Nigeria: Despite Pandemic, NSIA's Income Rises By 343% to N160 Billion

12 May 2021

Lagos, Abuja — The Nigeria Sovereign Investment Authority (NSIA), manager of Nigeria's Sovereign Wealth Fund (SWF), yesterday announced its audited results for its 2020 financial year, reflecting a strong financial performance and consistent implementation of strategic infrastructure investment programmes for the year.

The results showed that despite the challenges posed by the COVID-19 pandemic in the year under review, the NSIA recorded 343 per cent growth in its total income, which rose to N160.06 billion in 2020, up from the N36.15 billion in the previous year.

Also, excluding devaluation gain of N51 billion, the NSIA made a core income of N109 billion compared to N33.07 billion in 2019.

In addition, it achieved 33 per cent growth in net assets to N772.75 billion, compared with the N579.54 billion it achieved in 2019.

NSIA Managing Director, Mr. Uche Orji, said at a virtual media briefing yesterday that the organisation received an additional contribution of $250 million and provided the first stabilisation support to the federal government of $150 million withdrawn from the Stabilisation Fund, in the year under review.

Similarly, the NSIA received $311 million from funds recovered from late Gen. Sani Abacha from the United States Department of Justice and Island of Jersey for funding of Presidential Infrastructure Development Fund (PIDF) projects such as Abuja-Kaduna-Kano Highway, Lagos-Ibadan Expressway and the Second Niger Bridge.

"COVID-19 adversely affected logistics around infrastructure projects, especially the toll road projects, and the presidential fertiliser initiative. In response to COVID-19, NSIA partnered Global Citizen, a not-for-profit group, to form the Nigeria Solidarity Support Fund. Separately NSIA acquired and distributed oxygen concentrators to 21 teaching hospitals as part of corporate social responsibility, in addition to staffing support to the Presidential Task Force on COVID-19," Orji said.

Giving a highlight on the activities of Nigeria Infrastructure Fund (NIF), he said projects under construction in the country had reached major milestones across domestic infrastructure projects in motorways, agriculture, and healthcare.

According to him, in 2020, there were improved contributions from subsidiaries/affiliates such as Infrastructure Credit Guarantee Company (InfraCredit), Nigeria Mortgage Refinance Company (NMRC) and Family Homes Funds Ltd (FHFL).

The NSIA, he said, invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA's shareholding at 16.5 per cent following the company's rights issue of 2020.

Orji said the NSIA in 2020 launched its Nigeria Innovation Fund to address investment opportunities within Nigeria in information technology with an immediate pipeline that included data networking, data centres, software, and services as well as agri-tech and biotech.

It also made progress on developing the ammonia and diammonium phosphate production plants in partnership with OCP in the review year, as it selected Ikot Abasi in Akwa Ibom as the venue after an extensive review of several other locations.

He said: "In the year under review, COVID-19 adversely impacted NSIA key infrastructure projects, with significant disruptions to the supply chains and logistics of NSIA's key projects. NSIA maintained its three-pronged investment approach: direct investments, co-investment with partners, and creation of financial institutions to fill critical institutional voids in the infrastructure landscape. In 2020 the Authority recorded significant progress on all fronts.

"Over the past six years, the Authority has invested significantly in crucial sub-sectors of the financial landscape with the intention of bridging critical voids that otherwise constrain investments and smooth operations in the sector.

"In 2020, the access roads to the Second Niger Bridge, 2A and 2B, 17.5 kilometres (Km) each (totaling 35km), were added to PIDF scope of work. "These had initially been part of scope expected to be carried out by the Federal Ministry of Works but owing to several challenges they have been unable to commence the projects leading to a transfer to the NSIA. The original scope of NSIA's section was 10.7KM of bridge and road, bringing the entire project to more than 45Km.

"As of year-end 2020, the original scope of 10.7km Second Niger Bridge is at 53 per cent completion with a completion target of 2022. The Lagos-Ibadan Expressway is at 66 per cent completion and is expected to be completed in 2022."

He added: "The initial scope of the Abuja-Kaduna-Kano Highway is at 66 per cent completion. However, please note that the scope of the project has been expanded from the rehabilitation of 92.5km along the three sections of the road to the full reconstruction of the entire stretch of 375km, as directed by Mr. President; this has extended the completion date. The NSIA is exploring options to shorten the completion timeline for the project."

According to him, the NSIA ran the Presidential Fertiliser Initiative (PFI) from December 2016 to December 2020, adding that the operator company - NAIC-NPK - has now been spun off to the Ministry of Finance Incorporated (MOFI).

