Nigeria’s Sovereign Wealth Fund hits $2.5bn

…As NSIA grows income by 1,122% to N1.18 trillion in 2023

Latest statistics from the Nigeria Sovereign Investment Authority (NSIA) has revealed that the Nigerian Sovereign Wealth Fund has hit $2.5bn.

The NSIA was initially allocated an initial sum of US$1 billion in seed capital in 2013.

The record N1.184 trillion Total Comprehensive Income recorded by the Nigeria Sovereign Investment Authority (NSIA) in 2023 was largely driven by four tactical strategies, including cost efficiency, efficient balance sheet management, infrastructure investment and a focus on projects that yielded sustainable earnings.

This was disclosed by Aminu Umar-Sadiq, NSIA Managing Director & Chief Executive Officer who spoke to the media on Thursday, on the Authority’s recently released financial result.

NSIA’s total Comprehensive Income surged 1,122 percent to N1.18 trillion in 2023, relative to N96.96 billion reported in 2022. Total Comprehensive Income (excluding foreign exchange gains) equally rose from N21.39 billion in the previous year to N164.69 billion, marking a 670 percent growth.

Presenting the Authority’s 2023 financial performance to the media in Abuja, Umar-Sadiq explained that the renewed focus of the Authority which manages the country’s $2.5bn played a key role in delivering such impressive results.

According to him, the focus area on efficient balance sheet management ensured the timely availability of both local and foreign currency investments, thereby optimising currency utilization. This strategy also ensured optimal asset allocation and utilisation and retained a substantial portion of the balance sheet in foreign currency.

Also, with the focus on sustainable earnings, the NSIA directed efforts towards swiftly stabilising infrastructure projects. This, according to him, entailed engaging with instruments that guarantee consistent and reliable returns, further bolstering the Authority’s financial stability.

Umar-Sadiq further disclosed that the NSIA pioneered investment initiatives, particularly in environmentally sustainable ventures, with notable successes achieved through partnerships in green climates with organisations like CarbonVista.

It also prioritised cost efficiency, striving to transition towards digitised, streamlined operations that effectively addressed prevailing challenges. This shift, he said, optimised resources and enhanced operational effectiveness, further contributing to NSIA’s “excellent” financial performance.

As contained in its financial statement, NSIA in the last 10 years has continued to show resilience and growth in asset performance while creating value within the economy. Its net assets have grown from N156 billion ($1 billion) in 2013 to N1.189 trillion, an equivalent of $2.47 billion as at 2023.

In 2023 alone, Total operating income rose substantially from n101.1 billion in the previous year to N1.176 trillion, representing a 1,064 percent year-on-year increase.

NSIA strategically optimised its asset allocation, resulting in a Total Comprehensive Income of N1.184 trillion for 2023 – a remarkable 1,122 percent growth from N96.96 billion in 2022.

Amidst a challenging global financial landscape, the Authority’s core Total Comprehensive Income (excluding foreign exchange gains) rose from N21.39 billion in the previous year to N164.69 billion, marking a 670 percent increase attributable to the Authority’s robust strategic asset allocation and adherence to best-in-class enterprise risk management processes.

“I think a combination of our strategic and tactical activities is what helped us transition from N96 billion net returns in 2022 to over N1 trillion in net returns in 2023,” Umar-Sadiq told journalists.

“Whilst of course there is a component of foreign exchange gains in this, you will see that even on the core basis, we actually grew our returns by over 650 percent, to 160 billion,” he added.

Besides, the NSIA embarked on several infrastructure-focused activities in 2023, and “largely achieved what it set out to do in the financial year.”

Some of those projects include the 10MW Kano solar project which is the largest grid-connected solar PV plant in Nigeria; launch of strategic platforms including $202m MEDSERVE and $63m Equilease; $50mn launch of Renewables Investment Platform for Limitless Energy (RIPLE) and a strategic partnership agreement with the IFC, among other initiatives.

In addition to its financial performance, the NSIA boss informed that the Authority emerged tops at the 2023 Global SWF Governance, Sustainability, and Resilience Ranking, after scoring a perfect 100 percent, with esteemed SWFs like Temasek and NZ Super Fund.

Umar-Sadiq explained that the GSR Scoreboard analysis reflects the Authority’s substantial progress from a previous score of 84 percent, showcasing its enhanced sustainability practices including improved policies, a robust framework, climate investment leadership, and impactful reporting.

For 2024, the Authority will lay strong emphasis on enhancing fiscal responsibility within the institution to maintain stability and credibility, as well as attracting foreign investments.

The MD was confident of an excellent financial performance in 2024, noting over $500 million investments in domestic infrastructure which has created some 545 direct and indirect jobs.

He also underscored commitment to operationalising existing platforms to effectively attract foreign capital to complement its existing resources and emphasized the need for scalability to maximise the Authority’s impact within its operational sphere.

NSIA strategic priorities in 2024 are outlined in four key areas – operationalising its subsidiaries; broad and ambitious digitisation strategy and cost-efficiency strategy in place; focus on pioneering initiatives in new sectors, driving innovation and strategic growth to stay at the forefront of economic development; and building strong relationships with regulators, strategic partners, and development finance institutions (DFIs).

NSIA Executive Director and Chief Operating Officer, Bisi Makoju, further shed light on the organisation’s financial performance, emphasising efficient fiscal management within the Authority,

According to her, a significant indicator of NSIA’s fiscal discipline is its core income ratio analysis for the year 2023 which showed a remarkable drop to 8.6 percent, as against 30.2 percent in 2022.

“This signifies that NSIA is spending significantly less than what it is earning and kept expenses below the inflationary rate,” she emphasised.

“Despite a challenging economic environment with inflation reaching approximately 28 percent by the end of 2023, the Authority’s year-on-year change in expenses stood at approximately 18.4 percent.”