The Nigeria Sovereign Investment Authority (NSIA) said on Thursday that its new strategic investment plans will focus on new terrains that include climate finance, renewable energy, innovation and technology.
The NSIA, while presenting its 2022 financial report and projections for the 2023 financial year, said it remained committed to ensuring that Nigeria’s Sovereign Wealth Fund consistently ranks highly in the league of state-owned funds in terms of transparency, governance, and performance.
Aminu Umar-Sadiq, its managing director and chief executive officer, said: “We have on behalf of the present and future generations expanded our focus sectors; this is in addition to the priority sectors we had maintained over the years, namely agriculture, motorways, power, healthcare, and gas industralisation.”
He said the NSIA would focus on driving growth through platforms, assessing exit opportunities from existing investments as well as attracting local currency capital.
On the 2023 outlook, he said inflation would remain the biggest challenge to global economic environment, adding that the rate hike across markets and regions would have significant implications for funds supply.
Read also: NSIA grows total assets to N1.02trn
According to him, the ongoing Russia-Ukraine tension, the rise of India, and the reopening of Chinese Mainland are some of the key events in the horizon.
“In Nigeria, these global headwinds are exacerbated by challenges in the local environment – weakening of the naira, year-on-year drop in FDI, security challenges, decreased oil production, growing debt profile and inflation,” Umar-Sadiq said.
He predicted that the 2023 financial performance of the NSIA would be impacted by developments in the global and local environment, given its exposure across the three funds.
He said the Authority will take steps to strengthen the resilience of its strategy through strategic asset allocation and diversification, portfolio selection, and other options to enhance the risk/return profile and liquidity.
“NSIA adopts a more conservative approach to asset allocation compared to its peers with comparable SWFs having higher levels of listed equity and allocations to Fixed Income.
“Relative to NSIA, most peers have comparable asset allocations with similar risk profiles. There is also considerable variety in the way peers are positioned,” Umar-Sadiq said.
He said the NSIA’s investment in Carbon Vista was designed to create investor exposure to voluntary carbon markets across a variety of projects with exposure to different income streams and ancillary impact benefits, especially in support of the Sustainable Development Goals.
He said: “The sponsors (NSIA and Vitol) will identify and invest in and/or arrange funding for projects meeting the dual criteria of creating Verified Emission Reduction.
“The sponsors are in active discussions with various regulatory stakeholders, most notably the Federal Ministry of Environment and the NCCC to fulfill regulatory requirements for generation and trading carbon credits.”
The NSIA also declared that its earnings from interest income, infrastructure business revenue, and fiduciary activities and management fees increased by 34.5 percent to N15.7 billion year-on-year growth.
It’s comprehensive income however closed at N96.96 billion in 2022, as against N147.98 billion in 2021, representing a decline of 34.0 percent.
“Despite the VUCA (volatile, uncertain, complex, and ambiguous) nature of the markets in 2022, we continue to post positive earnings through effective management of the resources entrusted in our care coupled with the deft and harmonious working relationship of the Board, Executive Management, and partner institutions,” Umar-Sadiq said.
He noted that like any “other emerging and frontier markets, the Nigerian economy faced multi-dimensional challenges during the year.”
He said: “From surging inflation primarily driven by high cost of petroleum products and food prices to declining oil output and weakening currency, thus the prospect for growth diminished as the year wound down.
He blamed reduction in the group earnings in 2022 on the decline in the performance of the Future Generations and Stabilisation funds invested in emerging and developed financial market instruments and exposed to volatility issues within the global markets.
“It is however noteworthy that earnings from interest income, infrastructure business revenue, and fiduciary activities’ management fees increased by 34.5 percent (N15.7 billion) year- on-year.
“These returns provided the needed diversification of the Group’s revenue base and cushioned the effect of the decline in the earnings from the market facing assets
“We are in a fiduciary role for the people of Nigeria, current and future. We are guided by this every day as we recognize the urgent need to leverage the institution’s mandate and fund to support the country’s growth agenda. The results that we are presenting today are a continuation of the sterling foundation laid at the NSIA since inception. It is a legacy of achievement that we are sustaining and improving upon.”
Speaking further on domestic investments, he revealed that the NSIA has invested over $500 million in domestic infrastructure, attracted over $500 million in foreign direct investments and has developed a robust infrastructure investment portfolio covering seven distinct sector.
He disclosed that the Authority has developed/co-developed over 10 institutions and platforms to improve the financial market ecosystem, invested in over 80 percent of locally owned and run Private Equity funds and has high transparency ranking scoring 9 out of 10 in the Linaburg-Maduell Transparency Index.
“Nigeria Infrastructure Fund achieved major milestones across domestic infrastructure projects specifically in motorways, agriculture, healthcare, technology, gas industrialization and others, while the Presidential Fertiliser Initiative produced 500,000MT of NPK in 2022 and earned N16 billion profit in the period,” he added.
