Uche Orji: At NSIA, Our Guiding Principle for Investment  is Balancing Commercial and Social Returns

Sovereign Wealth Fund (SWF) is a state-owned investment fund, which commits excess proceeds from sale of export commodities  to judicious use, to the benefit of the people of a nation. Though not mandatory, but in line with international best practices, the initiative has been embraced by most countries that are rich in commodities and mineral resources and as such, Nigeria is not left behind. Now in its  seventh year, the Nigerian SWF managed by the Nigeria Sovereign Investment Authority (NSIA) has had its fair share of impact of the vagary in commodities prices at the international market as well as the challenges back home. The Nigerian fund has, however, weathered the storm to imprint its indelible marks in the lives of the people. The NSIA Managing Director, Mr. Uche Orji, speaks with Kunle Aderinokun about how impactful the fund has been on the development of Nigeria as he addresses the issues and challenges. Excerpts:

 

There is a lot of expectation from the Nigerian Sovereign Investment Authority regarding the management of the sovereign wealth fund. Where are we?

We had five straight years of profitability in all the three funds. Initially, $1 billion was injected into the fund, but in fact, there was not much that was injected until this new government came into power in 2015. This government has, in the last three years,  injected $1.15 billion into the fund. The fund right now, in terms of capital injection by the government, is $2.15 billion. It started with $1 billion and for most of the period between 2012 to 2013 into 2015; there was really not much by way of fresh capital injection. But we have then since received $1.15 billion, the latest being the recent $650 million that was injected, specifically for infrastructure. So excluding the returns that we’ve made and have been reinvested, the fund now has $2.15 billion injected by government. After five straight years of profit, we are considering to start paying dividends to owners of the funds which are the federal, state and local governments.

There are three funds that we manage; they are the stabilisation fund, the future generation fund, and the Nigeria infrastructure fund. Most of the efforts in the previous five years have been investing in the stabilisation fund, future generation fund and developing infrastructure projects. Infrastructure is now active, in fact we define it a little bit different, it is not infrastructure, and we call it direct investment into the Nigeria economy. In that area, we are focused on four sub-sectors; we are focused on agriculture, healthcare, toll roads and power. We have made some real solid investment into some of these areas and more.

The other areas that are of interest to us include industrial real estate, refining, and industrials that we are looking at, but we have not actually made investments in some of those areas. The areas that we are investing now are agriculture and toll roads. Let me step back to infrastructure or direct investment fund. We have three approaches to investing that fund.

The first approach is the direct investments we are making into these key areas. The second approach is the creation of co-investment funds like the ones we created with Old Mutual of South Africa and NSIA, so we invest in capital and they invest in capital  and we develop the funds together for Nigeria. So we did that successfully in agriculture and the fund has made some early investments and it continues to make some more. The first investment is a farm of 3,500 hectares; we are going to invest $25 million and turn it into a first class agriculture concern.

The second project is in Gurara, where there is the citrus farm. So the partner that we have is an agriculture investment company. The third pillar is in creation of funds and institutions that help infrastructure. For instance, one of the early funds we sponsored was the fund for agriculture in Nigeria. We sponsored it with KfW and it is doing very well. We also created InfraCredit- Infrastructure Credit Guarantee Company Limited. We did  that with GuarantCo of the UK. That’s a company that was conceived here at the NSIA and developed here at  the NSIA. It is fully operational and it’s in Lagos. NSIA owns all the equity at the moment, its supporting contingent capital is provided by GuarantCo. Recently, I signed investment by the first capital contributor into that fund and we are looking for more and we have expectations from many DFIs to support it.  What InfraCredit does is to provide infrastructure bond credit enhancement. What does that mean in practice? It means that once InfraCredit gives enhancement instrument to a bond, pension funds and insurance companies can buy into it.

Can you expatiate on that?

There is a company known as Viathan in Lagos, the company does captive power like street lights, Alausa power station, Maryland Shopping Mall. There is quite a few of those captive companies in Lagos that have real estates in Lagos Island that they power. But they’ve been borrowing their monies from banks, short-term monies and it is expensive. But with our intervention, they were able to issue a 10-year bond to pension funds and reduce their interest expense by N900 million yearly, because the interest rate came down.

