Despite a 27.2 percent declining revenue yield over 2021 performance, the Nigeria Sovereign Investment Authority (NSIA) has maintained a positive trajectory in its net asset growth, with a 10.5 percent annual climb to N1.02 trillion in 2022.
Presenting the facts behind the figures for 2022 financial year performance and earnings in Abuja on Wednesday, the investment agency said total revenue for the year stood at N111.4 billion, about N41.4 billion, or 27.2 percent decline, from about N152.9 billion recorded in 2021.
However, despite the macro-economic challenges in the national and global landscape, the Authority said its net assets grew by about 552 percent over the last ten years, from ₦156 billion in 2013 to ₦1.017 trillion in 2022 over N919.73 billion in the previous year.
The Managing Director/Chief Executive Officer, Aminu Umar-Sadiq, said the Authority was committed to sustaining its diversified assets strategy, adding that the performance showed continuity in high-quality and steady progress from the pioneer leadership team to the current one.
“Despite the VUCA (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.
‘We are in a fiduciary role for the people of Nigeria, current and future. We are guided by this every day as we recognize the urgent need to leverage the institution’s mandate and fund to support the country’s growth agenda,” Umar-Sadiq said.
He said the results presented reflected a continuation of the sterling foundation laid at the agency since inception with a legacy of achievement sustained and improved upon.
“We are committed to ensuring that Nigeria’s Sovereign Wealth Fund consistently ranked 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. This is in addition to the priority sectors we had maintained over the years, namely agriculture, motorways, power, healthcare, and gas industralisation,” the MD added.
Highlights in the financial performance showed earnings from interest income, infrastructure business revenue, and fiduciary activities’ management fees increased by 34.5 percent to N15.7 billion year-on-year growth, while total comprehensive income closed at N96.96 billion for 2022, a decline of 34 percent relative to N147. 98 billion in 2021.
Apart from over $500 million investment in domestic infrastructure development, the Authority said it attracted equal value in foreign direct investment, with an infrastructure investment portfolio covering seven distinct sectors of the economy.
Besides, the NSIA developed and co-developed over 10 institutions and platforms to improve the financial markets; invested in over 80 percent of locally owned and privately run equity funds, and established strategic partnerships with various global institutions, like Vitol SA, OCP of Morocco, Signature Agric Investments, PIDG, GuarantCo, while scoring high transparency ranking of 9 out of 10 in the Linaburg-Maduell Transparency Index.
On NSIA’s impact across sectors of the economy, the report showed a total capital investment of $2.27 billion that created more than 245,000 direct and 315,300 indirect jobs, in addition to an estimated $10 billion economic stimulus in financial markets; $7.5billion in agriculture; $1.8billion in motorways; $274million in gas industrialization; $42.9 million in healthcare, and 422.5 million in power.
Details of the sectoral impact showed the NSIA invested in three projects in motorways with 515.4 kilometres during the year; supported 236,000 agricultural projects, 68 percent of which were youth; impacted 600,000 individuals; developed 10 megawatts solar power project in Kumbotso, in Kano State with 500 direct and indirect jobs created; five hospital projects with 282,100 patients serve and 150,000 chemotherapy sessions; 13,504 affordable houses under construction, and partnered educational institutions to provide formal education to 283 youth.
Under the core mandate performance, the report said an overview of the Nigeria Infrastructure Fund performance showed the Presidential Fertiliser Initiative (PFI) produced about 500,000 MT of NPK in 2022 and earned N16 billion profit.
StabiIisation Fund performance showed that as at December 2022, about 12.43 percent returns were recorded in Naira terms and 4.08 percent in dollars during the year, with hedge assets registering 3.48 percent negative returns, while growth assets returned 7.35 percent during the year.
On the other hand, the Future Generations Fund recorded 4.42 percent returns in Naira terms and 3.87 percent negative returns in dollar terms, with fixed income as the best-performing asset class with a return of 7.57 percent during the year, while developed equity and hedge Funds recording negative returns of 19.7 and 3.05 percent respectively. Emerging markets equity was the worst performer with a negative return of -20.09 percent during the year.
Under the Nigeria Infrastructure Fund, the $16 million 10 MW Kano Grid Solar project was completed and commissioned in January 2023, while several solar power initiatives are in the pipeline for execution.
Although the Authority said the operating environment remains challenging, with an uptick of inflation the biggest in the global environment, Umar-Sadiq said its strategic focus for 2023 remained driving growth through platforms; assessing exit opportunities from existing investments; attracting local currency capital; increasing third-party asset management portfolio and leveraging ESG as an asset class.
The Executive Director, Corporate Services and Operations Olubisi Makoju, and Executive Director/Chief Investment Officer, Kolawole Owodunni, commended the Authority’s investment strategy and fund performance within the context of the operating environment.
While Makoju noted that the 2022 fiscal year was 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 global financial markets, Owodunni pointed out that like other emerging and frontier markets, the Nigerian economy faced multi-dimensional challenges during the year, from surging inflation, primarily driven by the high cost of petroleum products and food prices to declining oil output and weakening currency, thus the prospect for growth diminished as the year wound down.
The reduction in the Group earnings in 2022, he said was primarily attributable to the decline in the performance of the Future Generations and Stabilization funds invested in emerging and financial market instruments and exposed to volatility issues within the global markets.
He said it was however noteworthy that earnings from interest income, infrastructure business revenue, and fiduciary activities’ management fees increased by 34.5% (N15.7 billion) year-on-year.
These returns, he noted, provided the needed diversification of the Group’s revenue base and cushioned the effect of the decline in the earnings from the market-facing assets.
He said the NSIA remained confident in its investment strategy and would continue to explore opportunities to mitigate risks and drive financial performance.
