•invests $500m in domestic infrastructure
Despite the prevailing harsh operating environment posing a serious challenge to its ability to deliver on its core mandate in 2023, the Nigerian Sovereign Investment Authority (NSIA), has expressed its determination to continue to grow its assets through the sustenance of a diversified strategy.
Managing Director and Chief Executive Officer (MD&CEO), Aminu Umar-Sadiq, who revealed this while presenting the 2022 Financial Year figures of the Authority to the media in Abuja on Thursday, regretted that inflation remains the biggest challenge to the global economic environment while rate hikes across markets and regions have significant implications for the supply of funds to emerging markets.
He pointed out that geo-political developments such as the Russia/Ukraine tension, the rise of India, and the reopening of the Chinese Mainland are some of the key events on the horizon, continuing to impact the global economy.
According to him, in Nigeria, these global headwinds are exacerbated by challenges in the local environment – weakening of the Naira, year-on-year drop in Foreign Direct Investments (FDI), security challenges, decreased oil production, growing debt profile, and inflation.
He added: “2023 financial performance of the NSIA will be impacted by developments in the global and local environment given its exposure across the three funds.
“However, 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.”
Umar-Sadiq pointed out that in 2022, the economy saw a 3.52% growth, which was lower than the 3.98% GDP growth recorded in 2021 while the November 2022 headline inflation rate peaked at 21.47%, its highest since 2005.
However, he pointed out that although still short of the OPEC production quota, crude oil production hit 1.24 million barrels per day in December 2022, the highest production level since March 2022.
The MD&CEO noted that with 10 years of consistent positive returns, the Net assets of the Authority have grown from ₦156 billion in 2013 to N1.017 trillion, as of 2022.
He added: “Despite numerous challenges posed by the global economic environment, NSIA delivered a respectable financial performance, underscoring the resilience of its asset allocation and investment strategy.
“For the 10th year in a row, the NSIA has remained profitable, closing the 2022 financial year as follows: Net Asset grew 11.0% to N1.02 trillion in 2022 (2021: N919.73 billion); total Revenue for 2022 totalled ₦111.4 billion, a 27.2% decline from 2021. This comprises of income earned from the Authority’s core assets within the three funds and its fiduciary activities in relation to its third-party managed assets.
“In 2022, the Authority efficiently managed all its controllable earnings streams, resulting in growth in its non-volatile revenue streams (highlighted in green).
“The decline in performance year-on-year can be attributed solely to fair-value losses on financial assets from externally-managed investments, which are highlighted in red in the table.
“Nevertheless, we anticipate that these losses will be minimized, if not fully recovered, by 2023, as the global economy starts to recover.”
Umar-Sadiq said the authority’s strategic focus for 2023 will include driving growth through platforms, assessing exit opportunities from existing investments, attracting local currency capital, increasing third-party asset management portfolio, and leveraging ESG as an asset class.
He said 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 sectors.
Similarly, he said the Authority has developed/co-developed over 10 institutions and platforms to improve the financial market ecosystem, invested in over 80% of locally owned and run Private Equity (PE) funds and has high transparency ranking scoring 9 out of 10 in the Linaburg-Maduell Transparency Index
According to him, the NSIA has also become a leader in sustainability and a preferred green partner of choice.
Strategic partnerships with reputable global institutions such as Vitol S.A., OCP of Morocco, Signature Agri Investments, PIDG and GuarantCo, among others.
The MD&CEO said the 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 (PFI) produced 500,000MT of NPK in 2022 and earned ₦16 billion profit in the period.
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