By Bassey Udo
Despite challenges in the global business environment, the Nigerian Sovereign Investment Authority (NSIA) said on Monday it still managed to deliver solid returns on investment to its shareholders in 2021.
Although core income for the year declined by 8 percent, to N100.8 billion, when compared to N109.6 billion realised in 2020, the Managing Director/Chief Executive, Uche Orji, described the performance as impressive, as it underscores the resilience of the investment strategy of the agency, consistently profitable over the last nine years.
Details from the presentation of the performance and earnings report showed the Core income excluded foreign exchange gains of N45.8 billion in 2021 and N51.2 billion in 2020, with a profit after tax of N153.6 billion, which was slightly down by about 1.9 percent from abouy N156.5 billion realised in 2020.
Orji who presented the report in the company of some of the agency’s top officials, said total comprehensive income of the company declined marginally in 2021 by 8.2 percent to close the year at N147.0 billion against N160.1billion recorded in 2020.
He reported that net assets of the Authority during the year under review grew by 19.0% percent to N919.73 billion, from N772.75 billion in 2020, with its three funds closing the year on the positive side, superseding their respective benchmarks.
For the Nigeria Infrastructure Fund (NIF), Orji reported that NSIA reached major milestones across domestic infrastructure projects, specifically in motorways, agriculture, healthcare, technology, gas industrialization and others.
Specifically, he said under agriculture, the Presidential Fertiliser Initiative (PFI) recorded a profit during the year, to eliminate the need for government subsidy, while the number of local blending plants that participated in the PFI
programme jumped by over 78 percent, from 11 at inception 2017 to 51 in 2021.
The programme, he said, produced about 12million 50kg bags of NPK 20:10:10 equivalent in 2021, bringing total production since inception to over
30 million 50kg bags equivalent.
Also, he said the NSIA-UFF US$200 million Agriculture fund was engaged in the two-phase development of an animal feed processing business with backward integration through the farming of maize and soybean on about 3,500 hectares of land in Panda, Nasarawa State, while approximately 96 percent, (about 720 hectare) of the targeted 750 hectares of centre pivot
irrigation coverage has been achieved.
Under Technology, Orji said in line with NSIA Fund’s objective, the Authority successfully invested in a hyperscale cloud data company, Kasi Cloud Limited during the year.
Again, under its gas industrialization initiative the NSIA CEO said significant progress were made on developing the Ammonia and Di-Ammonium Phosphate production plants in Ikot-Abasi, Akwa Ibom State in partnership with OCP of Morocco.
In toll roads, Orji disclosed that the three road projects under the Presidential Infrastructure Development Fund have attained various stages of completion, the Lagos-Ibadan Expressway more than 77 percent; Second Niger Bridge almost 95 percent, and Abuja-Kaduna-Kano Highway reaching 27 percent.
He announced that at the current pace of work on the finishing touches on construction the second Niger Bridge may be commissioned on or before the end of the year.
In healthcare, he said the healthcare companies, namely the Lagos University Teaching Hospital (LUTH) Cancer Centre; the NSIA-Kano Diagnostic Centre, and NSIA-Umuahia Diagnostic Centre, became self-sustaining during the year after commencing operations in previous years, while the agency also began the development of an Active Pharmaceutical Ingredient Manufacturing Plant (API) during the year.
The development, construction and operations in 23 new modern medical
diagnostic centres of excellence have commenced across the country’s six geopolitical zones in the country, in addition to two Oncology centres in
Enugu and Kaduna states and six Cath Labs.
Reviewing the financial markets infrastructure, Orji disclosed that the share of the NSIA’s profit of investment accounted for the increased deployment of the equity method by 87 percent, from N2.2 billion in 2020 to N4.0 billion in 2021 due to increased profitability of the Group’s Associate/Joint Venture companies, namely
Infracredit, Family Homes Funds and Nigeria Mortgage Refinance Company.
The performance of the Future Generations Fund (FGF) also recorded significant milestones, Orji said, with 11.98 percent growth in profits, from $873 million in 2020 to $977million in 2021, with Private Equity/Venture Capital the best performing asset class with a return of 23 percent for the year.
Besides, the MD said the agency’s Developed Equity and Hedge funds also performed well during the year, with returns of 17.5 percent and 12.8 percent respectively, while the
▪ Emerging Markets Equity registered a negative return of -1.92 percent as the worst performer during the year due to the pervading uncertainty in the global markets.
He said the Stabilisation Fund (SF) invested in the US sovereign debt instruments, Investment Grade Corporate Credit and China Bond Fund yielded mixed returns of -0.64 percent, – 0.58 percent and 3.69 percent respectively.
Highlighting the key macroeconomic environment that impacted its investment activities, Orji inflation became a major concern in the global market after years of deflation, in addition to the devastation of COVID-19 pandemic, and disruptions in the global supply chain in China, leading to shortages.
He identified other challenges to include excess liquidity in the global marketplace; China – real estate bubble and the crackdown on the technology sector; climate change and energy transition, and the rising inflation in Nigeria, which peaked at 18.17 percent in March 2021.
Despite the rally in crude oil prices at the International market, public finances came under severe stress, such that despite the huge programmes it to pursue, the NSIA returned $150million in 2020 to the government from the Stabilisation Fund to help stabilise the country’s in line with the provisions of the NSIA Act 2011.
On the outlook for 2022, Orji expressed fears that the investment future was gloomy, with the risk of recession looming, as central banks
intensify effort to contain inflation, particularly with a possibility of stagflation in the US, and the global commodity prices to continue to surge amid the ongoing Russia-Ukraine crisis.
Besides, he said there was a likelihood of food crisis in 2022 and beyond due to the scarcity of commodities and raw
materials for fertilizer, while
China’s economic performance would be constrained by resurgence of COVID-19 in some regions.
Security, he said, would remain a major concern, weighing on
the investment climate, with the financial performance of the NSIA expected to be impacted by the rapidly crystalizing headwinds.
The way forward, he said, would be significant portfolio restructuring in the Future Generations Fund to diversify the portfolio, improve
the risk/return profile, and generate liquidity through secondary transactions.
Also, he said the Nigeria Infrastructure Fund (NIF) would remain resilient, as the agency would begin to recycle funds from investee companies, while asset transfers would provide an important component of the NSIA funding strategy in the mid to long term, with priority on ESG both as an asset class and l investment process.
