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SWF to Invest in Capital Market, Aviation Sector

14 Sep 2013

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  •   Earmarks 32.5% for infrastructure • To make returns to govt after 5 years

By James Emejo in Abuja                                     
Managing Director of the Nigerian Sovereign Investment Authority (NSIA), Mr. Uche Orji, has said that the authority was looking at investing in Monoline insurance, securities, health and aviation sectors of the economy.

Speaking at the Security Exchange Commission (SEC) Eminent Speakers' Series held in Abuja on Friday, he also explained that each of the components which makes up the Sovereign Wealth Fund (SWF), including Stabilisation, Infrastructure and Future Generation Funds, would have to be operated profitably for five years before returns by way of dividends could be made into the federation account for the three tiers of government to share.

The NSIA boss said already questionnaires were being sent to domestic managers for the various asset classes with domestic component.

Specifically, he noted that in the health sector, investment was being considered in the area of establishment of diagnostic centers which according to him had been found to have good returns.

In the aviation sector, he said the plan would be to help airlines have leasing opportunities to allow them access to new aircraft, adding that this had been a major challenge in the industry.

Speaking on the topic: "Sovereign Wealth Fund and the Nigerian Capital Market ... Joining the Dots", Orji said ideas were still being developed for investment in the Monoline insurance to ascertain its viability in the country.

Stating that the monoline insurance option had been found to be highly successful in the United States, Indonesia and other parts of the world, he said the sector remained: "One of the best market ideas we have seen so far is the creation of monoline insurance. Now, we have to appoint somebody to go and develop the idea and get investors and see how that works."

NSIA boss however noted that even though there were plans to invest in private equities within and abroad, not a lot would be invested in the capital market for now because it does not presently have enough funds at its disposal.

While noting that investment in securities would grow over time, Orji further stated that about 32.5 per cent of the overall fund would be invested in Infrastructure within the country.

He said: "We believe securitisation is the way forward. We would like to invest in bonds:
If we can't issue bonds then let's invest in bonds."

In her remarks, the Director General of SEC, Ms Arunmah Oteh, said the NSIA presented an opportunity for the commission to solidify their partnerships given that the former is a key institutional investor in the capital market.

She said: "I think the approach they've taken is what is important. What they want to do is ensure that every dollar that they put in brings in other dollars: working on preparing projects better so that they also make sure the projects are profitable-these are things we find very unique. So this is something we are very supportive of because we think it's a way to enable the capital market to support infrastructure."

The SEC Series is an intellectual platform through which SEC personnel engage frontier developments in the Nigerian economy and society as well as the champions of these developments.

Tags: Featured, Nigeria, News, Aviation Sector

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