NSIA Allocates 50% of Investments to Infrastructure Fund

•Considers raising fresh capital for sector in 2020

Nume Ekeghe

The Nigeria Sovereign Investment Authority (NSIA) has changed its fund allocation strategy such that the Nigeria Infrastructure Fund (NIF), which used to be allocated 40 per cent of funds under its management, will now get 50 per cent share.

The Managing Director/Chief Executive Officer, NSIA, Mr. Uche Orji, unfolded the new funding pattern yesterday while featuring on the ‘Morning Show,’ a breakfast programme on Arise Television, the sister broadcast arm of THISDAY Newspapers.

However, while the allocation to the NSIA’s Stabilisation Fund remains unchanged at 20 per cent, allocation to the Future Generation Fund (FGF) was lowered from 40 per cent to 30 per cent.

The implication of this is that 50 per cent of the $250 million the National Economic Council (NEC) recently approved for the NSIA would be allocated to infrastructural development.

Orji also said with the consistent injection of $250 million in the past three years, the NSIA currently has core equity of $1.75 billion.

In addition, by next year, the NSIA would be considering raising capital from the market and third parties.
He said: “From the beginning, it was an initial $1 billion and in 2016 and 2017, there was an injection of $250 million each, now there is a new injection of another $250 million.

“During the NEC meeting, we reported six consecutive years of profitability. And extensively, this year’s meeting was delayed for many reasons given that we had published our accounts as far back as May, but it was an opportunity to meet with the shareholders and go through the investments made, profit made, plans for the organisation particularly as we start to focus on infrastructure.”

Throwing more light on the change in allocation strategy, Orji said: “It used to be 20 per cent of the Stabilisation Fund; 40 per cent for the Future Generations Fund and 40 per cent for the NIF.

“What we said to Council was that for new capital now being injected, the allocation from 20 per cent Stabilisation Fund to 30 per cent Future Generation Fund and 50 per cent NIF. This now reflects the focus on domestic infrastructure investments from the NSIA.”

On what prompted the change in investment strategy, he said: “The switch is driven by the fact that we see opportunities to invest in domestic infrastructure and that is widespread in terms of definition.
“One of the areas that are referred to is the social infrastructure like healthcare, education, toll roads, power and gas industries. These are the five key areas we are focused on.

“The switch is driven by current needs without which you probably would not be in the position to prepare for the future generation. The savings fund is doing extremely well and that is somewhere we are confident we would continue to generate profits for the future generations but the two cannot be separated if we don’t address the current generation, we would be struggling to invest in the future generations.

“In addition to the core capital we are managing, we are managing other pools of capital for the government, including the Presidential Infrastructure Development Fund as well monies we manage for both the Debt Management Office (DMO) and the federal government in other pools of capital.”

Commenting on how the NSIA would deploy the newly approved $250 million, he said: “Half of that would be in infrastructure and in the five areas earlier mentioned.

“We are doing preliminary work on the East- West road and Mambilla and those are still in progress as we haven’t disbursed any funds on those yet nor have we taken any responsibility for those projects yet.

“The plans for the Presidential Infrastructure Funds are as follows: a little bit of capital from the federal government, some capital from the NSIA and then the NSIA would raise capital from a third party and this is everybody from pension funds, international investors, local investors and anybody who wants to come into those projects.”