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NSIA Grows Assets Under Management to N617bn

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investment
  • NSIA Grows Assets Under Management to N617bn

The Nigeria Sovereign Investment Authority has grown its assets under management to $1.9bn (N617.69bn).

The Managing Director and Chief Executive Officer, NSIA, Mr Uche Orji, said that as of the end of 2018, the NSIA had assets under management of $1.9bn (N617.69bn).

NSIA’s assets under management were N533.88bn in 2017, N420.93bn in 2016, N213.67bn in 2015 and N177bn in 2014.

Orji, at an interactive session with journalists in Lagos on Saturday, explained that in addition to its core funds, the NSIA managed third-party funds, including the Presidential Infrastructure Development Fund.

Orji said from 2012 to 2018, the NSIA reported six straight years of profitability in all its funds with core profits (excluding foreign exchange translation gains) of N28.45bn ($87.5m) for 2018.

He put the profit of the authority as of the end of 2018 at N46.50bn, compared to the N22.55bn recorded in 2017.

He said, “As the authority is shifting focus towards infrastructure and direct investments in Nigeria, returns will incubate longer and as a consequence, cash available for market- driven investments will decline. Despite this reality, total profits increased from N22.55bn in 2017 to N46.50bn (including FX translation gains) in 2018.”

He added, “Breakdown of returns in 2018 by funds is as follows: Stabilisation Fund (11.50 per cent); Future Generations Fund (3.30 per cent); Nigeria Infrastructure Fund (13.80 per cent). These against our benchmark of two per cent; six per cent and three to five per cent respectively.”

The NSIA was created by an Act of the National Assembly, Nigeria Sovereign Investment Authority (Establishment) Act 2011, and signed into law by the President on May 26, 2011.

The Federal Government owns 45.8 per cent of the agency; state government, 36.2 per cent; local government owns 17.8 per cent while the Federal Capital Territory owns 0.16 per cent.

The first board was inaugurated on October 9, 2012, while the authority commenced investment operations in the third quarter of 2013 with seed funding of $1bn.

It received $500m additional capital contribution between 2016 and 2017.

The operations of the NSIA are anchored on a three-fold mandate, namely building a savings base for the Nigerian people, enhancing the development of Nigeria’s infrastructure and providing stabilisation support in times of economic stress.

The NSIA also focuses on infrastructure investments in key sectors of the Nigerian economy, including agriculture, healthcare, power and toll roads implemented through Special Purpose Vehicles.

Speaking on the Nigeria Infrastructure Fund, Orji explained that the NIF was being implemented through three key pillars, which are direct investment, co-investments and investment/creation of enabling financial institutions, with the focus being on agriculture, roads, power, gas industrialisation and healthcare.

NSIA said under its direct investment strategy of the NIF, $10m was invested in the privatisation of the Nigeria Commodity Exchange.

It invested another $20m in the development of a cardiovascular diagnostic and treatment centre in the Lagos University Teaching Hospital in partnership with LUTH and Abraaj.

Aiming to improve the quality of education for Nigerian students, the NSIA said it invested $5m in Bridge Academies.

Under its co-investment strategy, it established the Gas Industrialisation Fund to invest in gas industrialisation projects with a view to stimulating the economy.

The firm stated that it participated in the $650m Presidential Infrastructure Development Fund by investing in four strategic infrastructure and power projects while $10m was invested in the $100m fund for agricultural finance in Nigeria, a project done in partnership with the German Development Bank, KfW, and the Ministry of Agriculture.

The NSIA also invested $25m in a $200m UFF Agriculture Fund, a Nigerian agricultural funding partnership with Old Mutual/UFF of South Africa.

As part of its creation of institutions’ strategy, the NSIA collaborated with the Federal Ministry of Finance to inaugurate the Nigeria Mortgage Refinancing Company to lower costs and improve access to mortgages.

It also inaugurated the Nigeria Infrastructure Credit Enhancement Facility in collaboration with GuarantCo and PIDG.

The firm said it worked with the Ministry of Finance to create the Development Bank of Nigeria.

It disclosed that it participated in the $129.3m Presidential Fertiliser Initiative aimed at blending 500,000 metric tonnes of NPK fertiliser.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

States Debt Rises by 163 Percent -BudgIT

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Naira

Debts of All 36 States Rise by 163 Percent or N3.34 Trillion to N5.39 trillion Between 2014 and 2019

Debts continue to rise across the 36 states of the Federation, according to a recent report by BudgIT, a public sector-focused financial information house.

