By Michael Eboh
The Nigerian Sovereign Investment Authority, NSIA, manager of the Sovereign Wealth Fund, SWF, weekend, assuaged fears over the prevailing challenging global economic environment, stating that it has put in place measures to ensure that the funds under its management are not adversely affected. Chief Executive officer/ Managing Director of the NSIA, Mr. Uche Orji, who disclosed this at a briefing in Abuja, affirmed that the year 2015 had been a challenging one, both locally and globally, adding, however, despite the challenges, its structure had helped in insulating it from crisis.
According to him, the NSIA run a fully diversified asset structure and this has helped made it competitive and protected from the vagaries of the global economic challenges. Orji further stated that the NSIA is considering extending its investment to other areas such as in crude oil refining, rail, aviation, communication, gas pipeline, storage and processing among others.
He, however, stated that its overall investment strategy would be based on nationwide strategic impact and which would attract foreign investments and guarantee attractive commercial and social returns.
He identified infrastructure development as a veritable means to drive economic growth, noting, however, that measures have to be put in place to encourage both local and foreign investors as well as pension funds.
He said, “Infrastructure development requires long term investment. This investment is often achieved through long term bonds, running as much as 25 years. Long term investors such as, SWFs, governments, pension funds and insurance companies typically invest in such bonds. This is the case in most developed countries – water, sewage, power, toll roads and other infrastructure have been funded by pension funds. At issue however, is that pension funds need credit enhancement or some form of insurance to invest in risky infrastructure bonds.”
To this end, Orji stated that the NSIA is partnering with GuarantCo to establish the Nigeria Credit Enhancement Facility (NCEF). He said, “NSIA – in collaboration with GuarantCo, a leading facility, developed by UKDFID, which provides local currency guarantee in frontier Economies – is leading the establishment of a Nigeria Credit Enhancement Facility (NCEF).
“Depending on the regulators views, we expect $400 million equity can support over $8 billion of bonds. By facilitating borrowing for infrastructure projects, NCEF will manage credit risks and expand liquidity in the domestic bond markets, attracting a wide array of lenders to the domestic capital markets. NCEF will also play a critical role in reducing infrastructure financing costs to affordable levels for issuers.
Presently, NSIA/Guarantco is finalising business development, hiring financial and legal advisors and raising core capital to establish the business. In its performance for the 2014 financial year, Orji stated that the NSIA posted net comprehensive income. of ¦ 15.8 billion, compared to the ¦ 525 million recorded within the first fifteen months of its operation ending in December 2013. This, according to him, was in spite of the prevailing volatile market conditions in the global financial markets.
Giving an highlight of its operations in 2014, he said, “The NSIA, through the Nigeria Infrastructure Fund, initiated several major projects in 2014 including co-development of the Second Niger Bridge through a Public-Private Partnership (PPP). NSIA also collaborated with the government, private sector and multilateral institutions by investing in the Nigeria Mortgage Refinancing Company to stimulate the development of the local mortgage industry.
“In addition, NSIA signed a Memorandum of Cooperation with the Federal Ministry of Health to develop sophisticated diagnostic centers across all the six geopolitical zones of the country.”