Umar-Sadiq: NSIA Has Attracted Substantial Capital into Economy

*Says assets grew by 10.5% in 2022

James Emejo in Abuja

The Managing Director/Chief Executive, Nigeria Sovereign Investment Authority (NSIA), Mr. Aminu Umar-Sadiq, yesterday said the operations of the fund had attracted a substantial amount of capital and value-addition into the country.

He said notwithstanding macroeconomic challenges which had impacted negatively on its transaction, the NSIA had returned a profit over the last 10 years of its existence.

Addressing journalists at the 2022 Performance and Earnings briefing in Abuja, he also explained that the fund’s positive performance over time had endeared it to state governments and the National Assembly – both of whom initially raised objections about the administration of the Sovereign Wealth Fund (SWF).

Umar-Sadiq said through a well-diversified investment portfolio and costs control measures, the institution had been developed currently to a N1 trillion-asset company.

However, he said the current monetary tightening regime characterised by high-interest rate continued to impact asset valuation.

 He said despite the numerous challenges posed by the global economic environment, the NSIA delivered a respectable financial performance, underscoring of its asset allocation and investment strategy.

According to him, in the review period, for the 10th year in a row, the fund has remained profitable, closing the 2022 financial year with net asset of N1.02 trillion in 2022, representing 10.5 per cent growth compared to N919.73 billion in 2021.

However, total revenue earned from its core assets within the three funds and its fiduciary activities in relation to its third-party managed assets, amounted to N11.4 billion, representing a decline of 27.2 per cent from the preceding year.

Essentially, earnings from interest income, infrastructure business revenue, and fiduciary activities’ management fees increased by 34.5 per cent amounting to N15.7 billion year-on-year growth.

Also, total comprehensive income closed at N96.96 billion for 2022, a decline of 34 per cent relative to N147. 98 billion in 2021.

The NSIA boss said, “The Authority efficiently managed all its controllable earnings streams, resulting in growth in its non-volatile revenue streams.
“The decline in performance year on year can be attributed solely to fair-value losses on financial assets from externally-managed investments.”

The performance further indicated a continuity of the performance trajectory from the pioneer team to the current one led by Umar-Sadiq, who also assured of continued high-quality and steady leadership for the authority.

He said despite the Volatile, Uncertain, Complex, and Ambiguous (VUCA) nature of the markets in 2022, the fund continued to post positive earnings through effective management of the resources entrusted in its care coupled with the deft and harmonious working relationship of the board, executive management, and partner institutions.

Umar-Sadiq said, “We are in a fiduciary role for the people of Nigeria, current and future. We are guided by this every day as we recognize the urgent need to leverage the institution’s mandate and fund to support the country’s growth agenda.

“The results that we are presenting today are a continuation of the sterling foundation laid at the NSIA since inception. It is a legacy of achievement that we are sustaining and improving upon.”

He said, “We are committed to ensuring that Nigeria’s Sovereign Wealth Fund consistently ranks highly in the league of state-owned funds in terms of transparency, governance, and performance.

“Our foray into some new terrains underscores our resolve to ensure that optimal returns are generated through responsible investing. For emphasis, we have on behalf of the present and future generations expanded our focus sectors to include climate finance, renewable energy, innovation, and technology.

“This is in addition to the priority sectors we had maintained over the years namely agriculture, motorways, power, healthcare, and gas industralisation.
He also said the NSIA would support the government’s efforts at improving the availability of fertilisers in the country.

Further commenting on the outlook for 2023, the NSIA boss expressed optimism that the returns would be robust despite the local and global headwinds.  
He said the fund would seek to attract local capital and strengthen institutional capacity to deliver more value going forward.

Umar-Sadiq said, “Nevertheless, we anticipate that these losses will be minimised, if not fully recovered by 2023 as the global economy starts to recover.”
He said the authority’s 2023 strategy will focus on driving growth through platforms, assessing exit opportunities from existing investments, attracting local currency capital, increasing third-party asset management portfolio as well as leveraging ESG as an asset class.

According to him, the 2022 fiscal year was marked by unprecedented shocks, such as the COVID-19 lockdown in China, the Russia-Ukraine conflict, food and energy crises, supply-chain disruptions, soaring inflation, and monetary policy tightening, which precipitously impacted the global financial markets.

He noted that like other emerging and frontier markets, the Nigerian economy faced multi-dimensional challenges during the year – surging inflation primarily driven by high cost of petroleum products and food prices to declining oil output and weakening currency, thus the prospect for growth diminished as the year wound down.

The NSIA chief executive explained that the reduction in the group earnings in 2022 was primarily attributable to the decline in the performance of the Future Generations and Stabilization funds invested in emerging and developed financial market instruments and exposed to volatility issues within the global markets.
“It is however noteworthy that earnings from interest income, infrastructure business revenue, and fiduciary activities’ management fees increased by 34.5 per cent (N15.7 billion) year-on-year. These returns provided the needed diversification of the Group’s revenue base and cushioned the effect of the decline in the earnings from the market-facing assets.

“NSIA remains confident in its investment strategy and will continue to explore opportunities to mitigate risks and drive financial performance.”