In the just released 2020 edition of its annual state of states report titled, “Fiscal Sustainability and Epidemic Preparedness Financing at the State Level”, BudgIT said debts rose by 162.87 percent or N3.34 trillion from N2.05 trillion in 2014 to N5.39 trillion in 2019 across the 36 states.

The report stated that 10 of the states incurred half or N1.68 trillion of the entire debt, adding that seven of the 10 states are from the South while three are from the North.

Speaking on how states can attain fiscal sustainability, Damilola Ogundipe, BudgIT’s Communications Lead, said: “States need to grow their Internally Generated Revenue, IGR, as options for borrowing are reduced due to debt ceilings put in place by the Federal Government to prevent states from slipping into debt crisis. There has to be a shift from the culture of states’ overdependence on Federation Account Allocation Commission, FAAC.

The report further stated that 13 states, including Lagos, Oyo, Kogi and others, were unable to fund their recurrent expenditure together with debt repayments due in 2019.

It stated: “From our 2020 State of States analysis, 13 states were unable to fund their recurrent expenditure obligations together with their loan repayment schedules due in 2019 with their respective total revenues. 

“The worst hit of these 13 states are – Lagos, Oyo, Kogi, Osun and Ekiti states while the other states on this pendulum are Plateau, Adamawa, Bauchi, Gombe, Cross River, Benue, Taraba and Abia. 

“Furthermore, of the remaining 23 states that can meet recurrent expenditure and loan repayment schedules with their total revenue, eight of those states had really low (less than N6 billion) excess revenue, that they had to borrow heavily to fund their capital projects. 

“The worst hit are Zamfara, Ondo and Kwara who had N782.45 million, N788.22 million and N1.48 billion left, respectively. 

“Based on their fiscal analysis, only five states – Rivers, Kaduna, Akwa Ibom, Ebonyi and Kebbi states – prioritised capital expenditure over recurrent obligations, while 31 states prioritised recurrent expenditure according to their 2019 financial statements.”

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Finance

Oil Marketers Says No to Labour Strike, Decries Over N320bn Losses

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petrol Oil

Oil Marketers Reject Labour Strike, Decries Over N320bn Losses

Oil marketers across the country have rejected labour’s planned strike over N320 billion worth of investment losses.

The marketers under the aegis of the Natural Oil and Gas Suppliers Association of Nigeria also kicked against the proposed industrial action by the Nigeria Labour Congress and other civil right groups, pleading with the union and allies to have a rethink and look into the situation from a bigger picture.

This was after labour and other civil right groups announced they would be embarking on a nationwide strike starting from September 28, 2020 to force the government to reverse the increase in pump price and electricity tariffs.

Labour had said the government remained insensitive to the plight of Nigerians despite the negative impacts of COVID-19 on the economy and Nigerians.

However, Ukadike Chinedu, the association spokesperson of Natural Oil and Gas Suppliers Association of Nigeria, who was quoted in a statement issued in Abuja, said members of the association may be forced to cut staff in an effort to reduce operating costs given current economic realities.

He said, “Some of our concerns are heavy losses of over N320bn investments from product purchases at government specified prices and sales at compelled price reductions, which could not be justified by the costs of transaction.”

Ukadike added that several oil businesses were no longer trading because of heavy losses and several others were dying in silence.

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Finance

Banks’ Credit to Economy Hits N19.33 Trillion in August

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Godwin Emefile

Deposit Money Banks Credit to Economy Rose to N19.33 Trillion in August

The total credit facility to the economy rose to N19.33 trillion in the month of August.

The Central Bank of Nigeria-led monetary committee disclosed on Tuesday after the nation’s monetary policy committee meeting.

The committee attributed the improvement to the 65 percent loan-to-deposit ratio policy implemented to compel the nation’s deposit money banks to join central bank efforts at growing the real sector of the economy.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, who spoke during the meeting said “The bank’s policy on Loan to Deposit ratio also resulted in a significant growth in credit to various sectors from N15.57tn to N19.33tn between end-May 2019 and end-August 2020, an increase of N3.77tn.

“This growth in credit was mainly to manufacturing (N866.27bn), consumer credit (N527.65bn), oil and gas (N477.65bn), agriculture (N287.11bn) and construction (N270.97bn).”

On monetary aggregates, broad money supply (M3) rose to 6.93 per cent (year-to-date) in August 2020 from 5.23 per cent in July 2020, reflecting the increase in both Net Foreign Assets and Net Domestic Assets.

He said total domestic credit grew by 6.94 percent in August 2020, lower than the 9.43 percent recorded in July 2020.

The committee reduced the nation’s benchmark interest rate by 100 basis points to 11.5 percent, down from the previous 12.5 percent.

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