The Federal Government is currently working out a permanent source of raising the Nigerian Sovereign Investment Authority (NSIA) capital to possibly $5 billion, Ngozi Okonjo-Iweala, coordinating minister for the economy and minister of finance, said at the weekend.
At the moment, NSIA which manages the Nigerian Sovereign Wealth Fund (SWF) has some $1.55 billion capital all funded through the excess crude account, including some $550 million recently injected by the government as third party assets for the institution to manage.
In her opening remark at a private meeting on the SWF, at the sidelines of the ongoing IMF/World Bank annual meetings in Washington DC, Okonjo-Iweala said the intention is to work the capital towards $5 billion, in the first instance, and then upwards, till it grows as appropriate.
Okonjo-Iweala said that the NSIA investments were already bringing in some good results, posting profits of N1.5 billion for the first quarter and slightly above for the second quarter, as she wooed investors towards co-investing with the institution.
Meanwhile, the NSIA is concluding arrangements to launch the first ever credit enhancement facility towards the end of the year. This facility, another issue that dominated conversations with the Nigerian officials at the annual meetings, would allow channeling of pool of funds from pension and insurance to infrastructure which had been difficult for years.
“We are working, as we speak, on a permanent source of increasing the capital of this institution.
“So the idea is that this is not going to be an institution of $1 billion or $1.5 billion entity, but we are working towards $5 billion to begin with and upwards, and it will grow,” the minister stated.
She told the meeting that an exciting feature of the NSIA is its ability to co-invest and channel liquidity and capital to invest in the economy unlike many other SWFs which operates the old model.
“We see our own SWF as helping to develop the economy and many more models are now turning to look at it this way.
“They have the fantastic ability to attract good capital for co-investments for some of the more prestigious forms and industries.
“So it is in that regard that we invite you to look at this relationship, this is one of the most important institutions in Nigeria,” Okonjo-Iweala told the investors.
She informed that the NSWF has now been rated the second most transparent after Norway by the Sovereign Wealth Fund Institute, which according to her, says a lot.
“I think there are encouraging signs that we have an institution that is going to be a solid building block for our economy going forward,” Okonjo-Iweala stated as she hoped most of the investors would take a very detailed interest in trying to work with Nigeria.
Speaking earlier with journalists, Uche Orji, chief executive officer, NSIA, said one more thing that has dominated conversations for the NSIA at this year’s annual event is their effort at establishing a credit enhancement facility, which will hopefully take off sometime towards end of this year.
Orji noted that the facility is a very important initiative of the NSIA as it provides some insurance. He said their expectation is that “we should be able to mobilise up to 20 times with re-insurance the level of support for each dollar of equity invested and that makes it easy for insurance companies to come in.
“This means that if you are an insurance company, we can insure your level of investments to a certain level.”
