Nigeria Sovereign Investment Authority Income Increases

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Uche Orji

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The Nigerian Sovereign Investment Authority earns more income of N15.8 billion in 2014 than the N505 million it got in 2013

| By Anayo Ezugwu | Apr. 13, 2015 @ 01:00 GMT |

THE Nigeria Sovereign Investment Authority, NSIA, has earned a net income of N15.8 billion in the 2014 financial year. The NSIA, in its annual report signed by Uche Orji, managing director/chief executive officer, which was released on March 31, said the amount was a significant improvement on the N505 million recorded in the 2013 financial period.

The 2014 annual report stated that the agency recorded N10.5 billion changes in value assets as well as total operating and administrative expenses of N1.6 billion. Key drivers of performance, according to the report, included investments in secondary interests in private equity, development in market equities, and returns on hedge fund investments. This, it added, was complemented by a long dollar currency position versus other currencies. “The NSIA reports net comprehensive income of N15.8 billion in 2014, up from N505 million in 2013. Key highlights include revenue of total revenue of N7.2billion and change in fair value of assets of N10.5billion, and total operating and administrative expenses of N1.6 billion.”

The NSIA is the agency currently managing the Sovereign Wealth Fund, SWF, which was set up in 2012 by the federal government following the injection of an initial investment of $1 billion. The initial investment was later followed with an additional investment of $550million about nine months later. The SWF, is made up of three funds, the Future Generation Fund, Nigeria Infrastructure Fund and the Stabilisation Fund. Orji said each of the three funds had return objectives that would guarantee the highest rate of return for Nigeria. “The reality is that we are going to earn commercial returns on infrastructure side as well as earning returns that will match the benchmark that we have set for the Future Generation Fund and the Stabilisation Fund. Our objective at this point is to earn consistent profit. The Act says that after five years of consistently making profit, we have to repatriate dividends to all the tiers of governments that own this fund. It is one of our objectives and that is what we intend to achieve.”

Orji said it would not pay dividend on the SWF until the end of the 2017 financial year. He disclosed this while addressing journalists in Abuja, on Monday, about the financial performance of the agency in the 2014 financial period. He said the law setting up the SWF did not allow the agency to pay dividend until the fund had posted profit for five consecutive years.

Orji, while giving the financial performance of the agency for 2014, said the NSIA earned a net comprehensive income of N15.8billion in the period under review, noting that this was a significant improvement over the N505million recorded in the 2013 financial period. He said inasmuch as the NSIA would like to see Nigerians enjoy the benefits of the fund through the payment of dividend, the law setting up the agency only permitted such to be paid after five years.

“The NSIA was established by an Act of the National Assembly under the NSIA Establishment Act in 2011 to achieve three broad mandates namely: to build a savings base for the Nigerian people; to enhance the development of infrastructure; and to provide stabilisation support in times of economic stress. It commenced operation in 2012. We will not pay dividend until 2017 by law. So, 2016 year into 2017, the law says dividend would be paid after five years of consistent profitability across all three funds and so we hopefully will start to pay dividend by then. I want to say that we will love to continue making money again. So we pray that we continue to show good performance. If we do and consistently show profitability across all three, then we will start to pay dividend to the state, local government and federal government as shareholders,” Orji said.

According to him, the NSIA would this year convene its governing council meeting where it would meet with all stakeholders of the SWF such as state governors, the vice president and the governor of the Central Bank of Nigeria, among others. On the outlook for 2015, he said the year remained volatile owing to vulnerabilities in the external environment.

He, however, stated that despite the vulnerabilities and barring any unforeseen adverse event, the NSIA would maintain its diversified strategy for the future generation and stabilisation funds. “We believe the recent devaluation of the naira presents both challenges and opportunities in the domestic market. From our position as investors, we have seen incredible buying opportunities and we expect the Infrastructure Fund to become increasingly active in the domestic market as we take advantage of short term price dislocations.”

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