NSIA Eyes $650m Projects Next Year

• Sets Dec 2019 date for 2nd Niger Bridge

BY COBHAM NSA, ABUJA – The Nigeria Sovereign Investment Authority (NSIA) says a whopping 650 million US dollars will be invested to grow infrastructure in the country next year.

According to the Authority, which manages the Sovereign Wealth Fund (SWF), areas of priority targeted are agriculture, power, motorways, healthcare, and real estate

This is even as the Authority confirmed that the NSIA-financed Second Niger Bridge project will fully take shape by December 2019 before its final completion date in four years time.

Managing Director of NSIA, Uche Orji, who made these disclosures while presenting the Authority’s audited financial results for the year 2017 in Abuja, said the massive investments being proposed are in line with decisions taken by the Vice President Yemi Osinbajo-led National Economic Council (NEC).

He explained that the Authority will focus on maintaining its diversified asset strategy aimed at driving returns and mitigating market volatility

According to him, despite the drop in profitability, “the NSIA anticipates increased investment in infrastructure as more projects come up to financial close.”

Orji said as part of measures to achieve the set objective, the Authority has restructured its asset allocation strategy to reflect an increased focus on domestic infrastructure investment, adding that henceforth 50 per cent of future contributions would be dedicated to infrastructure as against the previous arrangement of 40 per cent funds’ allocation.

Though Orji described 2017 as a challenging year for the Authority, he said; “The deployment of the Presidential Infrastructure Development Fund is expected to drive 2018 infrastructure investment strategy as $650 million dollars has been voted by NEC to complete critical infrastructure projects across the country.”

On the Second Niger Bridge as one of the key NSIA-financed road projects in the country, Orji said; “I can confirm that by December 2019, we will see another bridge on the Niger before we then start talking about the finishing touches.”

The NSIA boss said the Authority’s financial performance affirmed the potency of “Management’s investment strategy and highlighted its resilience in the face of market volatility. Both interest income and investment income correlated positively with the more efficient investment approach adopted within the period under review.”

He said; “While showed that its profit dropped to N22.5 billion in 2017 as against the N130.3 billion recorded in 2016. While the Total Comprehensive Income dwindled from N149.83 billion in 2016 to N27.93 billion in 2017, (2016:N46.24 billion to 2017: N26.28 billion excluding the effects of foreign exchange)the fundamental components of income rose as Interest Income grew by 106% (from N10.57 billion in 2016 to N21.77 billion in 2017) while Investment Income also grew by 96% (from N1.33 billion in 2016 to N2.60 billion in 2017).”

Orji described 2017 as a challenging year for the Authority, noting that the federal government’s Currency Management Policy was responsible for the decline in profitability, stressing that; “The decline of the net foreign exchange gains which accounted for the reduced net operating income recorded in 2017 was as a result of government’s Currency Management Policies, which were aimed at stabilising the Naira in 2016.”

He said; “To this effect, the Naira weakened in value from N196 per dollar to N305 per dollar in 2016”, adding; “Considering that at the end of that year, about 80 cent of the Authority’s assets were denominated in the United States Dollars, the devaluation resulted in significant exchange gains in the Authority’s Naira books.”

Commenting on dividend payment plans for its shareholders, the NSIA chief said the last board meeting discussed the issue but had to suspend further action until next year though there were expectations that dividend payment would commence by 2017 financial period ending.

“The law said that we should show profits in each of the three funds consistently for five years after which we will start declaring dividend and this is the fifth year of showing profitability.

“The dividend policy was considered by the board but we decided to step it down and consider it again next year,” Orji said.

He however admitted that late inauguration of the NSIA board also resulted in belated re-investment of matured fund that generally affected profitability in the year under consideration.

Orji maintained that the “agriculture sector has remained strategically important to NSIA, particularly as it is an area where the Authority is able to make significant socio-economic impact and earn substantial financial returns through direct investments.”