$9.723bn FDI partnerships: NSIA contributes $519.3m for 6 partnership projects

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…Revives 18 Fertiliser blending plants    … Deploys N100bn for three road projects

…  raises profit by 37% to N44.34bn in 1 year

By Samuel Ibiyemi and Kayode Tokede

Nigerian Sovereign Investment Authority (NSIA) has contributed $519.3 million to the execution of $9.723 billion six partnership projects to boost foreign direct investment (FDI) in Nigeria. This represents 5.3 per cent of the total cost of the six projects being executed to catalyze FDI through partnerships.

The projects include Fund for Agriculture Finance in Nigeria (FAFIN), Agriculture Fund of Ol Mutual Group, FEPSAN Fertiliser Project, Guarantee for Development (Infrastructure Credit Guarantee, Presidential Infrastructure Development Fund (PIDF), and NSIA-OCP Basic Chemicals Plaform.’

The  contributions to these projects catalysing FDI through partnerships worth $9.723 billion stands at $7.235 billion.

For instance, FAFIN provides tailored capital and technical assistance solutions to commercially-viable SMEs and intermediaries across the agriculture sector in Nigeria.

Managing Director NSIA Uche Orji during  discussion  of the company’s performance disclosed that within the last 12 months, the NSIA committed and deployed over N100 billion across the priority three road projects under the Presidential Infrastructure Fund ( PIDF). The fund according to him was established by President Muhammadu Buhari in February 2018 to accelerate the execution of strategic infrastructure projects including Lagos-Ibadan Expressway, Second NIGER Bridge, Abuja-Kano road, Mambilla Hydro power project and East West road. “NSIA’s investment policy for PIDF is to efficiently executive these core projects of strategic national importance,” he said.

Listing the performance of the NSIA, Mr Orji noted that the total profits of NSIA increased from N22.55billion in 2017 to N46.50 billion including forex translation gains in 2018. Also, he said by the end of 2018, the NSIA had assets under management of $1.9 billion (N617.69 billion). The breakdown of returns in 2018 recorded by the NSIA also recorded an improvement over the benchmark of 2%,6% and 3-5% . For instance, the stabilization fund recorded return of 11.50 per cent while Future Generation Fund increased by 3.30 per cent and Nigeria Infrastructure Fund (NIF) -13.80 per cent.

In 2018, he said the authority implemented the NIF through three key pillars of direct investment, co-investments and investment/creation of enabling financial institutions with the focus on agriculture, roads, power, gas industrialization and healthcare. During the period, he disclosed that the NSIA implemented the presidential Fertiliser initiative (PFI) up in 2018, commenced the construction of the three healthcare projects in Lagos, Kano, Umuahia respectively.

On co-investment funds, he added that the NSIA/UFF-Old Mutual $200 million agriculture co-investment fund made its first investment in Nasarawa state with the acquisition and expansion of Novum Farms ($25 million).

During the year under review, the Managing Director disclosed that NSIA in conjunction with GuarantCo (UK) created the Infrastructure Credit Guarantee Company Limited( Infracredit) which helped Pension Funds to invest in infrastructure. This entity, according to him was able to raise $60 million of additional capital from KfW-German state-owned development bank (€31 million) and African Finance Corporation ($25 million).

Talking about performance of Presidential Fertiliser Initiative ( PFI) under NIF, he said the PFI delivered10 million 50kg bags (500,000 metric tons of NPK 20:10:10 fertile R at a price of N5,500 in time for the wet season farming. Prior to PFI, he said that each imported Fertiliser bas was subsidized to the tune of up to N6,000 per bag. In 2017, he said the PFI saved the government N50 billion ($139 million) in would-be subsidies.

Beside, he said the NSIA helped with estimated foreign exchange savings of about $150 million in 207 through the substitution of 65 per cent of the imported inputs of NPK with locally sourced inputs.

He said that 11 blending plants with combined capacity at over 2 million metric tonnes have  been revived  while seven blending plants have been  cleared and on-boarded for 2018 PFL for 2018 PFI in addition. “Significant number of direct and indirect jobs have been created along the entire value chain and helped to reduce scarcity

From 2012 – 2018, NSIA reported six straight years of profitability in all its funds with core profits (excluding FX translation gains) of N28.45 billion ($87.5 million) for 2018.OrjI said that as the ?authority  is shifting focus towards infrastructure and direct investments in Nigeria, returns will incubate longer and as a consequence, cash available for market-driven investments will decline.

However, In a year when many international markets under-performed and the global economy experienced a moderate pace of expansion, Nigeria Sovereign Investment Authority (NSIA) has reported an increase in profit by 37 per cent to N44.33 billion for the financial year ended December 31, 2018.

The NSIA results highlighted strong activities and performance during the period under review, with total comprehensive income (including the impact of foreign exchange gains) of N44.34 billion in 2018 as against previous year’s figure of N27.93 billion.

Further analysis of the result showed that NSIA achieved total comprehensive income (excluding the impact of foreign exchange gains) of N26.29 billion (previous year: N26.28 billion) while total assets recorded a growth of 16 per cent to N617.70 billion at year-end (previous year: N533.88 billion).

Also, Return on Capital Employed (ROCE) on the core funds showed that the Stabilisation Fund (100 per cent Funds deployment); Future Generations Fund (81 per cent fund deployment) and Nigeria Infrastructure Fund (17 per cent fund deployment).

However, in spite of these market challenges, the NSIA’s funds performed favourably by generating aggregate returns of 8.2 per cent. Total income grew by 88.5 per cent, rising from N30.62 billion in 2017 to N57.73 billion in 2018.

Considering the volatile global and generally challenging local investment environment, this performance reflects the strength and capability of Portfolio and risk management within the institution. Interest income – N23.82 billion (a component of total income) earned in 2018 represents a nine per cent a year-on-year increase from the N21.77 billion in 2017.

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