NSIA commits to sustaining diversified assets strategy as net assets hit N1.02trn

By Onome Amuge

The Nigeria Sovereign Investment Authority (NSIA), manager of Nigeria’s sovereign wealth funds, has reiterated its commitment to sustaining diversified assets strategy in its core areas of healthcare, toll roads, gas industrialisation, technology, ESG, financial markets infrastructure, toll roads, power and agriculture.

This is on the back of a 10.5 per cent growth in net assets to N1.02 trillion in 2022 and attainment of over $500 million in foreign direct investments between 2013 and 2023 despite volatility and headwinds across major markets.

Aminu Umar-Sadiq, NSIA’s managing director and chief executive officer of the Authority, made the disclosure during the presentation of the 2022 audited financial statements in Abuja, Nigeria’s capital city.

Umar-Sadiq, who noted that NSIA created 560,300 jobs in the past ten years, added that the firm is  committed to delivering increased investments in critical sectors of the economy by driving growth across its funds and attracting third-party capital into Nigeria’s infrastructure sector.

The NSIA CEO also assured that the firm  will continue to sustain a diversified assets strategy.  “In 2023, we will be resourcing our various platforms targeted at emerging sectors – renewable energy, sustainability, innovation, and healthcare – which will ensure the Authority achieves its dual objectives of delivering financial returns and impactful social outcomes,” he said.

Umar-Sadiq said that the strong financial performance of the Authority, which saw a 10th year continuous run of positive earnings, reflects the resilience of its investment strategy and the quality of its earnings in spite of numerous challenges posed by the global economic environment.  He also stated that $1.6 billion contributed by the government since 2013 were efficiently utilised by NSIA  to generate net asset value (NAV) of $2.27 billion as of 31st December 2022.

Other major highlights of activities  recorded by NSIA include the investment of over $500 million in domestic infrastructure,growing net assets by 552 per cent from N156 billion in 2013 to N1.02 trillion in 2022, 34.5 per cent year-over-year growth in earnings from interest income, infrastructure business revenue, and fiduciary activities’ management fees,amounting to N15.7 billion year-on year growth.

 On the flipside, total comprehensive income closed at N96.96 billion for 2022, a decline of 34.0 per cent relative to N147. 98 billion in 2021.

Commenting on the dip in total comprehensive income, Umar-Sadiq explained that the decline was largely attributed to strong macroeconomic headwinds 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 financial markets.

He,however, pointed out that  the Authority was able to outperform most global investment benchmarks and indices to provide the resilience to withstand market challenges and deliver a respectable performance.

In his words: “Despite the volatile, uncertain, complex, and ambiguous nature of the markets in 2022, we continue to post positive earnings through effective management of the resources entrusted in our care coupled with the deft and harmonious working relationship of the board, executive management, and partner institutions.

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

The NSIA MD noted that the 2022 financial statements indicate a continuity of the performance trajectory from the pioneer team to the current one and assure of continued high-quality and steady leadership for the Authority.

Going forward in 2023, Umar-Sadiq said the Authority is making necessary plans toward further growth of its net assets through strategic asset allocation and diversification, portfolio selection, and other options to enhance the risk/ return profile and liquidity.

The CEO listed NSIA’s five focus areas in 2023 to include; driving growth through platform, assessing exit opportunities from existing investments, attracting local currency capital, increasing third-party asset management portfolio and, leveraging Environmental, Social and Governance (ESG) as an asset class.

Also speaking at the event, Olubisi Makoju,executive director, corporate services and operations, attributed the decrease in the Authority’s  total comprehensive income to the effect of market factors on portfolios  that aren’t under the Authority’s control.

“Our stabilization and future generation funds are assets that are exposed to the market and therefore, because the global headwinds were very tough in the period, we did marginally lose some value there.

“But like the MD explained, these are fair valuations and as long as those assets are not sold, when the market recovers, we are definitely certain that these fair valuations would improve and we’d make back what may seem to have dropped,” she assured.

Makoju explained that NSIA’s 34.5 per cent earnings from the infrastructure business and other fiduciary activities,shows that the investments for which the Authority had total control actually grew because these were non-volatile earnings and therefore were completely within the ability of the management to control.