We have a triple A-rated instrument in InfraCredit that is lent to this company, which is a kind of an enhancement. If a company could not  by itself issue a pension fund, but once InfraCredit provides that enhancement, they are able to do that.

InfraCredit’s history started here in NSIA on October 1, 2013 , when I started to write the business plan for that and a number of people helped us to get to where it was, such as IFC, AFC, to meet GuarantCo and we developed the business together.  It took three years to develop, but it is now fully operational. We have an office in Lagos, at Sanusi Fafunwa, a first class company.

Obviously, you know about the Nigeria Mortgage Refinance Company, we are the biggest shareholder. You also know about the Development Bank of Nigeria, we are the third largest shareholder. We also worked with the Minister of Finance to develop family homes funds to develop social housing. First investments have been made in Nassarawa State, for example where we have really built some low-cost housing projects. Here we are talking about one, two, three bedroom units, costing between two to three million naira for low income earners.

We have also activated our social infrastructure programme. What most people don’t know is that, we invest in education. We invest in Bridge International Academy, which provides high quality education to the low income earners of the society, with every teacher having a smart phone and an I-Pad. The teaching curriculum is pushed from a central server and the teachers teach exactly to the curriculum. The results so far have been fantastic. The literacy level of these children has gone up significantly. These are not fancy schools. These are places where the quality of education is very high. We have 11,000 students in that School. We own 13 per cent of that company, Bridge Nigeria.

We have also started our healthcare interventions. We will be commissioning our Cancer and Oncology Centre in conjunction with LUTH by December this year. Similar types of projects are going in Umuahia and Kano, Aminu Kano Teaching Hospital and Federal Medical Centre, Umuahia. The strategy we have in healthcare is a good-looking project with teaching hospitals and federal medical centres.

So there is a lot that has been going on with that fund. But with all of these, we have to be very mindful that we are very small as an organisation. In terms of ranking, the NSIA in the global sovereign wealth fund is number 56 in terms of size. There are two things: there is the size of the organisation and the way it runs. Norway is the biggest. We have always been on number.56, but right now with the new fund injection, at $2.15 billion, we will probably be number 51 or 52, replacing Kazakhstan, that is if they haven’t given them more money too, because oil price is still high and the country is oil-based.

The point is that, there is a lot going on in the organisation and we still go through the traditional means of press releases and call the press every quarter. At the minimum, we have the press twice in our office, where we shed light on everything that is going on. But there is a lot going within the organisation, the point being that all three funds are firing from all cylinders. We have also started our social infrastructure programme. On top of all these, we also manage funds for agencies of government that have cash, if they don’t know what they need to invest in. They know what to do with it, but it is better to invest the money while waiting for what to invest it on. NBET is one.

We manage money for NBET; that has expired though. It expired recently, so we will be returning our money to NBET. They gave us $350 million and we are returning over $400 million to them. So we manage models for the federal government. We invested the NBET fund  the same way we invested our own stabilisation fund. So we made money for them because if you think about it, they don’t have an investment mandate, so they probably would have had the amount they had it would have just sat there as capital. Because we invested, we were able to return to them more than $400 million.

You asked a question, where are we? We had five straight years of profit on all three funds. Stabilisation fund fully invested, future generation fund is still being invested. We can talk about all the investment we have made there. Infrastructure fund has started, and we making investment in agriculture, healthcare, toll roads, and gas to power.

We have our co-investment funds, which we have established with other people and brought real money and expertise to Nigeria. That is also running. Our social infrastructure is running in education and healthcare. I think that at the moment, the organisation is growing.

We have just launched two factory programmes last year. One is the fertiliser initiative which was a programme of the presidency, but executed by the NSIA. This is the first time we have had a significant almost entirely elimination of subsidy in the fertiliser distribution value chain and yet the price of the product was able to come down by more 40 per cent. I read a report from the International Federation of Fertilisers Corporation , IFCD, saying  consumption of fertilisers in Nigeria went up by 63 percent mostly because of the programme we embarked on. So there are a lot of things going on in the organisation, it’s been quite busy in the last few years.

