A pioneer could do with steady funding

The first time you meet Uche Orji, you are left in no doubt you are in the presence of a thorough-bred investment banker. It is not that he goes about with his pinstripe suits emblazoned with the words: ‘Hey, look at me; I am an investment banker’. It’s just that his many years of work in the global power play of investment banking have conditioned him to always think and talk in terms of opportunities and possibilities. For someone with a pedigree that involves stints at Goldman Sachs, JP Morgan and Switzerland’s UBS in portfolio, funds and asset management, advisory, equity research and analysis, you will know within minutes of your meeting him that this is a guy well prepared for this job.

Orji came into the role of Chief Executive Officer of the Nigeria Sovereign Investment Authority (NSIA), which has responsibility for managing Nigeria’s Sovereign Wealth Fund, in October of 2012, after a very rigorous and painstaking search process. And two months ahead of celebrating two years on the job, he can begin to see himself as a pioneer who has set on course something that could eventually turn out as one thing Nigerians could look to government and be happy about. Now, here is why.

Nigeria is a resource rich nation. But there has been a fierce debate about whether or not this richness has benefitted a large and broad spectrum of Nigerians. In the concept of the Sovereign Wealth Fund, the notion of saving for tomorrow the surplus revenues of today, especially revenues from natural resources, lies the huge chance of Nigerians accepting that such savings, managed on their behalf and seen to be expended on specific projects that could impact their lives, represent gains from the country being rich in natural resources. Orji and his team at the NSIA know that this is a pioneering task that needs to be delivered. The SWF started with seed funds of $1 billion. There is the belief that SWFs in resource-rich countries can help avoid resource curse. It suggests to Nigerians that for the first time in its history, there is some specific amount of money (this $1billion) that is kept away for them just because Nigeria is rich in crude oil. It is this money, and whatever more that would be added later that Orji has a responsibility to manage and ensure that he grows to provide even more benefits for people and country.

“The business has been profitable for everyone since we started it. We have also built a business from nothing. Progress is not absolute but sometimes progress is relative. We have been admitted into an international forum where you have to comply to certain things. We scored 33 out of 50 on the transparency index. We have to make certain progress and make benchmark across so many factors, so as to make it out there. We need to draw a balance between managing our business and taking care of our stakeholders. It is easy to make money in the bank. It is a business where you have to strike a lot of balances. It is a business where you have a lot of stakeholders that is why it has to be managed well. We have gone from scratch to make one major commitment,” he says.

This is not strange territory for Orji. When he joined Goldman Sachs after acquiring his MBA from Harvard Business School in 1998, he was an associate portfolio manager, but he rose very quickly and within 16 months had become a co-manager of a $600 million Global Technology Fund and a one billion euros pan European Equity Fund. Again, it reinforces the point about a man who has come to his role well prepared. The breadth of his coverage and experience would be cemented as he moved from Goldman Sachs to JP Morgan in London in 2001 as vice president in the advisory and equity research part of investment banking, focusing on semiconductor technology and valuation of listed and private semiconductor companies.

This would even expand further upon joining the New York office of UBS as managing director and coordinator of the bank’s semiconductor equity research and advisory business, having responsibility over businesses in San Francisco, London, Taiwan, Korea, Seoul, Zurich and Tokyo. In this role, he supervised three other managing directors in various countries and several vice presidents and associate directors achieving number three ranking out of over 300 analysts.  He had direct coverage of more than 30 companies and coordinated coverage of more than 100 global companies for UBS in the semiconductor sector.

With the vast experience and the role he has played in managing huge funds, Orji is a man who is keen as pioneer CEO to see the full objectives of the NSIA realized. That would be made possible from an increased and steady funding base. “It will get higher and rise to the point that it will reflect,” he said.

He adds: “It is not how we start that matters, but what matters is the consistency of subsequent contributions. Once you start, you prove the strategy. We have not deployed all we need yet because the strategy has to first be proved. Sometimes the process has to be put in place. We have a lot to prove as an organization. There are many things we just have to be very mindful of that are essential to building a sustainable wealth fund business. I am very proud of the progress we have made in the board, during this short period of time that the board has come together to work,” he says optimistically.

But Nigeria is a country that needs to play catch up and with its Vision 20/2020 ambitions; it must look to consistently fund the NSIA, as contained in the legislation, so that the laudable objectives set out for it can be realized. Investment bankers know that when there is large capital, it helps the realization of the objectives of setting up any kind of funds, including a SWF. Nigeria has many examples to draw from. SWFs managers always look to the long term. The world’s largest SWF, Norway, established in 1990 with less than a billion dollars, has assets of $878 billion today. Over the last few years the government of Norway has consistently funded it with $1 billion weekly. The Nigeria SWF will need consistent funding if Nigeria is to join the ranks of Norway, Abu Dhabi, Kuwait and China over the long term.

The argument often made for consistent or steady funding to accumulate a critical mass of capital is to enable promotion of the achievement of multiple economic objectives for the country, which results in the achievement of an economic transformation mechanism capable of impacting positively, directly or indirectly, on most of Nigerians. This is one of the very transparent way Nigerians can feel a better sense of the wealth of the nation through the investments that Orji and his team would make.

Phillip Isakpa