For the ninth straight year of profitability, the Nigeria Sovereign Investment Authority (NSIA), again showed resilience in 2021, delivering favourable outcomes despite market volatility and tough operating environment.
Here are ten numbers which best describe the 2021 financial performance of the NSIA – Managers of Nigeria’s Sovereign Wealth Fund (SWF) with Assets under Management in excess of $3.5 billion.
1. The NSIA reported profit after tax of N153.56bn. Though slightly down 1.9% from the 2020 figure of N156.5billion, this marks the 9th straight year of profit making for the Authority.
2. It reported Core income of N100.8 billion in 2021, down 8.0% compared to N109.6 billion in 2020. This excludes FX gains of N45.8 billion in 2021 and N51.2 billion in 2020.
3. Total Comprehensive Income of the Authority recorded a marginal drop of 8.2% to N146.98billion in 2021 as against the 2020 figure of N160.06billion.
4. But it achieved a 19.02% growth in Net Assets to N919.73billion, as against the 2020 figure of N772.75 billion.
5. The three individual funds, including the Future Generations Fund, Stabilisation Fund and Infrastructure Fund, closing the year positive, beating their individual benchmarks
6. Under the Nigeria Infrastructure Fund (NIF), the Presidential Fertiliser Initiative (PFI) – made profit in 2021 eliminating the need for government subsidy. The number of local blending plants that participated in the PFI program increased from 11 at the end of 2017, the first year of the program, to 51 in 2021. The programme produced 12million 50kg bags of NPK 20:10:10 equivalent in 2021, bringing total production since inception to over 30 million 50kg bags equivalent.
The NSIA-UFF US$200 million Agriculture fund is engaged in the two-phase development of an animal feed processing business with backward integration through the farming of maize and soybean on about 3,500Ha of land in Panda, Nasarawa State. Approximately 96% (720ha) of the targeted 750ha of center pivot irrigation coverage has been achieved.
Also in line with its Fund’s objective, NSIA successfully invested in a hyperscale cloud data company – Kasi Cloud Limited. The NSIA also made significant progress on developing the Ammonia and Di-Ammonium Phosphate production plants in partnership with OCP, selecting Ikot-Abasi in Akwa-Ibom as the project site after extensive review of several other locations.
The three road projects under the Presidential Infrastructure Development Fund (PIDF) namely the Lagos-Ibadan Expressway, Second Niger Bridge and Abuja-Kaduna- Kano Highway have reached 77%, 82% and 27% completion, respectively.
The healthcare companies – LUTH Cancer Centre, NSIA-Kano Diagnostic Centre and NSIA-Umuahia Diagnostic Centre, became self-sustaining in 2021 post commencement of operations in previous years. The Authority also commenced the development of an Active Pharmaceutical Ingredient Manufacturing Plant (API) during the year under review.
The Authority equally commenced the development, construction and operationalization of 23 new modern medical diagnostic centers of excellence across all 6 geopolitical zones in the country, 2 Oncology centres in Enugu and Kaduna states and 6 Cath Labs.
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7. Under the Financial Markets Infrastructure, share of profit of investment accounted for using the equity method increased by 87% from N2.2 billion in 2020 to N4.0 billion in 2021 due to increased profitability of the Group’s Associate/ JV companies – Infracredit, Family Homes Funds and Nigeria Mortgage Refinance Company.
8. The Future Generations Fund – a second component of the SWFund returned 11.98% for the year. Private Equity/Venture Capital was the best performing asset class with a return of 23% for the year. Developed Equity and Hedge funds also performed well in 2021, with returns of 17.5% and 12.8%. However, Emerging Markets Equity had a negative return of -1.92% for the year and was the worst performer, and according to Uche Orji, Managing Director, NSIA ,is a major concern.
9. The Stabilisation Fund, which is the third component, is invested in US sovereign debt instruments and Investment Grade Corporate Credit. At the end of December 2021, according to Orji, 21% of the fund was invested in a portfolio of US treasury bonds tracking the Bloomberg Barclays US Treasury bond 1–3-year index.
The Growth Assets part of the fund is invested in short duration bond funds (23%) and Structured products (53%). Also, the Fund has a 3% allocation to a China Bond Fund which is expected to provide diversified returns and returned 1.60% for the year.
The US Treasury bond portfolio returned -0.64%, while the short duration bond funds returned -0.58%.
The Structured products were the best performing component, returning 3.69% for the year, Orji noted.
10. Outlook for 2022: Despite gains in past years, Orji thinks that 2022 will be the toughest year of investing globally, as Central banks battle to navigate inflation without dampening growth. Global commodity prices continue to surge as the Russia-Ukraine crisis enters a new phase, coupled with an impending food crisis.
According to him, the financial performance of the NSIA for 2022 will be impacted by the rapidly crystalizing headwinds, with a significant portfolio restructuring in the Future Generations Fund to diversify the portfolio, improve the risk/return profile, and generate liquidity through secondary transactions.
However, the Infrastructure Fund will remain resilient and NSIA hopes to begin to recycle funds from investee companies. He also notes that Asset transfers will be an important component of NSIA funding strategy in the mid to long term, as it hopes to prioritize Environment, Social and Governance, both as an asset class and in the investment process
