With the uncertainty of the long-term economic impact of the global COVID-19 pandemic, the Government at all levels and agencies need to design policies and programme that would engender economic growth and jobs creation.
The International Monetary Fund (IMF) projected sharp recession with growth contraction of 5.4 percent in 2020. This showed further plunge in Nigeria’s growth from -3.4 percent it predicted in April 2020.
The success of the pace of recovery will depend crucially on policies undertaken during the crisis said the Washington based IMF.
Determined to engender real growth in the country, the Nigeria Sovereign Investment Authority (NSIA) manager of Nigeria’s sovereign wealth fund, said it would continue to deploy capital into vital sectors of the economy.
The areas of focus for the Nigeria Infrastructure Fund to include agriculture, healthcare, power, toll roads and gas industrialisation.
Asset allocation strategy remains stable across the various funds according to Uche Orji, managing director of NSIA, who said the future generations fund remains 25 percent public equities, 25 per cent private equity, 25 per cent absolute returns and 25 per cent other diversifiers.
NSIA recently announced its results for the 2019 financial year, which showed that the Authority sustained its positive performance trajectory in the period under review. 2019 was a mostly favourable year for the Authority.
In the first instance, its diversified asset strategy was buoyed by positive returns from the international markets as almost all the investments made in equities, hedge funds and private equity outperformed.
Secondly, domestic developments also favoured the Authority and enabled its infrastructure investment strategy to deliver value to the Nigerian people as more capital was deployed in key projects leading to the attainment of significant milestones.
Consequently, the Authority recorded a five per cent growth in its total assets, from N617.7 billion in 2018, to N649.84 billion as of the end of 2019. It also recorded a profit after tax of N34.4 6 billion in the 2019 financial period.
The NSIA also recorded total comprehensive income of N36.15 billion in 2019 as against the N44.34 billion it recorded in 2018.
Excluding foreign exchange gain of N18 billion in 2018 and N1.28 in 2019, the net income in 2019 was N34.87 billion compared to N26.28 billion in 2018.
Also, it closed key transactions and increased capital deployment on domestic infrastructure projects specifically in agriculture, healthcare, and infrastructure enabling financial institutions.
In the healthcare sector, the NSIA operationalised the Cancer Centre at the Lagos University Teaching Hospital in May 2019.
The Authority also recorded significant progress on the civil and construction works at the Advanced Diagnostic Centres at both the Federal Medical Centre Umuahia and Aminu Kano Teaching Hospital. These construction works, were subsequently completed in 2020 and awaiting the easing of the lockdown on account of the covid-19 pandemic to operationalize the facility.
Orji said the NSIA closed key transactions and increased capital deployment on domestic infrastructure projects specifically in motorways, agriculture, healthcare, and power:
“Operationalising several subsidiaries of the NSIA will be a key focus especially in the healthcare sector where we have several projects in the pipeline,” Orji said.
NSIA has invested in several financial companies that help develop the capital markets including Nigeria Mortgage Refinancing Company, InfraCredit, NG Clearing, Development Bank of Nigeria, and Family Homes Funds.
“We will continue to work on strengthening these entities and making new investments in companies that strengthen financial market infrastructure.”
The NSIA Boss said the agency would continue to deploy capital into vital sectors of the economy with increased focus on sectors that will engineer real growth.
Under Presidential Fertiliser Initiative (PFI), NSIA delivered 6.5million 50kg bags of NPK 20:10:10 in 2019, bringing total deliveries since inception ~20m bags, increased accredited participating blending plants to 31 plants as of year-end 2019 from 18 plants in 2018, enabled the creation of significant direct and indirect jobs across the agriculture value chain including in logistics, ports, bagging, rail, industrial warehousing, and haulage touch points amongst others. It aimed to deliver between 10 million to 12 million bags in 2020.
The PFI took off in 2017 after the visit of the King of Morocco to Nigeria in December 2016 and the subsequent signing of a 3-year bilateral agreement with Morocco for the supply of Di-ammonium Phosphate (DAP), a key ingredient for fertilizer production.
Prior to the agreement, the Nigeria’s fertilizer industry was in comatose, with only 5 blending plants operating below ten percent of installed capacity. No one expected a miracle to happen on account of the agreement between Nigeria and Morocco due to the well-documented cases of corruption that had plagued the sector, and which had shortchanged Nigerian farmers for decades.
The mandate of PFI was to make high quality fertilizer available to Nigerian farmers at the right time and at an affordable price, and to revive the ailing fertiliser blending industry so that Nigeria could achieve food security.
Three years down the line, PFI has proven to be a legacy initiative that has changed the agricultural and agro-business industry in the country for good. It has achieved a substantial chunk of its mandate in a way that recommends it as a model for government intervention in critical sectors and a template for government-led import substitution.
As of year-end 2019, the total sum of N181.9 billion was deployed across all three projects Under the Presidential Infrastructure Development Fund (PIDF): namely the 2nd Niger Bridge, Lagos – Ibadan Expressway and Abuja-Zaria-Kaduna-Kano Road. Significant progress was made on projects in terms of civil and construction works, while some projects are on course for completion in 2022 as construction milestones are outpacing project calendar despite the impact of covid-19.
During the year under review, Panda Farms: Pandagric, a fully integrated farm, a joint venture investment between NSIA and UFF African Agri Investments, a Dutch based agriculture investment firm farm acquired state of the art farming, irrigation, and feed production equipment.
This strengthened the farm’s capacity to cultivate the over 2300 hectares of arable land available within the facility and enabled the expansion of farming operation with notable reduction in input costs.
NSIA has invested in several financial companies that help develop the capital markets including NMRC, InfraCredit, NG Clearing, Development Bank of Nigeria, and Family Homes Funds. “We will continue to work on strengthening these entities and making new investments in companies that strengthen financial market infrastructure,” Orji said.
Stabilisation Fund (SF)
The period under review saw policy alignments across major economies which provided clear forward guidance to markets and reducing levels of volatility. As such, the Fund’s strategy of investing in diversified products across the yield curve provided returns. At year-end 2019, the SF has been fully invested. In terms of return on investment, the Stabilisation Fund returned 5.81%, outperforming its benchmark, the US CPI, by a 381 basis points.
Future Generations Fund (FGF)
The Authority maintained its strategy of a systematic deployment of the FGF across global equities, private equity, hedge Funds and ‘other diversifiers’. In the year under review, the FGF strategically gained more market exposure by investing in global equities and passive funds. In addition, it started making venture capital investments.
As of year-end 2019, NSIA had deployed over 90% of the capital in the Future Generations Fund. The fund returned 6.45% as of year-end, outperforming its benchmark of 6.43% (US CPI + 4).