Recently, you had a meeting with the state governors and others, where you made presentation to them. Could let us into what really transpired?

There are three things. First of all, the governors are our governing council. Most of the members of the national economic council are members of our governing council. So what we’ve done was to we take our governing council meeting to the National Economic Council. It’s  a minimum of once-a-year meeting with the governors. We show the accounts, they approve the accounts; so they’ve approved the accounts for 2017 at the meeting.  Every year we take our accounts to them and show all the investments we have made. We get guidance, feedbacks and ask some questions, but overall, the last three years of doing this with the governors have been very supportive. We have enjoyed tremendous support with the governors in this administration. To think that in the middle of a recession, recession of 2016/2017, we still got $500 million fund injected into the NSIA. It is a serious statement of intent and support and we are very grateful for that. And then the $650 million that just came, we are also very grateful for that. It has very been surprisingly, in my opinion, very supportive given the state of the economy, with oil prices collapsing in 2016 and 2017. We are grateful for that and not unmindful of the expectations on us especially delivering on some of these expectations.

How did it go?

The council presented and it was approved. We received feedback on what they think we should be doing. Some of which we are already and some of which we need to do better and focus. We promised them that we will continue to deploy the capital. We have not deployed most of the capital given to us in infrastructure, so the next 12 months will be about deploying capital and showing some real benefits. For example, the Presidential Infrastructure development fund, which we are running here is going to be the main focus of the next 12 months.

The fund is going to ensure almost full funding for some of the flagship projects such as Lagos-Ibadan Expressway, Second Niger-Bridge, Abuja-Kano Highway, Mambilla Power Plant and East-West Road, to satisfy projects that in the Presidential Infrastructure Development fund. This is what we are going to spend our energy on in the next 12 months, deploying capital and optimising those projects and make sure it gets done. The expectation for us is for something like Lagos-Ibadan, we are going to invest a lot of money to that project in order to see visible progress of that road. We expect that road be completed in 36 months. There are two sections to it. Abuja-Kano was flagged off recently.

People are wondering why the East-West road has not been completed all these years despite the length of time the federal government has spent on the project.  When will it be completed?

The President is aware and this is why we launched this Presidential Infrastructure Development Fund. The first question is what does this fund mean? The president came to the  conclusion that  the way we were budgeting for this project is the reason why they are not getting done. If you look at 2017 for example, the total appropriation for these projects was less than five percent of the cost of the project. If this is how you have been budgeting for the last many years, and the minimum it is taking to finish is 20 years. So these projects are not been executed as aggressively.

The president came to the conclusion that we need to look for another way to make these things get done quickly. Let’s say the project is N100 billion, and every year, you get N5 billion. You do N5 billion work and stop. First of all, you are probably going to spend N1 billion for mobilisation and de-mobilisation, then you finish, you do N4 billion work and stop, because money has ran out and then the road will deteriorate, you start again the next year. Then, you repair the ones that you’ve already done before. So, even if that didn’t deteriorate, it will take more than 20 years because mobilisation and de-mobilisation. The president came to the conclusion that he is going to take out five of the major roads, create a funding structure for those roads and he has asked the NSIA to manage it.

Based on the strategies the president has put in place, we believe this project will be aggregately more  than 80 per cent funded. We still have the responsibility of raising 10-15 per cent of extra funding from the market. We will get there, but there is now enough money to do this project aggressively. So, based on the new timelines we have, apart from Mambila power plant, which will take a little bit longer, simply because Mambila is a major civil engineering work, the plan is between 36 and 48 months for the likes of Second Niger Bridge, Lagos-Ibadan, and Abuja-Kano.

In fact, the  Second Niger Bridge, based on the funding plan, we are still waiting for the final works contracts to be issued, that should be issued soon and then, we will start funding. But the expectation we have is that by the end of next year, you will actually see a bridge. You probably will not use it, because access road, approach and other things need to be done. But 75 per cent of the piling has been done. If you go, you will see that all the pillars have come up, though not all. But you see a lot of the water pillars coming up, so piling is in the water. But we have to put pillars on that. Again, the Ministry of Works will provide more feedbacks on this, because we are working on this project with them. Our job is to make that the funding is structured and in place.  