"The Authority's role in the programme has shifted upstream. NSIA's role is limited to importation, storage, and the wholesale of raw materials to blenders. In essence, blenders are expected to build the capacity to actively participate in the sub-sector.

"Over the period it ran, 42 blending plants were enlisted under the programme while a total of 30 million 50kg bags of NPK 20:10:10 fertiliser were made available to the Nigerian farmers. Beyond serving a proof of concept for import substitution in the fertiliser space, the programme led to the creation of thousands of direct and indirect jobs across the agriculture value chain including in logistics, ports, bagging, rail, industrial warehousing, and haulage touchpoints amongst others. It also enabled the country to conserve foreign exchange that would have otherwise been used for subsidy payment," he said.

Commenting on his outlook for 2021, he said the NSIA would raise fund by issuing a Sukuk bond.

He stated: "Although NSIA believes the market is unlikely to repeat some of the performance of 2020, it is more likely that a broader market recovery will occur with economies opening unlike the case in 2020 in which technology stocks drove market performance.

"In the Future Generations Fund, we expect to allocate more capital to venture capital, global equity markets, and increasing exposure to European equities where we had been underexposed in 2020. NSIA believes that the broad opening of the markets will provide a comprehensive lift to equities.

"In the Nigeria Infrastructure Fund, the Innovation Fund is expected to be very active as we see opportunities in data centers, data networking, software, pharmaceutical manufacturing, and many others.

"NSIA expects to complete concession, capital raise and operationalisation of the three PIDF road projects: Lagos-Ibadan Expressway, Second Niger Bridge and Abuja-Kaduna-Kano Highway.

"Despite concerns around new waves of COVID-19, the Authority remains confident that with widespread vaccination programmes, global economies will continue to reopen and create more opportunities to create value by the NSIA."

Orji also shed more light on the NSIA's financial performance when he appeared yesterday on 'The Morning Show' on ARISE NEWS CHANNEL, the broadcast arm of THISDAY Newspapers.

He explained that some of the NSIA's portfolios were up by as much as 50 per cent in dollar terms in 2020, predicting that although the financial technology sector ruled the market last year, there will be a broader profit ecosystem this year as countries continue to open up on the back of increasing COVID-19 vaccine jabs.

According to him, the body has been aggressive in terms of its focus on international equities, private equity investments, venture capital and direct investments in the international market, where much of the profits came from.

He said with the exception of just one or two portfolios, every single asset class made substantial returns to the NSIA last year, with net profit of N108.9 billion.

He predicted a broader recovery for the equity side of the investments this year, saying that although stock market growth in 2020 was largely anchored on technology, activities in 2021 will be driven by aviation and the industrial sectors as the world opens up again.

Uche stated that fixed income should be closely watched by investors, except for the impact of inflation, which he predicted would make interest rates go up and make fixed income instruments fall.

"My view is that on the balance of risk, we are more likely to see interest rates go up than go down," he added, noting that venture capitalist funds are also being explored by the organisation.

"On the average, we had almost 30 per cent returns in dollar terms and we are going to be more aggressive in venture capital," he said.

Uche stated that the NSIA is also investing in fintech, software services, data networking as well as biotech and pharmaceuticals.

Besides, the NSIA has also intervened in the diagnostics and radiology centres in Kano and Umuahia and the cancer centres at the Lagos Nigeria University Teaching Hospital (LUTH).

It is also discussing with the University College, London, to develop pharmaceutical industries in Nigeria.

On the Abacha loot, he stated: "The Abacha fund was $311 million that was returned to Nigeria by the US Department of Justice and Island of Jersey and the agreement was to spread the money in equal measures across three projects.

"These are the Lagos-Ibadan Road, Abuja-Kano Road and the Second Niger Bridge. Each of them will get $103million-$104 million. To spend the money, we have been required to have external auditors aside from our in-house auditors as Deloitte to monitor the disbursement of that fund.

"A civil society group, CLEEN foundation has been appointed by the Ministry of Justice and also with the US government to also supervise the disbursement of the fund. So, you can imagine that every single pair of eyes possible are overlooking how these funds will be disbursed.

"The fund is still there intact. Not a dime has been spent. It is being held in our accounts with the central bank."

He added that another €4.2 was being expected to be repatriated, which the authorities have agreed should come to the NSIA to be used for the three projects.

According to him, the NSIA is planning to invest more in healthcare sector this year, with the ramping up of infrastructure in Abuja and an eye on 20 such centres nationwide.

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