructure projects that have been stalled for years.

The NSIA is accountable to the National Economic Council and reports about stewardship of the Authority would be assessed by it. But when the times comes for such assessment, the balance sheets would certainly speak for the board.

Members of the board from the six geo-political zones in the country include Halima Buba (North-East), Bello Maccido (North–West), Lois Laraba Machunga-Disu (North Central), Babajide Zetilin (South West), Urum Kalu Eze (South East) and Asue Ighodalo (South-South). Others include Uche Orji, the Managing Director of NSIA, Stella Ojekwe-Onyejeli and Hanspeter Acheermann.

It is an indication of how critical and prominent the NSIA has become is that staff appointments now generate intense scrutiny by the financial world and other informed members of the public. The recent appointment of Aisha Abba Kyari, daughter of President Muhammadu Buhari’s Chief of Staff, immediately generated controversy, with a civil society group alleging the appointment was against due process.

But subsequent media reports on the issue showed that Ms. Abba Kyari passed through a rigorous selection process and is indeed highly qualified for the position for which she was employed. It further highlighted the transparency of the organization’s processes, including staff recruitment.

Uche Orji, managing director of NSIA, who used the occasion of the financial report presentation to speak on the controversy, declared it ‘fake news.” He said hiring staff at the Authority is a tedious process, stressing that recruitment is not directly handled by NSIA. “We have consulting firms that advertise these roles for the NSIA and this too (Abba Kyari’s position) was advertised.”

It is to the credit of the management and board that the Authority has been spared the operational and financial scandals that usually plague state agencies. It is an eloquent testimony to the professionalism of the team at NSIA. It is this professional integrity of those at the helm that is responsible for the positive signals coming from the Authority. Nigeria is on the match.

-Olu wrote from Abuja

Disclaimer: This article is entirely the opinion of the writer and does not represent the views of The Whistler.

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