We are very confident based on the new Presidential Infrastructure Development Fund that these projects will be done. The president says he will take the five projects and create a new funding structure for them and ensure they get them done.

I think that is commendable, to be honest. It is bold and shows initiative, courage and it shows that the president understands the challenges people are facing with these projects.

We have a very difficult terrain as a country, so road construction is not a very simple thing to do in this country. High temperature, and humidity affect asphalt and so, you really have to build quality roads that will stand all types of weather conditions. But we have shown that we can build quality roads, look at Abuja Airport high-way.

So it is a matter of courage and political will, and I think the president’s programme is commendable; we just pray that we are able to execute it efficiently. We approach these things with a lot of humility because there is a reason why these projects have not been done in the last 30-40 years. So we approach it with a little bit of humility, and trepidation. But also with confidence in the way the president has defined the structure we believe we can get it done.

In terms of healthcare, how far has the fund gone in impacting peoples’ lives?  

It took time for us to really start what needs to be done. If you remember two years ago, I was quoting all the studies we have done, how much money was spent in cancer, renal and other things. It took a while, so we now said we were going to do specific projects addressing four areas. One is oncology which is cancer, another is renal which is kidney. The nature of Sub-Saharan Africa has made us susceptible to high blood pressure and that is what really causes these kidney issues. The challenges is how do you solve it, what do you do make sure that the cost are affordable and high quality. We also decided to address the area of cardiac diseases issues. NSIA, I accept, we take our time, because of the responsibility of managing public funds. We don’t just throw it in without ensuring that the money comes back.

We are an investment company and not the budget or  social intervention fund. So we took our time to study and then we decided to start with three projects and we entered into partnership with Kano (Kano Teaching Hospitals), Umuahia (Federal Medical Centre Umuahia) and Lagos University Teaching Hospital (LUTH).

For LUTH, we decided to start with cancer. We are rebuilding in a PPP the cancer centre at LUTH. So it is a public-private partnership. We signed an agreement with LUTH to take over their cancer centre and do it as a PPP. This is an ongoing work. We are targeting commissioning in January 2019. So, in this work bunkers are  being built for the cancer treatment centre. This would now be called NSIA Lagos University Teaching Hospital Cancer Treatment Centre. We have a structure with them, where we earn our money back.

We will operate, earn our money back and transfer to them. It is not just earning our money back, there is a specific return we will get. There is a transfer process back to LUTH over a certain period of time. We have shortlisted an external operator to operate it and the operator will be hired by us. We have a project management company that is executing on the project. This is a $10 million investment by the NSIA. This is taking time and I saw it first-hand, when I went to LUTH and I saw people who were being treated for cancer. I saw the fact that equipment will bring down.  The entire country has only one equipment that works and it usually  breaks down for one or two weeks. And if you have cancer, and they say you must take this radiotherapy treatment for 60 days, you can just wait for three days for them to go and start looking for parts. In the entire country, we have only one … and that one was in LUTH and it was always breaking down.

So that was the idea behind getting involved in this investment. By the way, it is profitable; people that we will treat themselves will go to Ghana, Dubai, and India. But you do it here; at least everybody can come to Lagos. There is nobody in the country without connection to Lagos. We will roll this out in other parts of the country as well. This is going to be World Class with all the right equipment. Luckily, for us LUH has done some things to ensure that they have steady power in LUTH. Again, target commission date is January 29, 2019. 

Different things are going on in Kano and Umuahia diagnostic centres both radio and laboratory. These are world class diagnostics centres with MRI machine and CT scanners. Again, target commission date is January 29, 2019. This is what we are doing in healthcare for now. Let’s get this to work. Also, with LUTH we are doing what is known as a centre for advance medicine. If you come to LUTH, this oncology centre is inside LUTH itself, there is a centre for advance medicine, which will be outside of LUTH. There is a spare piece of land we have agreed with the management of LUTH to build the centre for advance medicine. Therefore, it is not just for cancer, it will be cardio, renal, and high-end surgery. We had a partner we are working with in that regard, but that partner had a little of problem. But we are going to get a new partner to put on that project. We want to be sure that the model works because if you go crazy with and it fails, it fails spectacularly.

