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Sovereign Wealth Fund rekindles hope for economy

By Emeka Anaeto, Economy Editor

Amidst negative developments in the economy in the first 100 days of President Mohammadu Buhari’s regime, there are indications that the policy on national investment savings from oil revenue is yielding positive results, as the Nigerian Sovereign Investment Authority (NSIA) is reporting sharp rises in returns on investment from oil revenue notwithstanding the sharp decline in crude oil price.

NSIA said, at the weekend, that its comprehensive income for the financial year ended December 2014 rose to N15.8 billion from N525 million while operating income rose to N3.9 billion from N1.5 billion. Similarly, the total assets rose to N177.8 billion from N157 billion.

Against the backdrop of perceived lack of prudence in management of Nigeria’s oil wealth, NSIA was set up in 2011 to prudently manage and invest revenue generated when the oil price exceeds the budgeted price. The Fund is jointly owned by all the three tiers of government.

A sharp decline in oil price below the budget benchmark, which has already happened, would mean no new contribution from the oil revenue. But the over 150 per cent rise in NSIA’s operating income indicates that the Fund is efficient and effective in oil resource management even without new inflows.

Moreover, the first quarter 2015 results have already indicated that the positive results would be sustained following over 80 per cent further rise in NSIA’s comprehensive income to N28.7 billion with total assets increasing further to N206.2 billion.

The year 2014 was NSIA’s second consecutive financial year of providing positive returns on investment in the face of volatile global market conditions.

Looking ahead in 2015 and beyond, Alhaji Mahey Rasheed, Chairman of NSIA’s Board said: “The weakness in crude oil prices might persist for the foreseeable future, thereby potentially impacting on new contributions from the Federation.  However, NSIA is initiating some other strategies to grow its assets, while at the same time focusing on the efficient management of the existing assets’’.

Managing Director/ Chief Executive, Mr. Uche Orji, explained that NSIA recorded improved profitability as it increased capital deployment along the lines of its asset allocation model previously outlined in 2013 and executed its investment strategy which was underpinned by four major themes: Diversified Asset Allocation, Retention of the five key sub-sector focus for the Nigeria Infrastructure Fund (NIF), Growth in assets under management, and Strengthening of Infrastructure Financing Institutions.



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