At $1.5bn, Nigeria Lags Behind Peers in SWF Savings

Obinna Chima

Almost six years after the Nigeria Sovereign Investment Authority (NSIA) commenced operations, total savings into the country’s Sovereign Wealth Fund (SWF), presently at $1.5 billion, remain abysmally low, compared with some other African countries.

A report by the NSIA at the weekend showed that while the Libyan Investment Authority has about $66 billion, the Revenue Regulation Fund of Algeria has $7.60 billion as total Assets Under Management and the Pula Fund of Botswana currently holds $5.50 billion.

In addition, the report showed that Fundo Soberano de Angolano, Angola, which is the country’s investment authority, holds total Assets Under Management of $4.60 billion.

Owing to this, NSIA Managing Director, NSIA, Mr. Uche Orji, while speaking during an interactive session with journalists in Lagos, stressed the need for consistency in contribution into the fund.

According to Orji, Norway now has about $1.07 trillion as total assets under management.

“The Norway story is one that I like to tell all the time. The reason is because in one of my earliest jobs in 1998, the team I worked for was one of those that managed the Norwegian SWF’s assets.

“They started in 1993 with $10 billion and to see them now at over $1 trillion speaks to the power of consistent contributions. In 2013, it was reported that the Norwegians were putting in $1 billion a week into that fund.

“So, it doesn’t really matter how much you start with, what matters is how consistent you are. So, I think if there is one thing we need to do as a people and if we need to be serious about this, there must consistent contribution,” he said.

He pointed out that the country was still very far behind the rest of the world in terms of savings into its funds.

Orji, however, expressed optimism that the National Assembly would pass a legislation to promote consistency in contribution to the fund.

“We need to get more money into the fund. It is extremely important to us because if we end up investing all our infrastructure fund, we might run out of capital and you have your margin squeezed,” he added.

Earlier, in a presentation, the NSIA boss said from 2012 to 2018, the agency reported six straight years of profitability in all its funds with core profits (excluding FX translation gains) of N28.45 billion ($87.5million) for 2018.

He said as the authority was shifting focus towards infrastructure and direct investments in Nigeria, returns would incubate longer and consequently, cash available for market driven investments would decline.

Despite this development, the NSIA’s total profits increased from N22.55 billion in 2017 to N46.50 billion (including FX translation gains) in 2018. By the end of 2018, NSIA had assets under management of $1.9 billion (N617.69 billion), Orji said.

Commenting on his outlook for 2019, Orji said the NSIA started on a challenging manner with weak performances across its actively managed portfolios.

However, he identified ongoing trade disputes and political instability in key markets such as the United States and China, as risk factors that may escalate within the year.

He said it was expected that the markets would remain volatile.

“Nonetheless, we are optimistic that our asset allocation strategy will withstand downside risks and optimise market gains.

“Within the last 12 months, we committed and deployed over N100 billion across the priority three road projects under the Presidential Infrastructure Development Fund (PIDF).

“We have also commenced due diligence on the Mambilla Power Project. We are within the target project milestone on all these projects,” he added.

He said the authority had introduced gas industrialisation as a new focus sector.

“Within our pipeline are: Basic Chemicals Investment with OCP: An off-shoot of the Presidential Fertiliser Initiative is a development of a basic chemicals platform in conjunction with OCP of Morocco to produce ammonia for off-take by OCP.

“Gas flare reduction project: We are currently undertaking due diligence on this project. Throughout 2019, we shall continue to focus on executing our infrastructure investment strategy in our core focus areas of power, toll roads, agriculture, healthcare and most recently gas industrialisation.

“NSIA has invested significant efforts in developing a robust and transparent corporate governance framework. This is because strong corporate governance structures do not only foster successful relationships amongst the various organs of the Authority, but also sets the right precedents to encourage long-term, sustainable growth and partnerships with other institutional and private investors,” he said.

He reiterated that the ongoing construction of the second Niger Bridge would be completed in February 2022.