What are your plans to spread the fund to other non-communicable diseases ?

Of course we have plans, but we have to be mindful of the capital. You don’t have infinite amount of capital. I think Nigeria needs to be humble about that. You need to look at the philosophy of sovereign wealth fund. Sovereign wealth funds are not substitute for the budget. The Ministry of Health and budget need not to abdicate their responsibilities to sovereign wealth fund. It is your picking areas, where you can show your models. For example, fertiliser, we don’t have plans to be doing that forever. We plan to show what can be done and how we can eliminate subsidy, reduce price, supply quality fertiliser, revive the blending plants, employ people, and create value for the country. This is limited by the size of the funds we have.

Most sovereign wealth funds don’t have the philosophy of domestic investment in infrastructure. The Norwegians don’t invest one dollar of their money in the economy. That is their philosophy. It is a savings fund. It is a fund for the future, where money doesn’t run out, so they invest it internationally and earn returns from other places. Norway sovereign wealth fund is one mandate, ours is three that makes ours deeply complicated. Well it depends on how you define impact.

Granted, we have these issues and we need to solve them. Therefore, everybody defines their funds to the mandate that solves their problems. The Norwegians took a decision that every dollar we sell in oil will not be put to fund our budget. Their domestic budget is funded from agriculture and other things. Oil revenue is kept away; they don’t want distortion in the economy. So in the future when oil runs out, they ran to that money to rebuild their economy. This is the more reason why if you look at their economy you will realise that this is a major oil-producing country because the infrastructure is not fast splashy.

It is an economy that is growing at its normal pace on other real industries such as small manufacturing, agriculture, and fishery. We still buy fish in Nigeria from Norway, they have not allowed it to distort their economy; that’s the philosophy they have taken and there is a consequence. Budget is for infrastructure, but the oil money is kept away. I will like us to make sure that we understand the various philosophies that exist, so that we don’t start to think that sovereign wealth fund is now the be all and end all for Nigeria.

Secondly, bear in mind where you are. I happen to have followed the Norwegian sovereign wealth fund extremely closely. For many years, they didn’t invest much and nothing was heard about them because they went through a capital accumulation phase where on a consistent discipline basis, you are putting money in and into the fund. You grow it to a certain size, then start making big interventions. The reality is that in a grand scheme of our economy, is a $1.5 billion sovereign wealth fund. You have to be conscious of the fact that we are also not nervous. If you look at the Abu Dhabi sovereign wealth fund has the engine of not only external investments, but the engine of industrialisation within Abu Dhabi and Dubai. They started sovereign wealth fund in 1976, when Nigeria was more sophisticated and developed. You go through a capital accumulation phase before you start spending the money and investing aggressively.

Agriculture is also one sector that is very important to Nigerians. What are the specific things the NSIA has done in agriculture?

We view agriculture as a very important sector. First, there are two reasons why we regard agriculture as very important. It is the biggest part of our economy. It is 25-30 per cent of our GDP depending on what economic numbers or what year you are looking at. Again, we took our time.

Most of the initiatives, we took to be honest some are ours and others were brought to us in the sense that there was an idea developed known as the Presidential Fertiliser Initiative. It was a project we executed because we are helping in designing and executing it. But what is the objective? The objective was to produce high quality fertilisers at a low price and make sure farmers receive it.

The second objective was to improve our own blending capacity because up until this new government came onboard, we were still importing fully blended fertilisers. For many years, not much was invested.

 To make matters more fascinating two third of the raw materials are made in Nigeria. Yet we now import fully blended fertilizers. Urea and limestone are 63 per cent of the components of fertilisers.

This is how it started, we got involved and we were invited to look at the programme, we designed it and we have executed it and created SPV called NAIC NPK to execute it. It stands NSIA Agricultural Insurance Investment Company. Last year, we blended and sold 8 million bags of fertilizers; for the first time fertilisers was not in shortage in Nigeria.  We had more than ever and we did not use any subsidy.

