The Nigeria Sovereign Investment Authority (NSIA) has announced a 10.5percent increase in the value of its total assets to N1.02trn in 2022 up from the N919.73bn recorded in 2021.
But total comprehensive income was reported at N96billion – though a 34 percent decline from the 147billion recorded in 2021.
In its audited financial report for the 2022 fiscal year, the NSIA Group attributed the decline in profit to performance of its Future Generations and Stabilization portfolios that are invested in emerging and developed financial market instruments.
“The performance was recorded despite the challenges in the operating environment,” Aminu Umar-Sadiq who is the new Managing Director, NSIA said.
He explained that the 2022 fiscal year was marked by unprecedented shocks, such as the COVID-19 lockdown in China, the Russia-Ukraine conflict, food and energy crises, supply-chain disruptions, soaring inflation, and monetary policy tightening, which precipitously impacted the financial markets.
He said, “Against market expectations and internal forecast, NSIA closed the 2022 financial year with a respectable performance. This result underscores the robustness of our diversified portfolio, and the excellent commitment of the team.
“Like other emerging and frontier markets, the Nigerian economy faced multi-dimensional challenges during the year. From surging inflation primarily driven by food prices to declining oil output and weakening currency, the prospect for growth diminished as the year wound down.” he added.
However, NSIA which manages Nigeria’s Sovereign Wealth Fund (SWF), looking into the future is resolute in its commitment to delivering increased investments in critical sectors of the economy, driving growth across its funds, and attracting third-party capital into Nigeria’s infrastructure sector.
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Umar-Sadiq disclosed that in 2023, the Authority will be focusing more on its various platforms targeted at emerging sectors, including: renewable energy, sustainability, innovation, and healthcare.
The Authority is optimistic that this strategy will ensure that it achieves its dual objectives of delivering financial returns and impactful social outcomes.
Experts say that despite the slowed profit, the reported financial performance underscores the resilience of the NSIA’s investment strategy, and the quality of its earnings given the challenging macroeconomic environment.
Highlights of NSIA’s activities and performance during the period showed that showed that under the Nigeria Infrastructure Fund (NIF) in 2022, NSIA reached a significant milestone in implementing its infrastructure strategy by delivering key projects.
These projects cut across the Authority’s core sectors of focus and the implementation of specialized federal government initiatives.
Under the Presidential Fertiliser Initiative (PFI) of the NSIA, the financial report seen by BusinessDay showed that at at year-end 2022, 72 blending plants had been included in the programme as against 11 when it was launched in 2017.
According to the report, “In 2021, NSIA divested its interest in NAIC-NPK (now PFI-NPK), ceding its interest to the Ministry of Finance Incorporated (MOFI) while the management of the programme remains with the Authority. The PFI-NPK reported a profit in 2022, the second year in a row, signaling a departure from prior import substitution programmes for fertiliser.
“After roughly three years of development and construction work, the Pandagric Novum farm, a joint venture between NSIA and Signature Agri Investment, was commissioned in September of 2022.
“The fully operational, integrated farm is cited on 3,500 ha of land for the cultivation of maize and soybeans and connected to a 147,000 metric tons per annum capacity poultry feed mill. It has 75,000 tons of storage infrastructure consisting of two silos and six bunkers, as well as 35,000 tons of raw material and finished goods storage.”
As detailed in the report, the NSIA introduced the NSIA Prize for Innovation (NPI) as a measure to stimulate the ingenuity of Nigerian innovators and technopreneurs to develop solutions that address real-world challenges with global application.
The NPI program is a business enhancement initiative to support early-stage, growth-driven tech solutions through education, mentorship, and financing. The program aims to catalyze the growth of the Nigerian technology ecosystem by identifying budding innovators, enhancing their capabilities, and providing a platform to scale their solutions globally.
The NSIA has also kicked off the roll-out of phase 2 of its healthcare projects on the successes of the LUTH Cancer Centre and its two diagnostic centres in Kano and Umuahia. During the year, the Authority secured approval and began developing 23 new modern medical diagnostic centers of excellence which will span across all six geopolitical zones in the country.
Presently, two Oncology centres to be located in Enugu and Kaduna states, and six Cath Labs have advanced to the project execution stage.
On another note, NSIA has incorporated an equipment leasing company, Equilease which is in fulfilment of its commitment to bridge notable voids in the domestic healthcare value chain. Equilease was conceived to stimulate the proliferation of high-quality medical infrastructure in Nigeria by providing alternative financing options for acquiring critical medical equipment via equipment leasing.
Under power sector, NSIA completed the 10MW Haske solar power plant in Kano in 2022 as its flagship renewable energy sector project. The power plant was developed on behalf of the Federal government and its subnational co-investors to provide off-grid electricity in the Kumbotso Local Government of Kano State.
For the Future Generations Fund, NSIA’s approach was centered on generating healthy risk-adjusted returns, cautiously increasing market exposure, and growing the tactical allocation portfolio (ETFs) within the year.
Overall, the Authority’s portfolio delivered a return of 1.87 percent (in US$ terms) for the year ended 2022.
“The Future Generations Fund outperformed its sovereign wealth funds peers by 10 percent on average, with Private Equity being the top-performing sector. Developed Equity, Hedge Funds, and Emerging Long Only Equity posted a decline in the year due to prevailing macroeconomic market conditions,” the report noted.
For the Stabilisation Fund, the Authority said that it is largely invested in the U.S.’s sovereign debt instruments and Investment Grade Corporate Credit.
As at the end of December 2022, approximately 30 percent of the fund was invested in a portfolio of U.S. treasury bonds tracking the Bloomberg Barclays U.S. Treasury bond 1–3-year index. The fund returned 4.08% (in US$ terms) for the year.
On the outlook, the Authority projects that 2023 will equally be a challenging investment period due to the lingering effects of the Russia-Ukraine conflict, the activities of central banks of developed economies in curtailing inflation, and deglobalization challenges.
However, the NSIA assured that it will continue to drive direct investments in its core areas of healthcare, toll roads, gas industralisation, technology, ESG, Financial markets infrastructure, toll-roads, power and agriculture.
