… Nigeria’s Sovereign Wealth Fund now $2.5bn
Onyinye Nwachukwu & Godsgift Onyedinefu
The record N1.184 trillion Total Comprehensive Income recorded by the Nigeria Sovereign Investment Authority (NSIA) in 2023 was largely driven by four tactical strategies, including cost efficiency, efficient balance sheet management, infrastructure investment and a focus on projects that yielded sustainable earnings.
This is according to Aminu Umar-Sadiq, NSIA Managing Director & Chief Executive Officer who spoke to the media on Thursday, on the Authority’s recently released financial result.
NSIA’s total Comprehensive Income surged 1,122% to ₦1.18 trillion in 2023, relative to ₦96.96 billion reported in 2022. Total Comprehensive Income (excluding foreign exchange gains) equally rose from ₦21.39 billion in the previous year to ₦164.69 billion, marking a 670% growth.
Presenting the Authority’s 2023 financial performance to the media in Abuja, Umar-Sadiq explained that the renewed focus of the Authority which manages the country’s $2.5bn played a key role in delivering such impressive results.
According to him, the focus area on efficient balance sheet management ensured the timely availability of both local and foreign currency investments, thereby optimizing currency utilization. This strategy also ensured optimal asset allocation and utilization and retained a substantial portion of the balance sheet in foreign currency.
Also, with the focus on sustainable earnings, the NSIA directed efforts towards swiftly stabilizing infrastructure projects. This, according to him, entailed engaging with instruments that guarantee consistent and reliable returns, further bolstering the Authority’s financial stability.
Umar-Sadiq further disclosed that the NSIA pioneered investment initiatives, particularly in environmentally sustainable ventures, with notable successes achieved through partnerships in green climates with organizations like CarbonVista.
It also prioritized cost efficiency, striving to transition towards digitized, streamlined operations that effectively addressed prevailing challenges. This shift, he said optimized resources and enhanced operational effectiveness, further contributing to NSIA’s “excellent” financial performance.
As contained in its financial statement, NSIA in the last 10 years has continued to show resilience and growth in asset performance while creating value within the economy. Its net assets have grown from ₦156 billion ($1 billion) in 2013 to ₦1.189 trillion, an equivalent of $2.47 billion as at 2023.
In 2023 alone, Total operating income rose substantially from ₦101.1 billion in the previous year to ₦1.176 trillion, representing 1,064% year-on-year increase.
NSIA strategically optimized its asset allocation, resulting in a Total Comprehensive Income of ₦1.184 trillion for 2023 – a remarkable 1,122% growth from ₦96.96 billion in 2022.
Amidst a challenging global financial landscape, the Authority’s core Total Comprehensive Income (excluding foreign exchange gains) rose from ₦21.39 billion in the previous year to ₦164.69 billion, marking a 670% increase attributable to the Authority’s robust strategic asset allocation and adherence to best-in-class enterprise risk management processes.
“I think a combination of our strategic and tactical activities is what helped us transition from N96 billion net returns in 2022 to over N1 trillion in net returns in 2023”, Umar-Sadiq told journalists.
“Whilst of course there is a component of foreign exchange gains in this, you will see that even on the core basis, we actually grew our returns by over 650 percent, to 160 billion”, he added.
Besides, the NSIA embarked on several infrastructure-focused activities in 2023, and “largely achieved what it set out to do in the financial year.”
Some of those projects include the 10MW Kano solar project which is the largest grid-connected solar PV plant in Nigeria; launch of strategic platforms including $202m MEDSERVE and $63m Equilease; $50mn launch of Renewables Investment Platform for Limitless Energy (RIPLE) and a strategic partnership agreement with the IFC, among other initiatives.
In addition to its financial performance, the NSIA boss informed that the Authority emerged tops at the 2023 Global SWF Governance, Sustainability, and Resilience Ranking, after scoring a perfect 100%, with esteemed SWFs like Temasek and NZ Super Fund.
Umar-Sadiq explained that the GSR Scoreboard analysis reflects the Authority’s substantial progress from a previous score of 84%, showcasing its enhanced sustainability practices including improved policies, a robust framework, climate investment leadership, and impactful reporting.
For 2024, the Authority will lay strong emphasis on enhancing fiscal responsibility within the institution to maintain stability and credibility, as well and attracting foreign investments.
The MD was confident of an excellent financial performance in 2024, noting over $500 million investments in domestic infrastructure which has created some 545 direct and indirect jobs.
He also underscored commitment to operationalizing existing platforms to effectively attract foreign capital to complement its existing resources and emphasized the need for scalability to maximize the Authority’s impact within its operational sphere.
NSIA strategic priorities in 2024 are outlined in four key areas – operationalizing its subsidiaries; broad and ambitious digitization strategy and cost-efficiency strategy in place; focus on pioneering initiatives in new sectors, driving innovation and strategic growth to stay at the forefront of economic development; and building strong relationships with regulators, strategic partners, and development finance institutions (DFIs).
Bisi Makoju, NSIA Executive Director and Chief Operating Officer further shed light on the organization’s financial performance, emphasizing efficient fiscal management within the Authority,
According to her, a significant indicator of NSIA’s fiscal discipline is its core income ratio analysis for the year 2023 which showed a remarkable drop to 8.6%, as against 30.2% in 2022. “This signifies that NSIA is spending significantly less than what it is earning and kept expenses below the inflationary rate,” she emphasized.
“Despite a challenging economic environment with inflation reaching approximately 28% by the end of 2023, the Authority’s year-on-year change in expenses stood at approximately 18.4%.”