Towards the end of the programme we had gas issues, which we suffered a little bit of loss which is now being made up for us by the federal government because of Apapa issues. Here is the programme, we need four components to make fertilisers; we need Urea, Phosphate, Potassium, and limestone. Phosphate and potassium we have to import because we don’t have it in Nigeria. Urea and limestone we have in Nigeria. Up till the year, the presidency and the NSIA worked on this programme, fertiliser was being sold as high as N9000, N10, 000 a bag, we designed and built a model along with our partners which is the presidency with a target price of N5, 500.

The idea of the programme was to reduce this price; it was too high. If you thought in the past 50 per cent of the price was subsidised by government at N10,000 range per bag, it was going to be N5,000 per bag subsidy. The real demand in the country in my opinion is 10 million bags yearly. So you will have to spend N50 billion. However, if you buy these components, revive some of these blending plants, and all you do is remove the trucks from Lagos and Port-Harcourt to the blending plants. You now blend it yourself, you will have eliminated the labour cost from international market and create labour here.

In the transportation process, you create transport jobs. Some of these blending plants have not worked for 20 years. Some have not worked for 30 years, and some of them after inauguration they shut it down.  There was a particular blending plant; it has not worked for nine years, what was holding it back was conveyor belt chain and it cost N100, 000.

If you create a trading model, where I import and sell, and I make money because you are paying me subsidy why will I want to work? You need to remove the incentive so that people can work. Subsidy model was just an incentive for people not to do anything. Nigeria has more than 30 blending plants. We went round all the blending plants and these are the ones part of the blending plants; we have three in Kaduna, one in Niger, one in Edo it was commissioned about 16/17 years ago, but never worked and it packed up. Ebonyi, Benue, Jos, Bauchi, and Katsina, are working. Akwa Ibom is new for this year.

There is one in Lagos, it is working, but all are running below capacity. Therefore all these blending plants receive our materials. Let me give an idea. We did 10 million bags. We sold eight; we had 2 million bags left over. There were 17,000 truck movements to move these products across all the blending plants. This is no joke, 10 million bags is 50kg bag. The average trailer you have in Nigeria is 30 tonnes, 600 bags. Do you know that in 2016, there was not one trailer or truck imported into the country. Therefore they were shortages of trucks.

Our working partners actually moved a lot of these products by rail. But sometimes it took 20 days for the rail to go from Lagos to Funtua or Bauchi. So they are real infrastructure problems and those things created a major problem for us. Secondly, the second challenge we faced was the Apapa port. The port became congested. Our port capacity is very small. We need more ports, Lagos is not enough and sufficient. Think about how of these trailers have to go through Lagos which is a congested city. It is complicated and makes it very difficult. So a lot of these works were things we experienced.

In the first part of the programme, which was the dry season was very smooth (early 2017). February, and March, were excellent, then our last shipment arrived in June and the rains had started. It took 45 days before the ship could berth and running up demurrage because all the vessels that were discharging could not clear because of the rain. It was challenging. The joy of it was International Fertiliser Development Commission (IFDC) reported that fertilizer consumption in Nigeria went up by 63 percent. To large extent I like to believe that this president’s programme which we are able to execute contributed in some measures to the food reduction we have seen in the country, especially reduction food price inflation. You see the food price inflation gone down steadily down, from 16 to 11 per cent. Most of that is because food price has been coming down and I think this programme contributed in a significant way in doing that. Let’s talk about rice for example, December 26 rice was N22, 000, I was buying mine N14, 000. But it is now between N14, 000 and N16, 000.

Let’s talk about political risk especially from the angle of political interference. Again as laudable as these projects are, they’re affecting people’s lives positively, but another administration may come and set out its plans on how to achieve it or even decide that sovereign wealth is not their focus. So what are the measures to ensure that the funds are not affected by any political risk?

I think the NSIA is privileged in the sense that it is one organisation that was designed by the previous government, but sustained by the new government. If anything, the new government contributes more into this fund than the previous government, in a recession. You can only imagine if the economic fortunes were much better, If oil price was not at 27, it was at 80, 2016/2017 how much money the NSIA would have consumed? Therefore, the point is that as long as the organisation is consistently doing the right thing, I like to believe that it will take somebody who decides not to apply common sense to roll back some of these programmes. If we are making investments and not able to show returns or make any money, then we probably have to stop our job.

