NSIA: Impressive growth in net assets, earnings, others despite volatility, headwinds across global market
By Philemon Adedeji
The Nigeria Sovereign Investment Authority (“NSIA” or “The Authority”), manager of Nigeria’s sovereign wealth fund, has announced its audited financial results for the year ended December 31, 2022.
The results indicated that financial performance underscores the resilience of the NSIA’s investment strategy and the quality of its earnings, despite volatility, headwinds across global market
In its audited results, the investment institution announced an impressive performance in its Net assets which amounted to N1.02 trillion at the close of 2022 financial year (FY), reflecting a marginal increase of 10.5 per cent increase from the N919.73 billion recorded in prior financial year 2021, while Total Assets reported down marginally from N1.227 billion in FY 2021 to N1.032 billion in FY 2022, representing a declined of 15.9 per cent.
The NSIA said its non-volatile revenue, such as interest income, revenue from infrastructure business, and management fees earned from fiduciary activities, increased by 34.5 per cent (N15.7 billion) year-over-year. It noted that its total comprehensive income stood at N96.96 billion in 2022, representing a decline of 34 percent compared to 147 billion in 2021.
The NSIA attributed the decline to strong macroeconomic headwinds.The institution said although its earnings are lower than that of 2021, it remained confident in its investment strategy and would continue to explore opportunities to mitigate risks and achieve its investment objectives.
The NSIA said 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 impacted the financial markets.It said its well-diversified portfolio continues to provide the resilience to withstand market challenges as evidenced by the results.
The breakdown under total assets revealed cash and cash equivalents which amounted to N60.185 billion in 2022 financial year, showing a declined of 77.7 per cent from N269.6 billion achieved in prior financial year, as investment securities gained a 9.8 per cent to N628 billion in FY 2022 from N571.6 billion recorded as of end of December 31, 2021, while Loan and receivables increased impressively by a decent 110.8 per cent from N15. 467 billion in the corresponding period to N32.610 billion in the comparable period but property and equipment reported for the period down by 0.8 per cent to N5.119 billion in 12 months of 2022 from N5.161 billion in 12 months of 2021.
In addition, investment institution total liabilities announced in 2022 financial year declined largely by 95 per cent to N16.019 billion in 2022 financial year from N308.1 billion in the comparable period.
An investment institution total income reported for the period ended December 31, 2022 amounted to N111.4 billion from N154.9 billion during the preceding period, reflecting a marginal decrease of 28 per cent
From the profit and loss figures, the group Profit before tax (PBT) reported for the period dropped by 31 per cent from N148.5 billion accounted in prior financial year 2021 to N102.3 billion accounted in the comparable period of 2022, while Profit after tax (PAT) recorded declined by 34 per cent to N102.4 billion in 12 months of 2022 from N153.6 billion in 12 months of 2021.
Earnings from interest income, infrastructure business revenue, and fiduciary activities’ management fees increased by 34.5 per cent amounting to N15.7 billion year-on-year growth.
The Vice Chairman of Highcap Securities Limited, David Andori commented on the results that profit declined but Net Assets went up. Perhaps there was little profit from normal course of business in addition to extraordinary income which was credited directly to the reserve hence, increase in net assets.
About NSIA
An investment institution of the Federation set up to manage funds in excess of budgeted hydrocarbon revenues. NSIA play a leading role in driving sustained economic development for the benefit of all Nigerians by building a savings base for the Nigerian people, enhancing the development of Nigeria’s infrastructure, providing stabilisation support in times of economic stress.
NSIA outlook
The Authority expects the challenging macroeconomic environment to prevail for the larger part of 2023 as a result of the lingering effect of the Russia-Ukraine conflict, the activities of central banks of developed economies in curtailing inflation, and deglobalization challenges.
The annual report indicates that ESG, Sustainability and Climate finance will play a vital role in NSIA’s investment approach and strategy going forward while the Authority will continue to drive direct investments in its core areas – healthcare, gas industrialization, technology, power, and agriculture.
The Nigeria Sovereign Investment Authority is an investment institution of the Federation set up to manage funds in excess of budgeted hydrocarbon revenues. Its mission is to play a leading role in driving sustained economic development for the benefit of all Nigerians through building a savings base for the Nigerian people, enhancing the development of Nigeria’s infrastructure, and providing stabilization support in times of economic stress.
NSIA operates three mandate funds: The Stabilization Fund, the Future Generations Fund, and the Nigeria Infrastructure Fund.
Conclusion
Commenting on the results, the Managing Director and Chief Executive Officer of NSIA, Aminu Umar-Sadiq said a respectable performance was recorded despite the challenges in the operating environment.
“Against market expectations and internal forecasts, NSIA closed the 2022 financial year with a respectable performance.
“This result underscores the robustness of our diversified portfolio, and the excellent commitment of the team.
“As we look to the future, NSIA is resolute in its commitment to delivering increased investments in critical sectors of the economy, driving growth across its funds, and attracting third-party capital into Nigeria’s infrastructure sector.
“In 2023, we will be resourcing our various platforms targeted at emerging sectors – renewable energy, sustainability, innovation, and healthcare – which will ensure the Authority achieves its dual objectives of delivering financial returns and impactful social outcomes,” Umar-Sadiq said.
The key projects the NSIA delivered in 2022 cut across core sectors of focus and the implementation of specialised federal government initiatives.
