$650m Capital Injection Raises Nigeria’s Savings in SWF to $2.15bn

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 • CBN finalises modalities for transfer to NSIA
Ndubuisi Francis in Abuja

Following the approval by the National Economic Council for a fresh cash injection of $650m (N198.25 billion) into the Nigerian Sovereign Investment Authority (NSIA), managers of the Sovereign Wealth Fund (SWF), Nigeria’s savings in the fund since its establishment seven years ago has risen to $2.15 billion.

The amount, however, does not include the income generated by the NSIA from investments in various asset classes across the three funds managed by the Authority.

In his Democracy Day broadcast yesterday, President Muhammadu Buhari had announced that the SWF project portfolio had been expanded with an injection of $650 million.

According to him, the move was meant to strengthen NSIA’s investment in local infrastructure, power, health, re-construction of the Abuja-Kano Road, Lagos-Ibadan Expressway, East-West Road (Section V), the Mambilla Hydro-electric power project, as well as construction of the Second River Niger Bridge.

His statement followed the recent authorisation given by NEC for the transfer of $650 million to the NSIA as seed funding for Presidential Infrastructure Development Fund (PIDF), which has Buhari’s endorsement.

PIDF is to be managed by the NSIA and invested specifically in critical road and power projects across the country.

Speaking on the fresh injection, the Managing Director/CEO of the NSIA, Mr. Uche Orji said the final approval was given last week and the modalities were being worked out with the Central Bank of Nigeria (CBN) for the funds to be moved into the account of the NSIA with the central bank.

Orji was also emphatic that the fresh funds will be used for infrastructure projects under PIDF, “By implication, returns on investment in infrastructure projects would take much longer,” he added.
He said the $650 million represented funds saved on behalf of the three tiers of government, bringing the total value of the SWF to $2.15 billion.

The money is to be transferred from the Nigeria Liquefied Natural Gas (NLNG) Dividend Account and managed by the NSIA on behalf of the Nigerian federation.
The SWF took off with a $1 billion seed capital in 2012. Under the present administration, it has also received inflows of $500 million between 2016 and 2017.

The NEC in November 2015 approved the transfer of $250 million to the NSIA, which was released in 2016.
In May 2017, NEC also approved the injection of $250 million into the SWF sourced from the Excess Crude Account (ECA).
With the additional $650 million, the Buhari administration has so far injected $1.15 billion into the SWF.

In addition to the $2.15 billion held by the NSIA on behalf of the Nigerian federation, the Authority manages third-party assets comprising a $350 million asset for the Nigerian Bulk Electricity Trading Company (NBET) Plc and a $100 million asset on behalf of the Debt Management Office (DMO).

It also continues to manage a portion of the Federal Government’s Stabilisation Account (FGN Stab.), a Naira denominated fund commenced in late 2015.

Orji said the contract for the management of NBET’s asset would expire next month.
The NSIA derives its mandate from the NSIA Act, which was signed into law in May 2011. It empowers the Authority to receive, manage and invest funds in a diversified portfolio of medium and long-term assets on behalf of the federal, states, the Federal Capital Territory (FCT), and local governments.

To give effect to the mandate, the NSIA established three main funds: the Stabilisation Fund, the Future Generations Fund and the Nigeria Infrastructure Fund. The fourth fund is the PIDF approved by Buhari.

The role of the Stabilisation Fund is to provide budget support in times of economic stress, the Future Generations Fund is an inter-generational savings fund for future generations of Nigerians, while the Nigeria Infrastructure Fund is to invest in domestic infrastructure.

The Authority’s share ownership structure is made up of the federal government – 45.83 per cent, states – 36.25 per cent, local governments – 17.76 per cent, and the FCT – 0.16 per cent.

The NSIA is a signatory to the Santiago Principles of the International Monetary Fund (IMF)/International Forum of Sovereign Wealth Funds (IFSWF), which are a set of 24 voluntary guidelines that assign best practices for the operations of SWFs, including transparency and governance.