At NSIA, our guiding principles for investment are balancing commercial and social returns. If you do all of those things, then I think we should be okay as an organisation. Every country in the world has shown that if you allow the sovereign wealth fund to be professionally managed, it is a tool for economic progress. So why should we be afraid or are we not the ones electing the government?

I am not worried, I will only worry if the management or the board of any institution is doing the wrong thing. Then you should worry and that has nothing to do with political risks. The biggest risk I think we face is the risk of execution, being able to execute these projects. This is part of the reasons why we take out time to develop them properly that so that we can minimise those risks Outside of that,  I will not worry too much about that and I think,  in my opinion, we have shown as a country that we can transition from one political party to another. This is the first time in Africa, that there is a peaceful transition of power. We should celebrate the things we have been able to accomplish and not worry about the things that used to hurt us from the past. We should move forward.

Recently you released your results, could you please dissect the results?

Let’s look at the returns. There are three funds. There are the stabilisation future generation and infrastructure funds. All these three funds were above their  benchmarks; because of the nature of the stabilisation fund, the return benchmark was at two and half per cent US inflation; because we want to retain the purchasing of the stabilisation fund in US dollars, so that fund is coming in US dollars returns. The future generation fund was 8.6 percent and we have a benchmark of about 6 percent. The infrastructure fund is about 6.5 percent and we have a benchmark of 3.5 percent.

So they  were all above that benchmarks. Year on year, our profits were down because we now taking money into infrastructure projects and these take a long time before they start earning returns. And I expect Nigerians to understand that the rate of returns going forward will be affected by three things- it will be affected by the global market, and last year the global market was good for us. This year, not so good, so far.

I need Nigerians to understand that we have a strategy of diversified portfolio investments and we will do better. We may not make spectacular returns, because that means taking spectacular risks. At the same we want to run a steady ship that gives you confidence.

The second thing is that  when we start investing in long gestation projects such as the Lagos-Ibadan Expressway and the Second Niger-bridge, it will take decades to recover that money. We need to understand that if we take money out of the market and invest in this bridge, and goes three to four years of construction and in those years, we are not earning money.

This is the trend going forward, everybody is clamouring on investing in infrastructure. I need to understand that investing infrastructure is taking money away from the market and investing into long gestation projects. Dissecting it means making sure you understand the format of each of the project.  For the stabilisation fund, our objective is to make sure we stay above our benchmarks. But year on year, we are down for two reasons; it is an evolution of strategy, which is taking up almost $200 million equivalent in completing all these projects.

It is a sort of infrastructure credit, we funded of hospitals, agriculture projects, and some projects in gas to power, all of these things are happening at the same time. They have added value. One of the projects we invested in is to enable Calabar IPP to fire up 40 megawatts of power. We have done agriculture, which in some ways has helped food and fertiliser prices to come down. In the area of healthcare, we have changed people’s lives. All those take a long time; it is different from investing in the stock market.

For us to invest in those things we have now, we deploy capital. The three things are Global market effect, redeployment of capital and currency.

We need people to extricate the impact of currency, from the way we look at our funds. 2017, we had a positive move in currency because our investment in things like the stabilisation and future generation funds were across 17 different currencies. Because the naira devalued against the dollar from 196 to 304, if we translate all those foreign currency investments back to naira, you will see a big jump, because the naira value went up.

In 2017 we didn’t have that because naira was stable. So what we tell people is to remove the impact of currency. In all of these contexts, we made N26.4 billion, which was just $88 million in real dollar returns for the year that ended, down from over $100million in the previous year. But the truth about it is that part of that is actually strategic.

Something happened last year, we had this board transition period. It took a while before the board actually got inaugurated and they started investing.  There was a six-month period, where we had excess cash, we had over $700 million in cash. We could not invest because a new board was coming and I take full responsibility for that decision. Time is one thing you can never take back; once it’s gone, it’s gone. But I prefer to err on the side of caution; I wouldn’t want to commit those funds and the new board arises and asks me, why did you do that? It actually took a long time before the board was in place from announcement to inauguration and when that finally happened, we were now able to recover that time.

Those three factors were what affected our returns last year, but we fixed that and we started making investments going forward.