The Nigeria Sovereign Investment Authority (NSIA) has reported a 10th consecutive year of growth – as Aminu Umar-Sadiq took up the sovereign wealth fund’s leadership.
Net assets grew 10.5% to NGN1.02 trillion in 2022, although total comprehensive income slumped 34% to NGN97 billion as volatility negatively impacted on fixed income and public equities in developed and emerging markets. In US$ terms, net asset value grew by around 3% to US$2.27 billion.
The Nigeria Sovereign Investment Authority (NSIA) was launched in 2013 and has consistently remained profitable. Despite market turbulence, the Future Generations Fund (FGF) delivered a return of 1.87% (in US$ terms) in 2022 with Private Equity being the top-performing sector. Meanwhile, the Stabilisation Fund was largely invested in the US sovereign debt instruments and Investment Grade Corporate Credit. The fund returned 4.08% (in US$ terms) for the year.
Umar-Sadiq said, “Although the Group reported declining earnings year-on-year, the underlying portfolio exhibited significant resilience given the challenging macroeconomic environment characterized by rising inflation, geopolitical tension, and the impact of Covid-19 particularly in China.
“In 2023, we will be resourcing our various platforms targeted at emerging sectors – renewable energy, sustainability, and innovation – which will ensure the Authority achieves its dual objectives of delivering financial returns and impactful social outcomes.”
Before he retired from his position as CEO, Umar-Sadiq’s predecessor Uche Orji had warned of the challenges facing NSIA, saying in May 2022, “I think that 2022 would be the toughest year of investing over the last 15 years. Since between 2008 and now this will be the toughest year for investing because navigating inflation and controlling it without triggering a recession is the biggest challenge that central bank governors all over the world have to deal with. And that is always not a good time for investment.”
Warning of a risk of global recession and the impact of inflation on returns, Orji stated that the NSIA was strengthening resilience through diversification and portfolio selection. Over the long-term, the fund manager hopes to expand access to third-party capital to bolster efforts in sustainability and the development of a climate-resilient economy.
The Nigeria Infrastructure Fund (NIF) achieved a number of significant projects, including:
achieving a second year running of profit in the Presidential Fertiliser Initiative (PFI);
the commissioning of the Pandagric Novum poultry feed farm in September 2022;
the continuing development of 1.5 million tonnes per annum ammonia and di-ammonium phosphate production plants in Akwa Ibom State;
continuing development of highways under the Presidential Infrastructure Development Fund (PIDF);
the commencement of the development of 23 new modern medical diagnostic centers of excellence;
the completion of the 10MW Haske solar power plant in Kano.
NSIA oversees three funds with different mandates, all of which reported growth in 2021. Forming the strategic part of the NSIA, the National Infrastructure Fund (NIF) remains its largest mandate, representing around half of AUM, but does not provide details on an annual return.
The NIF has a three-pronged approach:
Direct Investment Strategy: Presidential Infrastructure Development Fund for road construction and Mambilla Hydropower Project; cancer diagnostics and radiology facilities
Co-Investment Strategy: Developing agriculture and innovation through contributions to the Fund for Agricultural Finance in Nigeria, NSIA-UFF Agriculture Fund and Innovation and Digital Technology Fund
Institutions to support financial market infrastructure: launching low-cost mortgages, infrastructure credit guarantees, operationalized the Development Bank of Nigeria for banking support for MSMEs.
It is branching out into various sectors, including healthcare, fertilizer production, animal feed processing, solar energy generation, and the development of financial infrastructure to foster greater inclusion. It is going further to support local innovators through VC.
